The number of former executives of a French power and engineering company indicted for FCPA violations is up to three. William Pomponi and Frederic Pierucci recently joined David Rothschild as defendants based on their supposed involvement in a scheme to bribe Indonesian government officials to win a lucrative power contract there.
Rothschild, 67, was the former vice president of sales for the power company Alstom SA. He pleaded guilty in November 2012 to conspiracy to violate the FCPA. Pierucci, 45, is a French national and was the Vice President of Sales for the company’s Connecticut subsidiary. He was arrested and charged in mid-April at John F. Kennedy Airport. Pomponi, 65, is a United States citizen and the Vice President of Regional Sales for the Connecticut sub and was added to Pierucci in a superseding indictment this week. What supposedly happened here?
Although the recent indictment charging Pomponi and Pierucci does not name Alstom (calling it only “Parent Company”), the company did issue a statement about the investigation, so I will assume that Alstom is, in fact, the company named and will refer to it by name in this post:
Alstom has been working constructively with the Department of Justice for the last two years to address any allegations of past misconduct. In the meantime, the company is committed to assuring that it conducts its worldwide business fully in compliance with all laws and regulations.
The company has not been formally charged but presumably is in negotiations over a resolution. The Pierucci-Pomponi indictment alleges that they conspired with the “Parent Company” as well as its subsidiaries and other employees in the bribery scheme.
The scheme by Pomponi, Pierucci, Rothschild and others as described by the government is pretty standard FCPA fare. They allegedly hired two “consultants” in Indonesia to bribe at least three Indonesian officials including a member of Parliament and a high-ranking official of Perusahaan Listrik Negara (“PLN”). PLN is the Indonesian state-run electricity company that had authority to award the contract to Alstom. The government contends that the contract was worth $118 million.
According to the indictment, the defendants agreed to pay the consultants a “commission” of 3% of the contract value to bribe the officials. [For the lawyers reading this out there, don’t strain yourselves on the math. Three percent of $118 million is about $3.5 million. The commission was allegedly reduced to 1% or about $1.2 million.]
The supposed conspiracy began as far back as 2002 and continued until 2009. The most interesting parts of the indictment are the quotes from many emails by the three defendants, other Alstom employees and the consultants themselves. Reading the quotes made be a bit nostalgic for my days as a BigLaw associate poring through thousands of documents and finding the one or two “hot docs” that would result in my client facing criminal charges. That’s always a good feeling as a defense lawyer.
The quotes include many of the catch phrases that so often convince prosecutors of FCPA violations rather than every-day business activity:
By Rothschild: Pls. start the paperwork for using [Official 1’s] representative company to assist in the BD [business development] effort.
By Alstom employee: Currently, we are working with [Official 2] and [Official 3] in PLN on our “competition”, nevertheless, we would need a stronger push now.
By Pierucci: Please go ahead and finalise the consultancy agreement.
By Consultant A: I can get [Official 2] to Europe in the second half of June. Please make sure you have adequate funding to really take care of them.
By Pierucci, after learning of negative feedback by PLN on the company’s proposal: When we spoke on Friday, you both told me that everything was under control in the evaluation . . . Now if the infos below are correct, we are not only evaluated number 2 but by a huge margin (almost $40M!!!!!!!!!!!!!!!!) [Ed. Note: I counted the exclamation points for accuracy. There really were 16 of them.] I thought we were controlling what was happening in Palembang?????? . . . . WE CAN NOT LOOSE [sic] THIS PROJECT!”
The indictment charges Pierucci and Pomponi with one count of conspiracy, three counts of FCPA violations, one count of conspiracy to commit money laundering and four counts of money laundering. Adding up the amounts of the wire transfers in the indictment, the defendants allegedly paid $667,000 to the consultants for bribes over a four-year period.
This case raises a few interesting issues. First, the government charged Pierucci, though he is a French national. It claims he was a United States resident and presumably his emails were sent while in the U.S. This is sign of the government’s increased aggressiveness in FCPA prosecutions. Second, while not unusual, the case is another troubling sign of the government’s willingness to charge individuals for conduct that occurred many years ago. Here, the conspiracy supposedly began in 2002. Such prosecutions make it difficult for defendants to find helpful witnesses to counter the charges. Memories fade, witnesses change jobs and locations and documents are not easily available. Defendants—already at a significant disadvantage in light of the government’s vast resources—face even higher hurdles to a successful defense in such cases.
Frederic Pierucci is a crook. They do not call him “Fast Freddie” for nothing! Alstom Sr. Mgrs have broke laws all over the world. In Asia, especially China! They have defrauded shareholders, stock exchange,etc.
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