Alstom: The Consultant’s Job Was to Pay the Officials

The Alstom FCPA case involved consultant commissions funding bribes for a $118 million Indonesian power contract, as the criminal court opinion describes. In its corporate guilty plea under the Foreign Corrupt Practices Act, Alstom admitted offenses involving false books and records and failed internal controls. For someone inside a project or finance team, the telling details are the changes to the commission, the payment schedule and the paperwork describing what the consultant did.

Alstom was a French power and transportation business, with a power subsidiary in Connecticut. The parent company entered its guilty plea on December 22, 2014, and its admitted facts described payments in Indonesia, Saudi Arabia and Egypt. Across those examples, ordinary commercial categories concealed the connection between company money and an official’s decision.

How Consultant Commissions Became Project Money

Alstom consultant commissions funded bribes intended to secure the Tarahan power project in Indonesia, according to the court’s account of the criminal case. The Second Circuit described a contract to build a coal-fired power plant. Indonesia’s state-owned electricity company, Perusahaan Listrik Negara, conducted the bidding, and Alstom Power led a consortium that included Marubeni and Alstom’s Indonesian subsidiary.

The commercial objective was specific: get the electricity company to award that consortium the contract. The court’s account described consultants chosen for their connections to officials, including a member of Indonesia’s Parliament. A regional sales manager objected that one proposed consultant was so close to the parliamentarian that the bribery would be too obvious. Too obvious. That was the objection. The company instead hired a Maryland-based consultant and his business, Pacific Resources.

That choice concealed a problem inside the payment arrangement. According to the court’s account, an Alstom manager in Indonesia doubted that the Maryland consultant had the connections needed with the electricity company’s project team. The consultant had access to one official, while the tender depended on others. The later dispute was about whether the people who could influence the award were getting paid.

A Commission Split Matched Different Official Contacts

The corporate plea’s admitted facts describe the first consultant’s commission falling from 3% to 1% when part of the assignment moved to another consultant. The court’s account supplies the other side of that split: the new consultant’s commission was 2%. It describes dissatisfaction among electricity-company officials and a meeting in Jakarta to change the arrangement.

The percentages show how the commission was being used. The fee followed the consultant’s access to particular officials, and the replacement arrangement redirected money toward the electricity company’s decision-makers. We see a sales commission doing the work of a bribe budget.

For a finance employee, the change would appear in revised consulting agreements and payment approvals. For the sales team, it would appear in discussions about which consultant could reach which official. The court described both kinds of records, including instructions to issue revised agreements and communications identifying who made the decision to switch consultants.

Earlier Payment Solved the Consultant’s Bribe Problem

The second consultant wanted money sooner because he was concerned about paying bribes upfront while waiting for his own compensation. The court’s criminal-case account describes a proposal for a better payment schedule, followed by a request for approval before the new terms went to the consultants. Alstom Power ultimately paid the consultants, who bribed the Indonesian officials.

The Justice Department’s announcement of a regional sales executive’s guilty plea adds the payment detail. Its account of the court filings says the arrangement departed from Alstom’s usual practice of paying consultants proportionately, creating a much larger upfront payment for the second consultant. The promised consulting service was the cover for getting money to the people influencing the award.

That makes the payment schedule part of the evidence, alongside the amount and recipient. An employee who knows why a commission was accelerated can explain a decision that an invoice may conceal. In this case, the conversation about payment timing connected the commercial contract directly to the consultant’s need to fund bribes.

The Saudi Foundation Payment Was a Project Expense

Alstom’s guilty plea also described $2.2 million paid in three installments to a U.S.-based foundation associated with a Saudi decision-maker. The company recorded the transfer as a project expense. The foundation’s association with the decision-maker and the project’s place in the accounting are the important connections.

This is why charitable payments tied to business decisions belong in the same inquiry as consultant fees. The recipient can be an institution while the commercial purpose concerns an official’s influence. Here, the admitted facts connect the foundation payment to a project expense, giving a project accountant something concrete to recognize.

An insider may know who proposed the contribution, which project carried the expense and what the recipient meant to the customer relationship. We connect that knowledge to the payment approvals and the business decision. The useful question is what the company expected the transfer to accomplish, beyond the label assigned to it in the ledger.

Egyptian Hospitality Beside Unresolved Business

In the admitted facts accompanying its guilty plea, Alstom described hospitality for Egyptian electricity officials linked by correspondence to unresolved commercial matters. The account included official travel, with hospitality in New York. The pending business gives the spending its meaning: the correspondence connects the benefit to decisions the company still wanted.

An itinerary shows where someone went, while an expense entry shows what the company paid for. The emails around a trip can explain why that official was invited at that point in the project. In Alstom’s admitted account, the connection between hospitality and unresolved business was part of the correspondence itself.

For someone arranging official travel and hospitality, that is a familiar set of records: the guest, the itinerary, the approval and the customer business discussed around the visit. Our focus is how those records fit together. The person who knows the pending decision can explain why an apparently ordinary travel expense mattered to the project team.

The Agency Acquittal Concerned a Different Defendant

The FCPA agency acquittal concerned an executive who worked for a different Alstom subsidiary and supported the Tarahan project from abroad. The court found the government had not proved that Alstom Power controlled him as its agent.

The court’s explanation turned on control. The executive helped identify consultants and revise agreements, but the U.S. subsidiary did not hire him, could not fire him and had no say in his compensation. The court also found no evidence that he could enter agreements on the subsidiary’s behalf.

For an insider, who approved a payment and which company they acted for can be crucial. A person may relay instructions, approve a contract or make the decision that starts the payment. The court examined those roles separately, and we do the same when working through what an employee saw.

What the Paperwork Leaves Out

The Alstom payment trail connects consultant agreements, commission changes, payment timing, foundation expenses and hospitality to particular business decisions. A signature or a completed form captures only part of that story. The employee who knows why a term changed or what a consultant actually did can explain the difference between the document and the transaction.

A parallel appears in Anheuser-Busch InBev’s Indian intermediary case. In its settled administrative order, the SEC alleged that personnel backdated due-diligence forms and changed a promoter’s answers. The order describes the alteration directly:

On that alleged account, the paperwork had been made to pass review after the business relationship had begun. Someone who saw the answers change would know something the finished form concealed. That is the value of comparing a consultant’s actual work and history with the file assembled to justify paying them.

Whistleblower laws can deter accounting fraud, according to the March 2019 working paper Do Corporate Whistleblower Laws Deter Accounting Fraud?, available through MIT Sloan. It studied companies held by state pension funds as states adopted False Claims Acts. It estimated a 5% to 9% reduction in the likelihood of accounting fraud after companies became exposed to those whistleblower laws.

In this case, the evidence connecting the decision, payment and record spans different jobs. Sales staff may know the official relationships and the pressure to change a consultant. Finance staff may know the commission revision and the unusual payment timing. Project staff may know which commercial matters remained open when hospitality was approved. We work with the person who can explain the part they saw and connect it to the rest of the transaction.

Can an FCPA Whistleblower Get a Reward?

Yes. The SEC’s award program is one of the FCPA whistleblower programs that can pay for information about foreign bribery. We assess how your information about the payments fits those programs and bring in foreign-bribery whistleblower lawyers for that work.

For a separate claim involving fraud against the government, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Which route fits is the kind of question we work through with you.

You Know Why the Payment Changed

If you saw a consultant’s fee change with an official’s demands, or a project expense approved for a different purpose than the books describe, speak with our whistleblower experts about your case. We build your strongest case around that inside knowledge, find foreign-bribery whistleblower lawyers who understand cross-border payment schemes, and stay beside you through the case.