On September 29, 2010, ABB Ltd, a Swiss corporation, announced it had entered into a settlement with both the SEC and DOJ relating to violations of the Foreign Corrupt Practices Act (“FCPA”). According to the SEC Release and Complaint, one of ABB Inc.’s (U.S. subsidiary of ABB Ltd) business units based in Texas, ABB NM, allegedly made payments to employees at the Mexican state-owned electric utilities, Comisión Federal de Electridad (CFE) and Luz y Fuerza del Centro. The bribes were allegedly made through various intermediaries, including a Mexican company. ABB allegedly failed to conduct due diligence on the payments to these entities and improperly recorded the payments on its books and records. Examples of improper payments include cash bribes, wire transfers to relatives of officials, and payment for a Mediterranean cruise vacation for officials and their wives. As a result of the scheme, ABB won contracts that generated over $90 million in revenues and $13 million in profits.
Other ABB subsidiaries paid kickbacks to the former regime in Iraq to obtain contracts under the U.N. oil for food program. ABB participated in the oil-for-food program through six subsidiaries: ABB Near East Trading Ltd. of Jordan, ABB Automation, ABB Industrie AC Machines, and ABB Solyvent-Ventec, all from France, ABB AG from Austria, and ABB Elektrik Sanayi AS from Turkey. According to the SEC, “ABB’s Jordanian subsidiary acted as a conduit for other ABB subsidiaries by making the kickback payments on their behalf. . . . ABB improperly recorded the kickbacks on its books as legitimate payments for after sales services, consultation costs, and commissions.” The bribes allegedly generated contracts with $13.5 million in revenues and $3.8 million in profits.
ABB Ltd’s U.S. subsidiary, ABB Inc., pleaded guilty to a criminal information charging it with one count of violating the anti-bribery provisions of the FCPA and one count of conspiracy to violate the FCPA. The court imposed a criminal fine of $17.1 million. ABB Ltd entered into a deferred prosecution agreement and agreed to the filing of a criminal information charging its Jordanian subsidiary, ABB Ltd of Jordan, with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA. ABB Ltd agreed to pay a criminal penalty of $1.9 million.
The SEC filed a settled action against ABB Ltd, charging the company with violating the FCPA’s anti-bribery, books and records and internal controls provisions. Without admitting or denying the allegations, ABB Ltd consented to the entry of final judgment permanently enjoining the company from future violations of the FCPA. ABB Ltd was ordered to pay $22,804,262 in disgorgement and prejudgment interest and a $16,510,000 civil penalty. The company is also required to comply with certain undertakings regarding its FCPA compliance program.