Vote for Alstom!

Nominated for the Public Eye People’s Award 2013

von Focus Association for Sustainable Development, www.focus.si

In Brief

The bribery pros: this French energy and transport conglomerate is involved in corruption scandals all over the world. Alstom has been repeatedly convicted of or investigated for bribing local politicians to secure contracts. The frequency of known cases is such that one wonders if this is a deliberate business strategy. Alstom has been fined repeatedly and some of its subsidiaries were excluded from World Bank projects. But as Patrick Bessy, a leading company representative, cynically remarked after the World Bank exclusion: „We’ll just carry out these projects with other subsidiaries“. Every so often, news about another corruption scandal involving Alstom has leaked out. Corruption is one of the greatest obstacles to economic development, increases poverty and environmental degradation, and subverts democracy.

ALSTOM

Head Office: Levallois-Perret, Paris, France
Industry: energy and transport
Revenue / net income: 19,9 billion $ / 732 million $
Owner: main shareholder Bouygues (30,74%)
Employees: 93’500
Chairman of the Board: Patrick Kron
CEO: Patrick Kron
Website: www.alstom.com

Irresponsible Corporate Behavior

Mexico: In July 2004, Alstom International was condemned by a Mexican court to pay a fine of USD 31,000 and a two-year disqualification from participating in public tender procedures for bribing Mexican officials. Despite a series of appeals filed by Alstom International, in August 2008 the original sentence against Alstom was re-instated.

Italy: In 2008, in a corruption scandal involving the state-owned Italian energy group Enel, an Italian Court of Auditors sentenced a former representative of Alstom Power for bribing representatives of Enel in order to influence the outcome of a tender for the modernisation of the Sulcis coal power plant in Sardinia.

Brazil: In 2008, Alstom was rumored to have paid USD 6,8 million to secure a contract in the expansion the metro system of São Paolo, Brazil. In 2011, the Sao Paolo District Attorney received an official request to investigate corruption claims related to Alstom receiving contracts for the maintenance of the São Paolo and Brasilia metro systems.

Slovenia: In June 2008, Alstom Power won a contract for the construction of a new block at the lignite power plant in the Slovenian town of Šoštanj, part of a project funded by two public banks—the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD). The Slovenian Commission for the Prevention of Corruption launched an investigation in 2009; in an interim report issued in February 2012 the Commission stated that acts of corruption may have interfered with the tender process to the benefit of Alstom. In addition to the close ties between Alstom and several actors in the procurement process, the Commission clearly states that «the project is designed and implemented in a non-transparent manner, lacks supervision and is burdened with political and lobbying influences, and as a result there has been [and still is] a high risk of corruption and conflicts of interest».

The Alstom Group has also been named in connection with various investigations into corrupt practices and misconduct in Australia, France, Hungary, the United Kingdom, Poland, and the United States.

Switzerland, Tunisia, Latvia, Malaysia: On November 22, 2011, the Alstom subsidiary Alstom Network Schweiz AG was ordered by the public prosecutor of the Swiss Confederation to pay compensation of 36,4 million Swiss Francs (EUR 30 million) for bribing to officials in three countries (Latvia, Malaysia and Tunisia). The investigation showed that consultants engaged by Alstom through consultancy agreements in the aforementioned countries had forwarded a considerable part of their fees to foreign decision makers to influence them in favor of Alstom.

Zambia, World Bank: On February 22, 2012, Alstom Hydro France and Alstom Network Schweiz AG and their subsidiaries were debarred by the World Bank for a period of three years, after making «improper payments» of EUR 110’000 to former senior Zambian officials to obtain a public contract in a project funded by the World Bank.

Indonesia: In July 2012, the Indonesian Corruption Eradication Commission announced that an opposition politician was suspected of taking a USD 300’000 bribe in return for preferential treatment of the Indonesian Alstom subsidiary in a deal to supply equipment for a coal plant in Sumatra. The offices of Alstom in Indonesia were raided as part of the investigation.

Consequences

Corruption is one of the biggest obstacles for economic development and it has a high impact on poverty, environmental harm and political structures that promote injustice. Such unsound business practices burden the public with excessive costs and unfair tenders of questionable quality. They also have a wider impact by distorting the political culture among the authorities in countries of investment and eventually undermine the public trust in the institutions of the state.

Current State and Demands

Alstom must abandon corruption and bribery and implement measures to prevent the recurrence of such practices, as other companies in their industry have done. But the general political conditions also have to be changed. Notably in these ways:

Call on the World Bank a) to include compensation for the country suffering the damages of corrupt deals (more specifically, Zambia) in their sanctions procedure; b) to go beyond the current dispositions of the Agreement of Mutual Recognition of Debarments by automatically enforcing cross-debarment measures against entities excluded from other multilateral development banks’ calls for tenders due to corrupt practices, instead of having to deal with them on a case by case basis
Call on the EIB and the EBRD to suspend Sostanj project funding and on the EIB to ratify and implement the cross debarment agreement that other multilateral development banks have signed.
Call on European and French Institutions to exert enhanced due diligence over any Alstom related project and to improve legislation (sanctions applied to the whole group and not only to involved subsidiaries; sanctions automatically applied in all member states)
Call on Member States of the EU to apply sanctions to firms convicted of corruption in any other member state (as provided for in EU Directive 2004/18/EC (Article 45.1)

More Information

Focus Association for Sustainable Development, Ljubljana, Slovenia – www.focus.si

SHERPA Paris, France – www.asso-sherpa.org

CEE Bankwatch Network, Prague, Czech Republic – www.bankwatch.org

Siemens and Alstom accused of bribery for Brazilian Metro contracts | IT Decisions:
http://itdecs.com/2011/02/siemens-and-alstom-accused-of-bribery-for-brazilian-metro-contracts

AFP: Prosecutors probe Alstom for contract corruption:
http://afp.google.com/article/ALeqM5if0Wac42KwRglSaQf0G5sCrcfgtQhttp:/afp.google.com/article/ALeqM5if0Wac42KwRglSaQf0G5sCrcfgtQ

TRACE Compendium – ALSTOM:
https://www.traceinternational2.org/compendium/view.asp?id=109

Three directors of rail engineering firm Alstom held in bribery investigation | Law | The Guardian:
http://www.guardian.co.uk/business/2010/mar/24/alstom-directors-bribery-dawn-raids

Alstom to pay €31m fine after bribery probe - FT.com:
http://www.ft.com/cms/s/0/1cd17286-1508-11e1-b9b8-00144feabdc0.html#axzz2CJ21UGOs

World Bank Punishes Alstom - WSJ.com:
http://online.wsj.com/article/SB10001424052970203918304577238943984834040.html

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Alstom at Center of Web of Bribery Cases - NYTimes.com:
http://www.nytimes.com/2010/03/30/business/global/30alstom.html?pagewanted=all