U.S. authorities arrested an Alstom SA subsidiary executive Sunday night at John F. Kennedy International Airport for his involvement in a foreign bribery scheme in Indonesia.
Frederic Pierucci, 45, a current executive who served as vice president of global sales for U.S.-based the company’s Connecticut-based subsidiary, was charged in an indictment unsealed yesterday. Pierucci is a French national.
David Rothschild, 67, former vice president of sales at the subsidiary had pleaded guilty Nov. 2 for his role in the scheme, though his plea and the charges against him were not unsealed until today.
Both criminal cases are in the District of Connecticut.
According to federal prosecutors, Pierucci and Rothschild allegedly conspired with Alstom and its subsidiaries in Connecticut, Switzerland and Indonesia, along with a consortium partner and individuals, to pay bribes to officials in Indonesia.
The Justice Department documents do not name Alstom or its subsidiaries. The company is referred to as a “French power and transportation company.”
Bribes were allegedly paid through consultants to a member of the Indonesian parliament and to officials at Perusahaan Listrik Negara, Indonesia’s state-owned and controlled electricity company. Money was given to officials, prosecutors said, to secure a contract fir a power project referred to as the Tarahan project.
Prosecutors said the defendants used two consultants to conceal the bribes. According to the indictment, Pierucci was responsible for authorizing payments with knowledge that they were going through consultants to foreign officials to win influence.
According to the charges, the first consultant allegedly received hundreds of thousands of dollars in a Maryland bank account — money was allegedly moved into a bank account in Indonesia to benefit the member of parliament.
Both defendants and co-conspirators discussed how money would be funneled to the official in exchange for influence over the project.
In 2003, Pierucci and others at Alstom decided the first consultant was not effective in bribing Indonesian officials. As a result, the consultant was only retained to bribe the member of parliament, at a reduced commission, while a second consultant was retained to bribe officials at the state-owned electricity company.
The scheme ran from 2002 to 2009, prosecutors said.
The Foreign Corrupt Practices Act prohibits improper payments to foreign officials to secure business.
“Stamping out foreign bribery is a Justice Department priority, and we are determined to continue our vigorous enforcement of the Foreign Corrupt Practices Act,” Acting Assistant Attorney General Mythili Raman.
Focus on individuals in FCPA cases
On April 5, the Justice Department charged four former executives of BizJet International Sales and Support Inc. for their role in alleged Latin American bribery. In March 2012, both the Justice Department and the Securities and Exchange Commission charged former Morgan Stanley executive Garth Peterson for violating the FCPA with a scheme in China.
In February of 2012, the SEC charged two Noble Corp. executives in an alleged Nigerian bribery scheme. In December 2011, both the Justice Department and the SEC charged former executives and agents of Siemens AG with alleged FCPA violations. The SEC also charged former executives of Magyar Telekom for alleged foreign bribery.
A massive criminal case against individuals in the arms supply industry fell apart in early 2012 after a string of rulings unfavorable to the prosecution, mistrials and acquittals.
Pierucci was charged with conspiracy to violate the FCPA and to longer money. He also faces substantive FCPA and money laundering charges.
Rothschild pleaded guilty to one count of conspiracy to violate the FCPA.
Corporation under investigation as well
Alstom itself was served with a Justice Department subpoena in spring 2010 and has been represented by Patton Boggs LLP partner Robert Luskin.
It isn’t clear how U.S. authorities intend to proceed with Alstom or its subsidiaries, though in past FCPA matters, the Justice Department and SEC have charged companies either before or simultaneously with the leveling of charges against related individuals.
However, Swiss investigators closed an investigation into the French engineering giant in November 2011. After probing for evidence of worldwide corruption, the Swiss found only isolated misconduct. Two Alstom subsidiaries were debarred by the World Bank in February and agreed to pay $9.5 million in restitution.
The current and former executives are being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut. Kahn is also the prosecutor assigned to the investigation of Alstom itself.