DOJ Hits French Energy Giant with Massive FCPA Fines

January 6, 2015

On December 22, 2014, the French energy company Alstom S.A. ("Alstom"), with subsidiaries in Connecticut and New Jersey, pled guilty in the U.S. District Court for the District of Connecticut to violations of the Foreign Corrupt Practices Act ("FCPA") and agreed to pay $772 million in criminal fines, making it the largest Department of Justice ("DOJ") FCPA enforcement action of all time.[1] The plea deal will end a lengthy investigation of the company that resulted in allegations of widespread bribery of public officials and fraudulent record-keeping associated with projects in several foreign countries, including Egypt, Indonesia, Saudi Arabia, Taiwan, and the Bahamas. Several senior officials of the company and its subsidiaries have been charged as individuals with criminal violations of the FCPA or mail fraud.

Under the FCPA, companies must comply with two distinct but complementary provisions, one prohibiting bribery of foreign officials and the other requiring maintenance of accurate books and records. Alstom pled guilty to violating both provisions.

Both DOJ and the Securities and Exchange Commission ("SEC") continue to make FCPA investigations and prosecutions a top priority. These increased efforts, as well as the FCPA's whistleblower provisions, which can result in awards of up to 30% of any subsequent government recovery, have led to several recent large FCPA fines.

The United States is not the only country increasing its enforcement efforts with respect to anti-bribery statutes. The United Kingdom's Bribery Act has far-reaching jurisdiction that extends to essentially any company doing business in the UK (regardless of whether the company is actually located or incorporated there), and in the last few years, Canada has obtained large settlements from two Canadian energy companies under its Corruption of Foreign Public Officials Act. Both countries have also recently stepped up their enforcement efforts.

To ensure FCPA compliance and protect the company against prosecution, businesses should carefully implement and closely monitor compliance and risk management programs, ensure they have policies in place that prohibit bribery and require maintenance of accurate books and records, and conduct proper due diligence of partners, agents, and intermediaries. These types of measures, when well-documented, have led the DOJ and SEC to decline to seek enforcement against the entire company, instead prosecuting only the rogue individuals responsible for the violation(s).

Companies should consult with counsel during their internal reviews and audits, making sure that the company's disclosure obligations and remedial measures are properly and carefully executed and documented.

For more information on the FCPA and how to best protect your business, please contact Jane Luxton at (202) 572-8674 | jluxton@clarkhill.com or Ted Planzos at (202) 572-8666 | tplanzos@clarkhill.com.

[1] U.S. v. Alstom S.A., D. Conn. Case No. 14-cr-246 (Dec. 22, 2014).