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Record Penalty to Settle Bribery Charges Against French Multinational

Wednesday, December 24, 2014
Sandler, Travis & Rosenberg Trade Report

The Department of Justice announced Dec. 22 that a French power and transportation company has agreed to pay a $772 million criminal penalty to settle charges related to a widespread scheme involving tens of millions of dollars in bribes in various countries around the world in violation of the Foreign Corrupt Practices Act. In addition, the French company’s Swiss subsidiary pleaded guilty to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Deputy Attorney General James M. Cole observed that if the settlement is approved by the court next year it will be the largest foreign bribery penalty in the history of the Justice Department.

The Justice Dept. indicates that from at least 2000 to 2011 the French multinational and its subsidiaries in Switzerland, Connecticut and New Jersey paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan. In Indonesia, for example, the companies paid bribes to government officials, including a high-ranking member of the Indonesian Parliament and high-ranking members of the state-owned electricity company, in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million. In total, the French multinational paid more than $75 million to secure $4 billion in projects around the world, with a profit to the company of approximately $300 million.

Justice adds that the company and its subsidiaries attempted to conceal the bribery scheme by retaining consultants purportedly to provide consulting services on behalf of the companies but who actually served as conduits for corrupt payments to the government officials. U.S. authorities considered a number of factors in reaching an appropriate resolution, including the French multinational’s failure to voluntarily disclose the misconduct even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges in connection with a power project in Italy, the company’s refusal to fully cooperate with the Justice Dept. investigation for several years, the breadth of the company’s misconduct, the lack of an effective compliance and ethics program at the time of the conduct, and the company’s prior criminal misconduct. The company only provided thorough cooperation when the Justice Dept. publicly charged several of its executives.

Deputy Attorney General Cole indicated that a “strong law enforcement response” was required in light of “such rampant and flagrant wrongdoing” by the French multinational, which involved a corruption scheme “breathtaking in its breadth, its brazenness, and its worldwide consequences.” Cole added that this comprehensive enforcement action is also intended to send other companies around the world the message that “this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.”

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