ABB to Pay U.S. $58 Million to Resolve Mexico, Iraq Corrupt Payment Claims
ABB Ltd., the world’s biggest electricity-networks builder, agreed to pay about $58.3 million to resolve claims by U.S. prosecutors and regulators that its units made corrupt payments to win business in Mexico and Iraq.
The U.S. Department of Justice and Securities and Exchange Commission accused Zurich-based ABB and three subsidiaries of conspiracy and violations of the Foreign Corrupt Practices Act, which bars companies from paying foreign officials to gain a business advantage. In separate settlements, the company agreed to pay criminal penalties of $19 million and SEC civil penalties of more than $39.3 million.
ABB and its co-conspirators made “concealed, corrupt payments” from 1997 to 2005 to officials at Comision Federal de Electricidad, an utility owned by Mexico, relating an electric network upgrade contract, prosecutors said in a court filing.
Another unit, ABB Ltd.-Jordan, paid more than $300,000 in kickbacks to the government of Iraq starting in 2000 for $5.9 million in purchase orders from regional companies of the Iraqi Electricity Commission as part of the United Nations oil- for-food program, prosecutors said in a separate filing.
“The primary purpose of the conspiracy was to obtain and retain lucrative business with the Iraqi government through the payment of kickbacks to the Iraqi government, which were concealed from the U.N. and portrayed as legitimate charges,” prosecutors claimed.
Laurence A. Urgenson, a lawyer representing Zurich-based ABB, didn’t immediately return a call seeking comment. Thomas Schmidt, a spokesman at the company’s Zurich headquarters couldn’t be reached after hours for comment. The company’s U.S. media relations office didn’t immediately reply to an e-mailed request for comment.
ABB Inc. pleaded guilty today to violating the FCPA before U.S. District Judge Lynn N. Hughes in Houston and admitted to the allegation it paid kickbacks in Iraq, the Justice Department said in a statement. The company also admitted that a Sugarland, Texas-based unit paid about $1.9 million in bribes to the Mexican utility company, gaining contracts worth more than $81 million. ABB Ltd. entered into a three-year deferred prosecution agreement, according to the statement.
“ABB Ltd. and ABB Inc. voluntarily disclosed the misconduct to the Department of Justice and have cooperated fully with the investigation,” according to the department’s statement.
The SEC also accused the company’s subsidiaries of bribing Mexican officials and of paying kickbacks in Iraq to win contracts with the oil-for-food program. ABB agreed to pay the fines and disgorgement to the SEC without admitting or denying the allegations, the agency said.
The UN set up the oil-for-food program in 1996, five years after coalition forces ousted Iraqi troops from Kuwait, enabling Saddam Hussein’s government sell oil to raise cash for humanitarian needs. The SEC has brought cases against more than 12 companies involved in the program, recovering in excess of $150 million, the agency said earlier this year.
The cases are U.S. v. ABB Inc., 10-664, and U.S. v. ABB Ltd.-Jordan, 10-cr-665, U.S. District Court, Southern District of Texas (Houston).
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