International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Monday, July 28, 2014

4th guilty plea in Indonesia bribery FCPA case

DojWilliam Pomponi, a former vice president of regional sales at Alstom Power Inc., the Connecticut-based power subsidiary of Alstom, pleaded guilty today in federal court in New Haven, Connecticut, to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) in connection with the awarding of the Tarahan power project in Indonesia.   

Pomponi is the fourth defendant to plead guilty to charges stemming from this investigation.   Frederic Pierucci, the vice president of global boiler sales at Alstom, pleaded guilty on July 29, 2013, to one count of conspiracy to violate the FCPA and one count of violating the FCPA; and, David Rothschild, a former vice president of regional sales at Alstom Power Inc., pleaded guilty to conspiring to violate the FCPA on Nov. 2, 2012.  Marubeni Corporation, Alstom’s consortium partner on the Tarahan project, pleaded guilty on March 19, 2014, to one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, and was sentenced to pay a criminal fine of $88 million.  FCPA and money laundering charges remain pending against Lawrence Hoskins, the former senior vice president for the Asia region for Alstom, and trial is scheduled for June 2, 2015.

“Three Alstom corporate executives and Marubeni, a major Japanese corporation, have now pleaded guilty to a seven-year scheme to pay bribes to Indonesian officials to secure a $118 million power contract,” said Assistant Attorney General Caldwell.  

According to the court filings, the defendants, together with others, paid bribes to officials in Indonesia, including a member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia, in exchange for assistance in securing a $118 million contract, known as the Tarahan project, to provide power-related services for the citizens of Indonesia from facilities in Tarahan.   To conceal the bribes, the defendants retained two consultants purportedly to provide legitimate consulting services on behalf of Alstom and Marubeni in connection with the Tarahan project.   In reality, the primary purpose for hiring the consultants was to use the consultants to pay bribes to Indonesian officials.

The first consultant retained by the defendants allegedly received hundreds of thousands of dollars in his Maryland bank account to be used to bribe the member of Parliament.   The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.   According to court documents, emails between Hoskins, Pomponi, Pierucci, Rothschild, and their co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.

However, in the fall of 2003, Hoskins, Pomponi, Pierucci and others determined that the first consultant was not effectively bribing key officials at PLN.   One email between Alstom employees described PLN officials’ “concern that if we have won the job, whether their rewards will still be satisfactory or this agent only give them pocket money and disappear.”   In another email, an employee at Alstom’s subsidiary in Indonesia sent an email to Hoskins asserting that the first consultant “has no grip on the PLN Tender team at all” and “is more or less similar to [a] cashier which I feel we pay too much.”

As a result, the co-conspirators retained a second consultant to bribe PLN officials, according to the court documents.   The co-conspirators deviated from Alstom’s usual practice of paying consultants on a pro-rata basis in order to make a much larger up-front payment to the second consultant so that the consultant could “get the right influence.”   An employee at Alstom’s subsidiary in Indonesia sent an email to Hoskins, Pomponi, Pierucci and others asking them to finalize the consultancy agreement with the front-loaded payments but stated that in the meantime the employee would give his word to a high-level official at PLN, according to the charges.   The defendants and their co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.

read Department of Justice announcement

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