Over the last ten years, numerous events in the field of prevention, fight and repression of corruption committed by companies have made it possible to draw up precise guidelines on the characteristics expected of an anti-corruption Compliance organization by the anti-corruption authorities. Consequently, the question of what risks a company runs if it has a perfunctory anti-corruption organization is once again being asked.
Some companies have put in place a "façade" anti-corruption organization and processes, which have neither the reality nor the effectiveness they claim. This is what the US Department of Justice (DoJ) found in its December 2014 decision against Alstom, after several years of very thorough investigations and inquiries into a number of the Group's practices, including the holding company Alstom SA and several of its subsidiaries, in various sectors of its activities, over the period 2003 to 2011.
An anti-corruption organization has all the appearance of an organization that complies with legal and regulatory requirements, as well as with the requirements of the authorities, but in reality allows - or even authorizes - reprehensible corruption practices. This situation is necessarily a source of tension, or even a form of organizational schizophrenia; the company's discourse is at odds with the reality of its practices.
Over the past decade, however, several events have made the existence of a frontline anti-corruption organization more perilous. organization. These include, in chronological order:
In 2008, the Paris public prosecutor noted "the workings of a vast corruption".
in the Alstom trial for the acquisition of land in the Paris region in 1994. He asked the former CEO and CFO of the Group, then GEC-Alsthom, to be sentenced to prison and to pay high fines. Such an indictment was a warning to the company and, in fact, Alstom was relatively spared from the following legal episode.
In the case closed in Switzerland in November 2011, the Public Prosecutor of the Swiss Confederation concluded that there was no system or slush fund that could have been used to bribe public officials in order to illegally obtain contracts. In its reasoning, it mentions that the control processes of Alstom's commercial agents were judged to be at the highest international level, thus validating the Group's defense. However, the Public Prosecutor's Office noted that Alstom's organizational efforts had been insufficient at one point.
In a 2011 press release, the Alstom Group, for its part, stated that it "never organized, authorized or allowed any act of corruption or any breach of the rules and laws in force" from the beginning of the proceedings. Yet, the 2014 DoJ decision uncovered facts that profoundly contradict this communication and its favorable description of reality by Alstom.
Alstom vs. US DoJ
In its December 22, 2014 decisions fining Alstom and several of its subsidiaries $772 million (at the time the highest penalty ever imposed on a single company for bribery), the DoJ stated that Alstom had set up at the time of the events " a very extensive bribery scheme, that allowed for the payment of tens of millions of bribes in a number of countries around the world" , that " this scheme lasted for more than a decade" and that " it was astounding in its scope, audacity, sophistication, and global coverage, as well as in the fact that it lasted for years, touching every continent . The scheme included " falsifying accounting records and knowingly failing to implement an adequate system of financial and audit controls . In particular, the DoJ noted "theabsence of an effective ethics and compliance program at the time the bribery occurred .
These two decisions, Swiss and American, only three years apart, reveal :
The DoJ's decision reveals the failure of Alstom's of Alstom's compliance governance compliance governance system for the relevant period, including the internal audit and ethics and compliance departments ethics and compliance. As an example, " the audit department did not conduct any audits on consultant contracts during this period. this period "even though the investigation reveals that the use of consultants was consultants was widespread at Alstom during this period, forperiod, for very substantial amounts of compensation. substantial amounts. Under the guise of control, Alstom allowed control, Alstom allowed numerous corrupt actions to flourish, some of which have some of which have not yet been judged. This organizational duplicity and cynicism partly explain the the exceptional severity of the sanction sanction imposed by the DoJ on Alstom and its employees and its employees, the refusal to cooperate and its employees, with the refusal of the executives to cooperate an aggravating factor. In addition to the financial risk, the damage to the Group's image and the discrediting of its reputation, the image of the Group and the discrediting of its managers image of the Group and the discrediting of its managers, the risk for individuals is major. In this case the heads of compliance, the legal department and the In this case, it was the compliance, legal and sales managers who were the most exposed. Many of Alstom's managers are, or have been, indicted in several countries; some have gone to jail, are likely to go to jail Some have gone to prison, are at risk of going to prison or are still in prison. They have also incurred criminal fines and legal fees that They have also incurred criminal fines and legal fees (not covered by the company's insurance).not covered by the company's insurance or by the company itself), even though the company itself), even though their actions were their actions were committed within the framework of the in place within the company.
The AFA's recommendations made pursuant to the Sapin 2 Act are intended to help French companies, in a preventive manner, to set up an effective and efficient compliance organization, in particular to protect themselves against sanctions from anti-corruption authorities.
The AFA specifies all the levers and sets out in detail the contours and substance: commitment of the management body, anti-corruption code of conduct, internal alert system, risk mapping, procedures for evaluating third parties, accounting control procedures, training system for corruption risks, internal control and evaluation system.
This system will allow it to control ex ante the effectiveness of the internal structures of companies for the prevention of corruption.
Where the law so provides for a legal entity, an offence may be punishable by the obligation to submit, under the supervision of the AFA, for a maximum period of five years, to a compliance program designed to ensure the existence and implementation within the entity of the measures and procedures defined above. It's a curious offence to be condemned to protect oneself.
Let's hope that thanks to these guidelines, these prescriptions and this new offence, the AFA will be able to identify behaviours such as those that the DoJ took several years to identify and sanction at Alstom. The objective is to push companies to be more careful.
The human cost was very high. By comparison, in the Siemens case, the Chairman and the CFO were heavily convicted in Germany and the United States.
Alstom's managers can at least be proud of having made it possible, through their heavy negligence, to raise awareness that led to the vote of the Sapin 2 law and to progress in the fight against corruption in France... This is not nothing, and it is a lesson for other companies.
Author: Pierre Laporte
Executive Director of Compliance
