DEPARTMENT OF JUSTICE PRESS CONFERENCE
Justice Department Press Conference
Subject: Resolution of a Foreign Bribery Case
Participants: Deputy Attorney General James Cole; Michael Gustafson, First Assistant U.S. Attorney for the District of Connecticut; Robert Anderson, Executive Assistant Director, FBI
Location: The Justice Department, Washington, D.C.
JAMES COLE: Good morning. I'm joined today by Assistant Attorney General Leslie Caldwell of the Justice Department's Criminal Division; First Assistant United States Attorney Mike Gustafson of the District of Connecticut; and Executive Assistant Director Robert Anderson, Jr., of the FBI.
And we're here to announce a historic law enforcement action that marks the end of a decade-long transnational bribery scheme -- a scheme that was both concocted and concealed by Alstom, a multinational French company and its subsidiaries in Switzerland, Connecticut and New Jersey.
Today, those companies admit that from at least 2000 to 2011, they bribed government officials and falsified accounting records in connection with lucrative power and transportation projects for state-owned entities across the globe. They used bribes to secure contracts in Indonesia, Egypt, Saudi Arabia and the Bahamas. All together, Alstom paid tens of millions of dollars in bribes to win $4 billion in projects and to secure approximately $300 million in profits for themselves.
Such rampant and flagrant wrongdoing demands an appropriately strong law enforcement response. Today, I can announce that the Justice Department has filed a two count criminal information in the United States District Court for the District of Connecticut, charging Alstom with violating the Foreign Corrupt Practices Act buy falsifying its books and records and failing to implement adequate internal controls.
Alstom has agreed to plead guilty to these charges, to admit its criminal conduct, and to pay a criminal penalty of more than $772 million. If approved by the court next year, this will be the largest foreign bribery penalty in the history of the United States Department of Justice.
In addition, I can announce that Alstom's Swiss subsidiary is pleading guilty to conspiring to violate the Foreign Corrupt Practices Act. And the company's two American subsidiaries have entered into deferred prosecution agreements and admitted that they conspired to violate the Foreign Corrupt Practices Act.
Alstom's corruption scheme was sustained over more than a decade and across several continents. It was astounding in its breadth, its brazenness, and its worldwide consequences. And it is both my expectation and my intention that the comprehensive resolution we are announcing today will send an unmistakable message to other companies around the world that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.
Let me be very clear: Corruption has no place in the global marketplace, and today's resolution signals that the United States will continue to play a leading role in its eradication.
The investigation and prosecution of Alstom and its subsidiaries have been exceedingly complex, and they have required the utmost still and tenacity on the part of a wide consortium of law enforcement officials throughout the country and, indeed, across the globe.
I want to thank the Criminal Division's Fraud Section and Office of International Affairs, the United States Attorney's Office for the district of Connecticut, Maryland and New Jersey, the FBI's Washington Field Office, and its resident agency in Meriden, Connecticut, the Corruption Eradication Commission in Indonesia, the Office of the Attorney General in Switzerland, the Serious Fraud Office in the United Kingdom, as well as authorities in Germany, Italy, Singapore, Saudi Arabia, Cyprus and Taiwan, for their tireless efforts to advance this matter.
The remarkable cross-border collaboration that these agencies made possible has led directly to today's historic resolution. This outcome demonstrates our unwavering commitment to ending corruption and ending bribery in the corporate sense, and international corruption.
Our hope is that this announcement will serve as an inspiration and, in fact, a model for future efforts.
At this time, I'd like to introduce Assistant Attorney General Leslie Caldwell, who will provide additional remarks about today's announcement.
LESLIE CALDWELL: Thank you, Jim.
Today truly represents a significant milestone in the global fight against corruption. It demonstrates the department's commitment to fighting foreign bribery and ensuring that both companies and individuals are held accountable when they violate the FCPA.
The resolutions announced today also highlight -- and this is very important -- what can happen when corporations first refuse to disclose wrongdoing and then refuse to cooperate with the department's efforts to identify and prosecute culpable individuals.
