Articles
Engineering group ABB is to pay more than $58 million to settle charges related to allegations of bribery and kickbacks in Mexico and Iraq.
The Swiss-Swedish company, which supplies power and automation equipment, was charged by US authorities for using subsidiaries to bribe Mexican officials to obtain business with government-owned power companies, and of paying kickbacks to Iraq to obtain contracts under the UN Oil for Food Programme. The conspiracy and bribery charges were brought under the US’ Foreign Corrupt Practices Act.
ABB admitted in court last week that its Texas-based subsidiary, ABB Network Management, made approximately $1.9million of “corrupt payments” from 1997 to 2005 to obtain and retain contracts worth more than $81m for power generation, transmission and distribution products and services from the Comision Federal de Electridad in Mexico. According to the US Securities and Exchange Commission (SEC), illicit payments included cheques, wire transfers, cash and Mediterranean cruises being given to relatives of CFE officials and their wives. ABB agreed to pay a criminal fine of $17.1m.
The company also admitted that its Jordanian subsidiary paid more than $300,000 in kickbacks to the former Iraqi government to secure contracts with the Iraqi Electricity Commission. ABB Ltd – Jordan received 11 purchase orders for electrical equipment as a result, worth more than £5.9m. ABB agreed to pay a criminal penalty of $1.9 and $39 million in disgorgement, pre-judgement interest and civil penalties.
Cheryl Scarboro, chief of the SEC’s Foreign Corrupt Practices Act Unit, said: “ABB’s violations involved conduct at a US subsidiary and six foreign-based subsidiaries. Multinational companies that make illicit payments through layers of subsidiaries will be held accountable.”
ABB has faced other allegations of bribery in recent years, including cases in the Middle East and Nigeria. The company said it had cooperated fully with the SEC and had put in place a “global compliance and integrity program”. Diane de Saint Victor, general counsel, ABB, said: “We are pleased that the investigations are behind us. We are committed to fostering a culture where integrity is woven into the fabric of everything we do. This means acting responsibly as individuals and as a company.”
The UK 2008tightened up its corruption laws earlier this year, when it gave new powers to the Serious Fraud Office to investigate if bribery has been committed by intermediaries such as agents or subsidiaries in a company’s name.