Switzerland’s ABB Ltd., a global technology company listed on the New York Stock Exchange, has agreed with the Department of Justice to end Foreign Corrupt Practices Act (FCPA) criminal charges in exchange for more than $315 million, a news release issued last week announced. The agency’s corruption lawsuit concerns bribes paid by ABB to a high-ranking official at South Africa’s state-owned energy company Eskom Holdings Limited.
Court filings alleged that between 2014 and 2017, ABB, which professes to be a “technology leader in electrification and automation,” paid bribes to a South African government official to gain business advantages in connection with the award of multiple energy contracts. ABB reportedly paid South African government subcontractors, despite their “poor qualifications and lack of experience,” in exchange for improper advantages in obtaining work with Eskom.
The DOJ accused ABB of conducting fake negotiations to obtain contracts at inflated prices pre-arranged with a specific South African government official, all on the condition that ABB employ a particular subcontractor associated with that official. Further, the company falsely recorded subcontractor payments as legitimate business expenses when, in fact, a portion of the payments were intended as bribes.
The department reached the $315 million resolution based on a number of factors, including the serious nature of the misconduct, the company’s “extraordinary” cooperation, and its prior criminal record. As to the third factor, the press release noted that ABB has been in hot water before, including two prior FCPA violations in 2004 and 2010, as well as a guilty plea by an ABB entity for bid rigging in 2001.
The DOJ said it has agreed to credit up to one-half of the criminal penalty against amounts the company must pay to authorities in South Africa in related proceedings, along with other credits to resolve investigations conducted by the Securities and Exchange Commission for $460 million, and authorities in Switzerland and Germany.