Like many FCPA schemes, this investigation involved the use of consultants. Alstom funneled bribes through third-party consultants who really did little more than serve as conduits for payments. Alstom then dummied up its books and records to make it look like there were legitimate payments and to hide the fact that it was making bribe payments.
Alstom's corruptions spanned the globe and was really its way of winning business. For example, in Indonesia, Alstom and certain of its subsidiaries used consultants to bribe government officials, including high-ranking members of the Indonesian Parliament and state-owned and state-controlled electricity companies. They did that to win several very lucrative multi-million dollar contracts in the power -- in the power-related services industry, and the documentations showing that what they were doing and the extent to which they were aware that what they were doing was inappropriate was astonishing.
There are internal documents showing that when Indonesian officials were dissatisfied with the amount of money they were getting, calling it "pocket money," Alstom took immediate steps to increase the amount of money through the use of additional consultants.
In Saudi Arabia, Alstom hired at least six consultants, including two members -- two close family members of high-ranking government officials to bribe officials at a state-owned and state-controlled electricity company, to win projects valued at approximately $3 billion.
Again, the evidence showed that Alstom employees were fully aware that their conduct was criminal. Internal documents refer to the consultants as -- by code names like "Mr. Geneva, Mr. Paris."
Alstom similarly used consultants to bribe officials in Egypt and in the Bahamas. Again, the evidence showed that Alstom employees clearly knew that they were violating the law.
For example, in connection with a project in Egypt, a member of Alstom's internal finance department sent an e-mail questioning an invoice for consultant services. In response, she was advised, "Your inquiry quote could several people put in jail," and she was further instructed to delete all prior e-mails regarding the consultant.
If approved by the court, as Deputy Attorney General Cole said, the criminal penalty of $772 million will represent the largest FCPA penalty ever assessed in a -- in a DOJ-FCPA case.
Through Alstom's parent-level guilty plea and record-breaking criminal penalty, Alstom is paying a historic price, as it should, for its criminal conduct and for its efforts to insulate culpable corporate employees and other corporate entities.
Alstom did not voluntarily disclose the conduct, and Alstom did not agree to cooperate with the government and, in fact, deliberately did not cooperate with the government for some time.
Indeed, it was only after the department publicly charged several individual executives that Alstom finally and reluctantly began cooperating.
One important of this message -- one important message of this case is while we hope that companies that find themselves in this situations -- in situations like this will cooperate with the Department of Justice, we are not going to wait for them to do so. We are not going to depend on that cooperation.
When Alstom refused to cooperate, we persisted in our investigation. We built cases against various individual corporate executives and various culpable corporate entities.
To date, the department has publicly charged four Alstom corporate executives in connection with a corrupt scheme in Indonesia and also another company's corrupt executive in connection with a scheme in Egypt. Four of these individuals have already pleaded guilty.
In addition, another company called Marubeni Corporation, a Japanese trading company, which pioneered with Alstom in Indonesia has plead guilty to conspiracy to violate the anti-bribery provisions of the FCPA and substantive -- excuse me -- and has paid $80 million in criminal penalty.
Another important message of this case is that the United States is increasingly fighting the fight against international corruption with a growing array of international partners.
Earlier this year, Indonesia's Corruption Eradication Commission, known as the KPK, assisted the department in the investigation, and in turn, the department assisted the KPK by sharing information that we obtained in the course of our investigation, which the KPK in turn used to prosecute a former member of the Indonesian parliament in Indonesia for accepting bribes from Alstom-paid consultants. This past spring, that official was convicted in Indonesia, and he's now serving three years in an Indonesian jail.
Our partnership with Indonesian law enforcement authorities in this case means that both bribe payers and bribe takers are increasingly being held responsible, and our investigation of this case is not over yet.
This case is emblematic of how going forward, I think, in the future, the Department of Justice will increasingly investigate and prosecute major FCPA cases. We encourage companies to maintain robust compliance programs. We encourage them to voluntarily and fully disclose misconduct. We encourage companies to voluntarily and fully cooperate in our investigations.
But we will not wait for companies to do that. We will not wait for companies to act responsibly, with cooperation or without out it.
