The final catch-up post from recent FCPA enforcement activity – this one concerning the recently unsealed enforcement actions against David Rothschild and Frederic Pierucci.

First, what to make of this month’s enforcement activity?  Quite frankly, not much as I told Samuel Rubenfeld (Wall Street Journal) last week in this article.  Much of this “new” enforcement activity is really not ”new.”  For instance, the BizJet individual enforcement actions were filed in 2011 and in 2012, but recently unsealed.  Parker Drilling disclosed last year its settlement and the amount, it just took a while for resolution documents to be finalized.  It was publicly reported last year that former Siemens executive Uriel Sharef was going to settle the SEC enforcement action, it just took a while for the resolution documents to be finalized.  And finally, the charges against Rothschild and Pierucci discussed below were filed last year, but recently unsealed.

This post summarizes the Rothschild information (dated November 2, 2012) and plea agreement (dated November 2, 2012) and then the Pierucci indictment (dated November 27, 2012).

Pierucci, a French national, has been identified as a current executive of Alstom and he was arrested on April 14th at JFK airport in New York City.  Rothschild is a former vice president of sales for Alstom Power Inc., a Connecticut-based subsidiary of Alstom.

According to this report, Alstom said in a statement that it “has been working  constructively with the Justice Department for the last two years to address allegations of past misconduct.” It went on to say that Pierucci, its current executive, is entitled to the presumption of innocence.  “We urge everyone to respect the judicial process, which will provide a full  and fair opportunity for the facts to be adjudicated,” the statement read.

Rothschild Information

The conduct at issue concerned the Tarahan coal-fired steam power plant project in Indonesia.  According to the charging documents Perusahaan Listrik Negara (“PLN”) “the state-owned and state-controlled electricity company in Indonesia and an ‘agency’ and ‘instrumentality’ of a foreign government [...] was responsible for sourcing the Tarahan Project.

The officials allegedly involved were.

“Official 1  … a member of Parliament in Indonesia [who] had influence over the award of contracts by PLN, including on the Tarahan Project”

“Official 2 … a high-ranking official at PLN [who] had broad decision-making authority and influence over the award of contracts by PLN, including on the Tarahan Project”

“Official 3 … an official at PLN [who] was a high-ranking member of the evaluation committee for the Tarahan Project.  Official 3 had broad decision-making authority and influence over the award of the Tarahan contract.”

The information charges one count of conspiracy and alleges that Rothschild and others, between 2002 through 2009, conspired to make “corrupt payments to a member of Parliament in Indonesia, officials at PLN, and others in order to obtain and retain business related to the Tarahan Project on behalf of the following entities and in violation of the FCPA’s anti-bribery provisions.

Alstom

Alstom Power Inc.

Power Company Switzerland – an indirect subsidiary of Alstom.

Power Company Indonesia – an indirect subsidiary of Alstom.

Consortium Partner – “a trading company … headquartered in Japan, incorporated in Japan, an in the business of providing power generation related services around the world.”  According to the information, this entity “acted as the partner” of the above Alstom entities “in the bidding and carrying out of the Tarahan Project in Indonesia.”  Consortium Partner would sure seem to be Marubeni Corp. of Japan.  (See here for its 2004 press release concerning the Tarahan Project).  This will be interesting to follow as Marubeni in 2012 resolved an FCPA enforcement action concerning conduct at Bonny Island, Nigeria (see here for the prior post) and is currently under a two year DPA.

Specifically the information alleges various telephone and e-mail communications between Rothschild and others concerning the alleged bribe payments and efforts to “conceal the payments to foreign officials by entering into consulting agreements with Consultant A (described as a “consultant who purportedly provided consulting related services [for the above companies] in connection with the Tarahan Project in Indonesia”) and Consultant B (same description) in order to disguise the bribe payment to the foreign officials.”

All of the alleged overt acts in the information allegedly occurred between 2002 and 2004, although the information does allege the following wire transfers:

In 2005 “200,064 from [Alstom Power Inc.'s] bank account to the bank account of Consultant A in Maryland”

In 2006 “200,064 from [Alstom Power Inc.'s] bank account to the bank account of Consultant A in Maryland”

In 2007 “200,064 from [Alstom Power Inc.'s] bank account to the bank account of Consultant A in Maryland”

In 2009, “66,688″ from [Alstom Power Inc.'s] bank account to the bank account of Consultant A in Maryland”

Other individuals generically identifed in the information include the following.

“Executive A – Senior Vice President for the Asia Region at [Alstom].  Executive A’s responsibilities at [Alstom] included oversight of [Alstom's] and [Alstom's] subsidiaries’ efforts to obtain contracts with new customers and to retain contracts with existing customers in Asia, including the Tarahan Project in Indonesia.”

“Executive B – who held executive level positions at [Alstom Power Inc.] and [Alstom], including Vice President of Global Sales [this is Pierucci].  Executive B’s responsibilities at [Alstom Power Inc.] included oversight of [Alstom Power Inc.] efforts to obtain contracts with new customers and to retain contracts with existing customers around the world, including the Tarahan Project in Indonesia.”

“Employee A - Vice President of Regional Sale at [Alstom Power Inc.]  Employee’s A’s responsibilities at [Alstom Power Inc.] included obtaining contracts with new customers retaining contracts with existing customers in various countries, including the Tarahan Project in Indonesia.”

“Employee B – the General Manager of Power Company Indonesia.  Employee B’s responsibilities at Power Company Indonesia including obtaining contracts with new customers and retaining contracts with existing customers in Indonesia, including the Tarahan Project in Indonesia.”

“Employee C – Director of Sales at Power Company Indonesia. Employee C’s responsibilities at Power Company Indonesia including obtaining contracts with new customers and retaining contracts with existing customers in Indonesia, including the Tarahan Project in Indonesia.”

In the plea agreement, Rothschild pleaded guilty to the one count information charging him with conspiracy to violate the FCPA.  According to the plea agreement, the offense carries a maximum penalty of 5 years imprisonment and a $250,000 fine.  Other than setting forth the DOJ’s recommendation that the court reduce by two levels Rothschild’s offense level “based on the defendant’s prompt recognition and affirmative acceptance of person responsibility,” the plea agreement does not set forth any further specifics concerning sentencing.

Pierucci Indictment

The indictment is based on the same core set of facts alleged above in the Rothschild information.  Because it is an indictment, and not an information, the Pierucci indictment is more detailed and indeed contains additional charges beyond the one count of conspiracy to violate the FCPA.  In addition, Pierucci is charged with four substantive counts of FCPA anti-bribery violations, money laundering conspiracy and four substantive counts of money laundering.

In the indictment, the DOJ alleges that “Pierucci was one of the people responsible for approving the selection of, and authorizing payments to, Consultants A and B, knowing that a portion of the payments to Consultants A and B was intended for Indonesian officials in exchange for their influence and assistance in awarding the Tarahan Project contract to [Alstom] and its subsidiaries.”

The indictment further alleges that Pierucci and others “came to the conclusion that Consultant A was not effectively bribing key Indonesian officials” and accordingly in 2003 Pierucci and others concluded “that Consultant A would be responsible only for paying bribes to Official 1, a member of the Indonesian Parliament” and that Alstom and its subsidiaries would retain another consultant to pay bribes to PLN officials.”

In this release, Acting Assistant Attorney General Mythili Raman stated as follows.

“Frederic Pierucci and David Rothschild allegedly used outside consultants to bribe foreign officials in Indonesia in exchange for lucrative power contracts.  Stamping out foreign bribery is a Justice Department priority, and we are determined to continue our vigorous enforcement of the Foreign Corrupt Practices Act.”