Swiss-based technology company ABB Ltd. announced a resolution of criminal charges relating to a bribery scheme in South Africa. The resolution will result in ABB paying over $315 million in fines and penalties for what is the company’s third bribery related fine from U.S. regulators.
The Violations
ABB is listed on the NYSE, and as a result, is subject to the Foreign Corrupt Practices Act (FCPA), a U.S. law that prohibits the bribery of foreign officials. The FCPA is enforced in the U.S. by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
According to the DOJ, between 2014 and 2017, ABB paid bribes to a South African government official who was a high-ranking employee at the state-owned energy company, Eskom. ABB paid the bribes so that the government official would give ABB business advantages in connection with the award of multiple contracts from Eskom.
ABB did not make the bribe payments directly to the government official, instead, ABB hired multiple subcontractors with connections to the government official. ABB made payments to the subcontractors with the knowledge that the money would ultimately flow to the government official.
After the bribes had been paid, ABB pre-arranged with the government official the award of certain contracts from Eskom. ABB then conducted sham negotiations for the contracts even thought ABB knew they had already secured the contracts through the bribe payments.
The Fine
As part of the resolution, ABB will pay over $315 million dollars in fines and penalties (ABB received a 25% discount for its cooperation and remediation efforts).
ABB entered into a three-year deferred prosecution agreement (DPA) with the DOJ in connection with the case. In addition, ABB subsidiaries ABB Management Services Ltd. (Switzerland) and ABB South Africa (Pty) Ltd. (South Africa) each pled guilty to conspiracy to violate the FCPA.
Repeat Offender
This is the third time ABB has been fined by the U.S. government for FCPA violations. The first time was in 2004 and related to bribery in Nigeria, Angola and Kazakhstan. The second time was in 2010 and was related to bribery in Mexico and Iraq.
Article by John Peterson, Managing Attorney of FBR, a firm that focuses on representing FCPA whistleblowers. John has worked for almost a decade on financial crime and corruption cases around the globe. He regularly acts as an expert commentator in business and legal media on corporate crime and international corruption issues.