The Department will identify criminal activity and investigate the conduct ourselves, using all of our resources, employing every law enforcement tool and considering all possible actions, including actions against individuals and corporations.
This has been a team effort. I very much would like to thank the prosecutors from the Criminal Division's Fraud Section, the Criminal Division's Office of International Affairs, United States Attorney's Office for the District of Connecticut, the talented agents of the Federal Bureau of Investigation for all of your extraordinary work in this very important matter. I also would like to thank the U.S. Attorney's Office for the District of New Jersey and the U.S. Attorney's Office for the District of Maryland for their work on very important related cases.
And as the Deputy Attorney General alluded to, I also would like to thank our international counterparts: Indonesia, Switzerland, United Kingdom, Singapore, Italy, Saudi Arabia, Taiwan, Cyprus and Germany.
Every new FCPA case, we are likely to be working with yet another new potential international partner and that is a trend that I expect will continue going forward. We're grateful for the assistance of our international partners and we look forward to working with them in the future. Thank you.
MICHAEL GUSTAFSON: Thank you. Good morning. I'm Mike Gustafson. I'm the first assistant United States Attorney from the District of Connecticut. Government works best when it operates transparently and with the public interest as its sole aim. Because of that, fighting corruption has long been a top priority for federal prosecutors in Connecticut and across the Department of Justice.
Today's historic resolution is an important reminder that our mandate to stamp out corruption does not stop at any border, be it state or national. For years, Alstom has operated in the shadows, secretly lining the pockets of government officials around the globe, in order to secure millions of dollars in public contracts.
They ensured the contracts would not necessarily go to the most qualified bidder or the best products, but instead, to whomever was willing to pay off the right decisionmakers. And they covered up those payments in some time-honored ways, by using so-called consultants whose sole value was access to corrupt officials and by recording bribes on their books and records as commissions and consultant fees.
Unfortunately, a significant part of the illicit work was carried out from Alstom Power's office in Windsor, Connecticut. Alstom Power and its predecessor companies has been an important part of the fabric of our state since the 1950s, an employer of hundreds of Connecticut residents. Yet, as this case makes clear, executives and employees from Windsor worked hand-in-hand with co-conspirators across the globe to bribe officials in places such as Indonesia, Egypt and Saudi Arabia.
I'm hopeful that this resolution today, in particular, the deferred prosecution agreement with Alstom Power, will provide the company an opportunity to reshape its culture and restore its place as a respected corporate citizen.
I applaud Mr. Cole and Ms. Caldwell, the prosecutors, the department's fraud section, the FBI and prosecutors in my office -- particularly, David Novick -- who, for years, have spent seeing justice -- sought tirelessly (ph) pursuing justice in this case. And their successful collaboration is a mile (ph) for effective this department can be.
I echo all the thanks given by Ms. Caldwell and Mr. Cole. I also want to single out the special agents of the FBI and the Merited (ph) Office, who have provided significant support during the course of this investigation. Thank you.
ROBERT ANDERSON (?): Good morning.
The record $772 million fine we are announcing today should serve as a wake-up call to all the companies who do business internationally. Bribery may once have been considered a time-honored method of gaining competitive advantage, but I'm here to tell you that the FBI is working tirelessly with our Department of Justice colleagues and international law enforcement partners to root out corruption in every corner of the globe.
It is incumbent on us and companies to perform due diligence, create a culture of compliance, and to use internal auditing authorities aggressively to ensure that this type of corruption is not occurring in their operations.
In today's case, Alstom's misconduct spanned many years and multiple continents and employed a wide range of sophisticated schemes to bribe foreign officials. After receiving credible allegations from the Department of Justice fraud section that Alstom had made improper payments to government officials in numerous countries, the agents from the FBI's Washington field office and New Haven field offices traveled around the world, conducting interviews and collecting evidence on this investigation.
We received great cooperation from many of our international law enforcement partners. In this case especially, I'd like to thank the Indonesian Corruption and Eradication Commission for all their work. Their determined efforts led the Indonesian government to charge a high-level member of the Indonesian parliament for accepting bribes. As stated before, he's now serving a three year prison term.
