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French Co. Alstom Pleads Guilty, Faces Largest FCPA Fine Ever

Several years ago, the Justice Department announced it was cracking down on violations of the Foreign Corrupt Practices Act, the federal statute that makes it a crime to bribe foreign government officials in order to get business.

Last week, the French engineering company Alstom interrupted its Merry Christmas to plead guilty to FCPA violations and pay $772 million in fines -- the largest ever for foreign bribery, according to The New York Times.

At Least Your Light Bulbs Won't Cost More

Corporations had always resisted FCPA enforcement, claiming that bribing foreign officials was just how business got done in some parts of the world. Alstom, for example, had bribed officials in Indonesia, Taiwan, and Egypt to the tune of $75 million between 2000 and 2011, resulting in $4 billion worth of business.

Normally, foreign bribes get hidden in the balance sheet as line items for things like "gratuities." In this case, Alstom apparently used "consultants" to funnel money to foreign government officials.

Alstom was already scheduled to be purchased by General Electric next year. Thankfully (maybe), as part of the plea deal, Alstom's fine isn't transferrable, so GE won't have to foot the bill. This is due in part, says The Wall Street Journal, to one of the FCPA's goals, which is selling companies that have broken the law. Naturally, potential buyers would run screaming out of the room if they ultimately had to pay significant fines.

The Bribery World Tour

By the way, it's not just the United States that wants a piece of Alstom. Representatives of the company appeared in a London court December 22 to answer to charges of conspiracy and bribery under UK law. There are also criminal charges pending in France, Switzerland, and Brazil, reports Bloomberg News. The government of Taiwan is also investigating whether construction contracts awarded there were the result of bribery.

Alstom's shady practices were apparently hidden from everyone who might have blown the whistle. The Times reports that a finance department employee who questioned an invoice was told that her inquiry could lead to "several people put in jail."

All the more reason for a company to have strong criminal enforcement and reporting guidelines in place. Not only that, but corporations need to foster a culture of compliance with the law so that higher-ups don't think that a little bribery isn't such a big deal.

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