Corruption Crime & Compliance Deep Dive into the ABB FCPA Case
ABB is a three-time loser in foreign bribery enforcement, but still agreed to pay $315 million to settle FCPA charges. The company also resolved SEC charges for $75 million.
ABB's criminal history includes bid rigging and bribery violations in multiple countries. However, the DOJ cited ABB's extraordinary cooperation and extensive remediation when they announced the settlement. Michael Volkov explores ABB’s history of FCPA violations, leading up to their most recent, in this week’s show.
- ABB paid a settlement of $315,000,000 for its extensive criminal history record, including multiple violations of the Foreign Corrupt Practices Act and a prior conviction for price fixing. The settlement raised questions about the effectiveness of the Justice Department's new FCPA enforcement program, which is designed to prevent benefits for recidivists.
- The case involved two ABB subsidiaries in South Africa and Switzerland, and the parent company agreed to a three-year deferred prosecution agreement. The company also resolved SEC charges for $75 million and faced foreign prosecutions in South Africa, Switzerland, and Germany.
- ABB was also involved in a bribery scheme between 2014 and 2017 to obtain confidential information and win lucrative contracts with South Korea's state-owned energy company, ESCOM Holdings. They engaged multiple subcontractors who were linked to a high-ranking ESCOM official and made payments to these subcontractors despite their poor qualifications and lack of experience. In exchange for these bribery payments, ABB secured improper confidential information needed for the bidding process and securing the valuable contracts.
- ABB established a relationship with an additional subcontractor. This subcontractor failed various portions of the ABB due diligence process, including its financial stability and qualifications. ABB required a specific waiver of due diligence requirements to be approved, which they did. On its face, the approval of a waiver creates significant red flags.
- ABB took important first steps on learning about the potential violation by immediately scheduling a meeting with the DOJ and committing to change. However, the settlement papers did not give any detail as to what made ABB's cooperation extraordinary.
KEY QUOTE
“For companies that have to decide whether to disclose and may hesitate because of their criminal histories, the answer now is fairly clear that it is a better idea in many cases to voluntarily disclose, remediate and cooperate.” - Michael Volkov
Resources
ABB Settles SEC Charges That It Engaged in Bribery Scheme in South Africa
Email Michael: mvolkov@volkovlaw.com