It's important to note, not only has Alstom agreed to pay nearly an $800 million penalty, but also that four of the company's executives have been charged. The record dollar amount of this fine is a clear deterrent to companies who would engage in foreign bribery. But even a better deterrent is sending the executives who committed these crimes to prison.
It's also critical to challenge the culture in the companies who too often have turned a blind eye to payments and bribes to secure their next contract. And as added deterrent, we have received funds to staff internal corruption squads and international corruption squads in three of our major field offices this coming year: the Washington field office, the New York field office, and the Los Angeles field office.
So companies should know, if you're operating overseas, you should be aware, we will be taking an ever-closer look at allegations on foreign bribery this coming new year. International corruption increases the cost of doing business globally. It disadvantages honest companies that do not pay bribes. It also slows the growth of developing countries when officials are lining their pockets with funds intended for their citizens. We cannot let it go unchecked, and we won't.
I want to thank our partners on the stage. All of them who have already spoken before me, and around the world for the collaboration to bring Alstom's misconduct to light and to justice.
The FBI has committed, with our partners on this stage and around the world, to continue working together to combat this insidious threat. Thank you.
MR. COLE (?): Thank you very much. We'll take a few questions.
Q: Yes, Alstom is in the process of selling its energy business to General Electric. How did that sale factor into today's resolution?
MR. : From the government's perspective, the sale really was not particularly important to the government's resolution. Obviously, we were aware of the transaction. The fine that's being paid by the entities that are being acquired by G.E. is being paid by Alstom. And that was something that we insisted upon. So that's something that I think was very important.
Otherwise, the relationship between G.E. and Alstom is something that we were not really in the middle of.
Q: And, going forward, in terms of what's required by the court, is that gonna be required with G.E. picking up these subsidiaries?
MS. CALDWELL: So, G.E. has a very robust compliance program, and one of the requirements of the transaction imposed by G.E. is that Alstom must immediately come under G.E.'s very robust compliance program.
Because it will be -- those two entities will be under a deferred prosecution agreement, if for some reason that does not happen, they can still be subject to having some prosecution or have a monitor imposed on them.
But -- so we will be relying, at least in the first instance, on G.E.'s compliance program to police the behavior of the Alstom subsidiaries.
Q: How concerned are you about these police shootings? And would you recommend that they do anything differently?
MR. COLE (?): Well, the shootings that happened over the weekend were heinous and cowardly acts. Our sympathies, our prayers are going out to those families.
We have officers, men and women, in law enforcement throughout the country who put their lives on the line every day to protect us all. Some of them are required and called upon to make the ultimate sacrifice, like these two brave officers did. And there's just no reason that we should have to be dealing with this.
One of the main focuses that we've had in the Department of Justice is officer safety and making sure that we have procedures in place and training in place to encourage that. And as we -- as we go forward, that's going to continue to be a huge emphasis for the Department of Justice.
People need to make sure that when law -- they go into law enforcement, they can depend on all of us to make what is inherently an unsafe job as safe as possible.
Q: Mr. Cole, do you believe at all that the -- that some of the violence against officers is a result of the Justice Department's efforts to try to address police tactics around the country?
MR. COLE: I do not. I think that what you have to be able to do is have a conversation about isolated instances where we see profiling or we see excessive force, and, at the same time, we have to make sure that our officers are safe and that we do everything we can to make sure that the brave men and women who are part of law enforcement are protected as much as we can.
Those are conversations that we have to have at the same time, and we can have at the same time. And I don't subscribe to the view that you can't do one or the other, and they cancel each other out.
Q: China has hopefully asked for some help from the U.S. government and other governments in its anti-corruption campaign. I wonder are there any -- are you working, the DOJ and FBI, working with the Chinese government in cases like today's? And also, are there discussions for future cooperation?
MR. COLE (?): Certainly we're in discussions with many countries throughout the world in trying to level the playing field in dealing with international corruption and foreign corruption.
We welcome any country that wants to work with us in trying to make sure that those kinds of rules and regulations and controls are in place so that you have a free marketplace throughout the world and free competition throughout the world.
Q: Can you or the FBI give us an update on the Sony investigation?
