ADB debars GE Power units tied to Alstom offenses
Monday, March 25, 2019 at 8:08AM
Harry Cassin in African Development Bank, Alstom, Asem Elgawhary, Egypt

The African Development Bank said Thursday it debarred several former Alstom companies now owned by GE Power for up to 76 months because of fraud and bribery committed on two bank-financed projects in Egypt.

The bank said the offenses occurred in 2006 and 2011.

GE Power acquired the former Alstom companies in 2015.

The bank said three former Alstom companies "engaged in two instances of corrupt practices and in one instance of a fraudulent practice" in connection with two bank-financed power projects in Egypt.

The bank imposed a 76-month debarment on two of the former Alstom units. Those units are now known as Alstom Egypt for Power Projects S.A.E. based in Cairo and GE Power Systems GmbH headquartered in Mannheim, Germany.

And it debarred GE Power GmbH (formerly Alstom Power GmbH), also based in Mannheim, for 12 months.

The bank said GE Power entered into a voluntary settlement of the legacy offenses.

The 76-month debarment can be reduced to 48 months based on the companies' compliance with the settlement terms, the bank said.

Among other things, GE Power promised to collaborate with the African Development Bank's Office of Integrity and Anti-Corruption "in the fight against corruption in the power generation and transmission sector."

In 2015, an ex-Bechtel Corporation vice president was sentenced to 42 months in prison in the United States for taking $5.2 million in kickbacks to rig bids for state-run power contracts in Egypt.

Asem Elgawhary, 73, of Potomac, Maryland pleaded guilty to mail fraud, conspiracy to commit money laundering, obstruction, and interference with the administration of the tax laws. 

The judge also ordered Elgawhary -- a dual U.S. and Egyptian citizen -- to forfeit $5.2 million.

From 1996 to 2011, Bechtel assigned Elgawhary to be the general manager at a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company. Elgawhary took a total of $5.2 million from three power companies to rig bids for the project contracts.

One of the power companies that bribed Elgawhary was Paris-based Alstom S.A.

Bechtel wasn't charged in the case.

In December 2014, Alstom paid $772 million in criminal penalties to resolve FCPA offenses, including bribing Elgawhary.

The African Development Bank's statement Thursday said in 2006 Alstom companies tendering for a bank-financed project paid their agent in Egypt about $1.1 million.

The African Development Bank said it took into account "General Electric’s substantial cooperation with the investigation of the legacy cases as well as the high quality of the company’s comprehensive compliance program, which now applies to the Alstom entities acquired by GE Power."

Thursday's 76-month debarment qualifies for cross debarment by other multilateral development banks under their mutual enforcement agreements. The other multilateral development banks include the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the World Bank Group.

A list of all entities and people debarred or otherwise sanctioned by the African Development Bank is here.

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Harry Cassin is the publisher and editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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