Legal News

Swiss, French, Brazilian Prosecutors Team Up on Bribery Investigation

By Dan Slater

We know that Foreign Corrupt Practices Act work isn’t perhaps as riveting as it sounds. Though we still find a fair amount of intrigue in bribery scandals.

We’ve covered the alleged corruption at Siemens and Alcoa. Now there’s Alstom, the French engineering giant. Yesterday, police raided the Swiss offices of Alstom and arrested a former manager on charges of malfeasance, corruption and money laundering. Since 2004, Alstom has been under investigation for allegedly paying bribes to win contracts in Asia and South America. Here’s the WSJ report from David Crawford and Antonio Regalado.

Alstom, which makes everything from power turbines to high-speed trains and subway cars, denies any wrongdoing and says it is cooperating with the investigation. Yet, if Swiss prosecutors build a successful case against it, Alstom could face heavy fines or even be banned from bidding on public-sector contracts in fast-growing markets like Brazil.

Interestingly, according to a source familiar with the investigation, in July, Swiss and Brazilian prosecutors traveled to Paris to discuss Alstom with their French counterparts. A division of labor was outlined: The French will focus on embezzlement. The Swiss will focus on money-laundering and the abuse of the Swiss financial markets. The Brazilians will trace the flow of bribe money to suspected recipients.

Here’s what’s going on in Brazil: Investigators have identified a sociologist, Claudio Mendes, as a suspected intermediary for payments made to former Sao Paulo state government officials. The name was discovered in the margins of a hand-written Alstom memo outlining Alstom’s strategy of bribing officials close to former Sao Paulo governor, the late Mario Covas. Mendes didn’t return calls seeking comment. In a statement to prosecutors, he denied wrongdoing.

There’s also Robson Marinho, a top executive with the Tribunal de Contas, an auditing agency responsible for overseeing the state’s expenditures, including payments to Alstom. Cryptic references in Alstom financial records show a percentage of Alstom sales in the State of Sao Paulo were earmarked for “RM,” according to a review of the records. According to Alstom documents, RM promised he could influence decisions in the governor’s office, the auditing agency and the political party. From 1994 to 1997, Marinho headed Covas’s successful gubernatorial campaign and served as the governor’s chief of staff. In a statement, Marinho said he traveled to France in 1998 as a guest of an Alstom subsidiary to enjoy the soccer World Cup. He denies wrongdoing.

Full post as published by Law Blog - WSJ.com on August 22, 2008 (boomark / email).