MR. COLE: That's a matter under investigation right now. Can't really talk about that.
Q: Yes, sir. Local police departments across the country say the Department of Justice is not doing enough to help keep them safe, specifically by rejecting requests to help pay for bullet-proof vests through the Federal Bullet-proof Vest Partnership. How do you respond to this?
MR. COLE: We've put an enormous amount of resources and money into officer safety. We have pioneered the protective equipment and the use of it, and getting it out to officers throughout many of our programs. We've pioneered training and put that out to many, many different officers and law enforcement agencies.
This has been a huge priority for the Department of Justice since the day I got here and before. And it's going to continue to be a huge priority for the Department of Justice.
Q: Will you be stepping up -- (inaudible) --
Q: Former New York Mayor Rudy Giuliani said that Mayor de Blasio, President Obama and Attorney General Holder have, quote, "contributed to an atmosphere of hate towards police." Did Mayor de Blasio undercut his cops? And what do you think he should do going forward? Do you think he should meet with the families of the slain officers?
MR. COLE: I'm not going to speak for Mayor de Blasio. I'm going to repeat what I have said earlier. We have to be able to have a conversation about both of these topics going forward. It's not undercutting the cops. We've supported our police officers and our law enforcement personnel from the time I've gotten here, for years and years and decades going in the past.
We need to make sure that we can have conversations about how policing can be done effectively, how we can have community policing going forward. But we also need to at the same time protect our law enforcement personnel. And I think having the conversation about one is not undercutting the other. We have to have them both.
Q: You have a record -- a record fine that these people -- (inaudible) -- Alstom is paying. But how about the focus on the executives? Is that a new trend that you're doing? I mean, by putting executives in jail?
MR. COLE: It's not a new trend. We've done this in any number of other cases. It's more difficult to make a case against an individual than it is against a corporation. But we are always looking to make sure that we bring cases against individuals where we can find the evidence to do so. Because as Assistant Attorney General Caldwell said, that's the most effective deterrent. They are harder cases to make, but we are always, always looking to make those and we have done so in the past on numerous occasions.
Q: The president is about to announce your successor. Whoever she turns out to be, what are the big challenges that she'll be facing?
MR. COLE: An incredible schedule; an incredible number of meetings all day long; an incredible number of decisions that you have to make all day long. This is a very challenging job. It has also been, frankly, from my point of view, the most interesting job I've ever had. It involves virtually every issue that comes into the United States government. So to try and identify a particular challenge that he or she might have when they come and succeed me would be difficult. Everything is a priority in this job.
Q: Mr. Cole, if I could ask, you talked about the decisions you have to make as deputy attorney general. One of those, obviously, is whether to issue a subpoena to a reporter. Guidelines talk about the balance that needs to be struck -- that prosecutors should strike a balance -- a proper balance between press interest and law enforcement interest. How should prosecutors moving forward make that balance -- (inaudible) -- in deciding whether to issue a subpoena?
MR. COLE: We have set this out very clearly in the new regulations that we've issued under 50-10, that really have changed the way we look at things. We have always treated subpoenas to the media very differently and very carefully because of the media's important role in our society. We have made those requirements and those regulations even stronger and they really set out in a very, very detailed way the kinds of balancing and the kinds of issues that our prosecutors need to look at.
In addition, we've put into place a news media review committee that will be another layer of review before it even gets to the deputy attorney general or the attorney general. So that there will be a full and complete review before any subpoena issues in that regard.
Q: True, though do the guidelines talk about how prosecutors should decide to issue a subpoena to a reporter directly? Don't the guidelines talk more about documents and how they should decide to go after documents?
MR. COLE: No, it covers reporters directly as well. And those are all covered, and there's a whole process you have to go through before you can do that, and that will be through those regulations a very formalized process.
Q: (Inaudible) -- Castro regime return the fugitive wanted for killing law enforcement personnel in the past.
MR. COLE: Certainly, we're working with that country and every country to get back fugitives who we have charges against. I think the fact that we're going to be having better relationships with Cuba will increase our likelihood of being successful and getting those people back.
Thank you very much.