By Joel Schectman, Rachel Louise Ensign and Andrew Grossman
U.S. prosecutors are close to a deal with Alstom SA that would
require the French engineering giant to pay nearly $700 million to
settle a foreign bribery probe, people familiar with the matter
said.
A settlement of that size would be the largest-ever related to
foreign bribery allegations between a corporation and the Justice
Department. A deal could be announced in coming weeks, the people
said.
Prosecutors want to extract a large penalty from Alstom in part
because of what they perceive to be the company's initial failure
to cooperate with the government's investigation, they added. The
large settlement also reflects the scope of the investigation,
which spans the globe and covers years of activity, one of the
people said.
The settlement talks come as General Electric Co. is closing its
purchase of the bulk of the French company, which has faced a
number of bribery investigations around the world in recent years.
An Alstom spokesman declined to comment.
U.S. prosecutors have focused on an approximately $120 million
Indonesian power project that Alstom and Japanese trading company
Marubeni Corp. were awarded the contract for in 2004, according to
people familiar with the matter and public documents. Earlier this
year, Marubeni agreed to pay an $88 million fine and plead guilty
to foreign-bribery charges in connection with a scheme to pay
bribes to high-ranking Indonesian officials to secure the
contract
But the Alstom probe also involves "other bribery around the
world," a prosecutor said in court last year.
The settlement likely will reflect the increasingly global
approach American prosecutors are taking to foreign bribery
prosecutions. U.S. prosecutors began investigating Alstom in 2009,
after French and Swiss authorities had begun their own bribery
investigations of the firm, another person familiar with the matter
said. The U.S. probe led to charges against a number of former
Alstom executives.
The U.S. Foreign Corrupt Practices Act makes it a crime to bribe
foreign officials in exchange for business. American companies have
long complained the law causes them to lose business to less
scrupulous foreign rivals, while leaving foreign bribe takers
unpunished.
To address these complaints, prosecutors have sought greater
cooperation from foreign law enforcement and aggressively
prosecuted foreign companies that have a connection to the U.S.
such as a local subsidiary. Prosecutors are pursuing allegations
against Alstom's Connecticut subsidiary Alstom Power Inc.
The Alstom case has involved more than six years of
investigation by law enforcement in the U.S., Switzerland and
Indonesia. Indonesia's anticorruption unit Komisi Pemberantasan
Korupsi helped U.S. prosecutors obtain evidence from the country,
according to public records and people familiar with the matter.
Indonesian prosecutors also obtained a three-year sentence for
lawmaker Izedrik Emir Moeis, who was convicted of taking bribes
from the company.
In the Alstom investigation, U.S. prosecutors have gone after
individuals, which led to three former executives of Alstom
pleading guilty to helping bribe Indonesian officials in exchange
for energy contracts for the company.
One of these former executives became a confidential cooperator
for the Federal Bureau of Investigation, according to court
documents.
After admitting to helping bribe Indonesian officials 2012,
former Alstom executive David Rothschild agreed to help the FBI
investigation of Alstom in exchange for leniency. Mr. Rothschild
agreed to help the FBI using "active investigative techniques" and
keep his cooperation secret, according to court documents. His
attorney Michael Jennings declined to comment.
Earlier this month, U.S. Justice Department criminal division
head Leslie Caldwell made the rare move of publicly saying that she
expects "additional law-enforcement actions" soon in a broader
bribery probe of Alstom and other companies.
The company's level of cooperation has been a sticking point
between prosecutors and the company, with the government
complaining the company didn't cooperate for much of the yearslong
probe, according to court documents.
Prosecutors were unhappy with the level of cooperation from the
French firm, even after they sent the company a grand jury
subpoena, according to a court transcript and another person
familiar with the matter.
Alstom in 2011 replaced its lawyers in the probe with
Washington, D.C., attorney Robert Luskin, a partner at Squire
Patton Boggs that has represented high-profile clients including
political consultant Karl Rove.
But the Justice Department remained unhappy with Alstom "The
company really hasn't been cooperating," Connecticut-based federal
prosecutor David Novick said in a November 2013 court hearing,
adding that the firm had only complied in "fits and starts" with a
grand jury subpoena and had not been producing documents from
abroad not covered by the subpoena.
In March, Mr. Luskin said in a statement that "in the course of
our regular consultations, the DOJ has not identified any ongoing
shortcomings with the scope, level, or sincerity of the company's
effort." He also said at the time that settlement negotiations had
not yet begun. Alstom is "cooperating closely, actively, and in
good faith," he said.
Write to Joel Schectman at joel.schectman@dowjones.com, Rachel
Louise Ensign at rachel.ensign@wsj.com and Andrew Grossman at
andrew.grossman@wsj.com
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