Swiss Corruption Case Shows That Corporate Criminal Law Is A Wolf In Sheep's Clothing

In a Swiss criminal investigation into bribery offences committed abroad, Alstom accepted heavy sanctions ordered by the federal prosecutor's office. Following the conviction of a Swiss financial institution for money-laundering, this is the second case in which Swiss corporate criminal law – until recently considered fairly harmless – has bared its teeth. These cases should spur companies into reviewing their compliance systems.

1. INTRODUCTION

   The initial charges raised against Alstom by the federal prosecutor's office were dramatic: it was alleged that the company ran a system of slush funds financing bribes to foreign public officials in order to win public procurement contracts. The company was cleared of this initial allegation after an extensive investigation. However, the federal prosecutor's office concluded that foreign public officials had been bribed on three accounts. On 22 November 2011, a summary punishment order was issued against Alstom's Swiss subsidiary that was in charge of certain compliance procedures for the French group. The subsidiary was held liable for not having taken all necessary and reasonable organizational measures to prevent the payment of bribes to foreign public officials.

   Following a recent conviction of a Swiss financial institution for money-laundering, the order rendered against Alstom by the federal prosecutor's office is the second case within a year in which the provision of the Swiss Criminal Code (SCC) which allows for criminal sanctions against corporate entities (Article 102 SCC) has bared its teeth. In April 2011, the District Court of Solothurn-Lebern had handed down a sentence for money-laundering (currently under appeal), finding that the company in question had failed to take the necessary precautionary measures in connection with a cash payment of CHF 4.6 million. The Court held that the company's organization was deficient, as there were no appropriate internal regulations in place. Since its introduction in 2003, corporate criminal law has been considered somewhat of a harmless figure in the background. Based on recent developments, however, that figure may turn out to be a fully-grown wolf.

2. THE "ALSTOM CASE "

   Alstom is a group based in France with a global presence. Its core business lies in the construction and maintenance of large-scale infrastructural developments involving power plants, rail transport, and energy transfer. Accordingly, a majority of its customers are states or companies providing public services.

   The group appointed consultants to secure such projects and, to some extent, provide support during the projects' implementation and completion. The usual arrangement with these consultants was for a contingency fee to be paid in installments when certain predefined milestones were reached. The criminal investigation revealed that on three occasions, consultancy fees were indirectly paid to executives of the...