Analysis
14 July 2019

3-liners on active matters

Bastille Day Newsletter 2019 - Enforcement / Court Decisions

 

Alstom now under investigation in France, piling up ahead? Alstom has already been convicted in Switzerland, and the UK due to failure to prevent bribery by company executives. The company is now under scrutiny in France and Alstom’s counsel in the UK confirmed that the French National Financial Prosecutor’s Office investigations without information as to scope. Alstom Network UK has chosen to appeal the 2018 Southwark Crown Court conviction on the grounds that no “directing minds” were identified during the case.

SNCF raided in an investigation on public tenders with IBM. French police have raided SNCF’s headquarters and other sites of the group on June 4, 2019, as part of a preliminary investigation lead by the French National Financial Prosecutor’s Office. The investigation aims to establish whether Stelia, a group subsidiary, fostered contracts passed with the US IT group between 2009 and 20111.

Confederation of African Football’s president, Ahmad Ahmad, suspected of bribery. Arrested in Paris on June 4, 2019 to be questioned over corruption allegations, Ahmad Ahmad was finally released by French authorities. In April 2019, former general secretary Amr Fahmy accused Ahmad Ahmad of bribery and misuse of the organization’s funds. While Ahmad Ahmad denied any wrongdoing, Amr Fahmy was fired by the African football organization. FIFA was unable to contribute on any detail about the investigation2.

Athletics: The International federation on trial yet again. Lamine Diack, former head of the International Association of Athletics Federations (IAAF), will be facing charges of bribery and money laundering in Paris. Lamine Diack and his son, who is currently in Senegal and subject to an international warrant, allegedly received bribes from Russia’s athletic authority to cover up failed drug tests3. This trial will follow a four-year investigation into doping cover-ups, extortion and bribe taking in the world of athletics.

PSG’s president, Nasser al-Khelaifi faces indictment. The world of sport is undoubtedly under the authorities’ sight. A few days after the Lamine Diak trial was announced, Nasser al-Khelaifi, the president of the Paris Saint-Germain football club was put under formal investigation. Interrogated by the French National Financial Prosecutor’s Office, he denied any wrongdoing regarding a 3,5 million dollars deal with Lamine Diak concerning Doha’s campaign to host the 2017 Athletics Championships.

Carlos Ghosn’s arrest may have an impact on Corporate Governance. Since November 19, 2018, Carlos Ghosn has been subject to four indictments for financial malpractices in Japan for incorrect reporting of compensation, leveraging a company investment fund to offset personal investment losses or to satisfy personal expenses as well as inappropriately filing expense reports4. In France, investigations are open into the former CEO’s wedding at Versailles allegedly financed thanks to a sponsorship agreement entered into by Renault5.
As Mr. Ghosn insists that his compensation and expenditures had been approved by Nissan, the issue of the board’s responsibility arises. The Japanese authorities have called for a renewal in Nissan’s corporate governance, board structure and overall culture, requesting more independence. For some legal commentators, this scandal might have consequences on corporate governance, likewise those following the Enron case6.

Airbus subsidiary GPT shuts down bribery investigations. Following whistleblower accusations in 2012, the SFO investigated the aerospace company for illicit payments and gifts. The amounts at stake reach at least £14m and the attribution of a £2bn military contract with the Saudi National Guard. In an annual report published in June 2019, GPT Special Project Management announced that it would go out of business at the end of the year after the loss of its only contract with the UK Ministry of Defense7. While individuals will remain subject to prosecution, it will no longer be possible to prosecute the company after that date.

Danske bank formally indicted in France. Danske bank, which faces major money laundering allegations stemming out of its Estonian subsidiary, has been placed under formal investigation by the French authorities in February 20198. The largest Danish Bank is already under investigation in several other countries regarding €200 billion worth of suspicious payments to Russian and ex-USSR customers in the years 2007-2015. The European Commission announced that “[i]t is the biggest scandal in Europe to date”, calling for increased vigilance in supervising bank activities9. According to an official announcement released by the institution, Dansk bank was ordered to post a €10.8m bail10.

Russian senator Kerimov placed under formal investigation by French authorities for the second time. On March 20, 2019, Suleyman Kerimov, a Russian senator whose family own Russia’s largest gold company, was placed under formal investigation by the Nice prosecutor for complicity in aggravated tax fraud. He is suspected of having acquired properties for underreported amounts on the French riviera11. Following the indictment, the oligarch was placed under judicial supervision and required to post €20 million in bail12. Kerimov faced similar charges last year but was acquitted in June 2018.

Four of France’s largest electrical companies raided by French police on a corruption and cartel pricing probe. Several raids were conducted by French police on Legrand, Rexel, Sonepar and Schneider Electric – as part of an investigation into cartel pricing, bribery, forgery, breach of trust and misuse of corporate assets, opened in June 201813. According to Reuters, the investigation targeting the groups was opened by the French National Financial Prosecutor’s Office in Paris pursuant to receiving reports from the French Anticorruption Authority (AFA) 14. When the AFA is knocking at your door worst can happen.

TechnipFMC Plc agreed to pay $296 Million to resolve foreign bribery charges. While TechnipFMC had announced in February 2019 a $280 Million provision for a trilateral settlement, the agreements signed by Technip on June 25, 2019 were only with DOJ and Brazilian authorities regarding bribery schemes in Brazil and in Iraq.
TechnipFMC has announced being still cooperating with the PNF relating to projects in Equatorial Guinea and Ghana. While this investigation has not yet reached resolution, TechnipFMC maintains a $70 Million provision.

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