Executives at the global industrial giant, which fully cooperated in the investigation, bribed a South African official to win contracts for that country’s Kusile power station.
Switzerland-based robotics and automation giant ABB has agreed to pay $460 million to U.S. agencies in connection to an investigation into violations of the Foreign Corrupt Practices Act (FCPA) stemming from the bribery of a high-ranking official at South Africa’s state-owned energy company.
The Department of Justice resolution is coordinated with prosecutorial authorities in South Africa and Switzerland, as well as the U.S. Securities and Exchange Commission (SEC).
The resolution involved a $315 million criminal penalty as well as $75 million civil penalty to settle the SEC’s charges. ABB also reached a settlement with the National Director of Public Prosecution in South Africa and is in the process of a reaching a final resolution with German authorities.
“We take the Kusile matter very seriously. Since it was reported, ABB has cooperated fully with all authorities and spent considerable time and effort – including launching a new code of conduct, educating employees and implementing an enhanced control system – to prevent something similar from happening again,” said ABB CEO Björn Rosengren in a statement. “We have a clear zero tolerance approach to non-ethical behavior within our company.”
Assistant Attorney General Kenneth Polite of the Justice Department’s Criminal Division says ABB bribed a high-ranking official at South Africa’s state-owned energy company in order to corruptly obtain confidential information and win lucrative contracts. Authorities in South Africa have brought corruption charges against that official.
“This resolution demonstrates the Criminal Division’s thoughtful approach to appropriately balancing ABB’s extensive remediation, timely and full cooperation, and demonstrated intent to bring the misconduct to the department’s attention promptly upon discovering it, while also accounting for ABB’s historical misconduct,” says Polite.
The SEC’s order finds that, from 2015 through 2017, ABB executives in Switzerland and South Africa colluded with a high-ranking government official at Eskom, an electricity provider owned by the South African government, to funnel bribes to the official through complicit third-party service providers with whom the government official had close personal relationships. ABB paid the service providers more than $37 million to bribe the government official. In return, ABB obtained a $160 million contract to provide cabling and installation work at Eskom’s Kusile Power Station.
According to court documents, ABB entered into a three-year deferred prosecution agreement (DPA) with the department in connection with the filing of a criminal information in the Eastern District of Virginia charging the company with conspiracy to violate the FCPA’s anti-bribery provisions, conspiracy to violate the FCPA’s books and records provisions, and substantive violations of the FCPA. In addition, ABB subsidiaries ABB Management Services Ltd. (Switzerland) and ABB South Africa (Pty) Ltd. (South Africa) each pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA.
The Justice Department has agreed to credit up to one-half of the criminal penalty against amounts the company pays to authorities in South Africa in related proceedings, along with other credits for amounts ABB pays to resolve investigations conducted by the SEC and authorities in Switzerland and Germany, so long as payments underlying an anticipated resolution with German authorities are made within 12 months of the resolution.
