Bombardier executive faces bribery charge

Arrested in Sweden over Azerbaijan deal

Bombardier Inc. said it is co-operating with authorities and is committed to “high ethical standards” after police detained an employee of the Swedish office of its transportation division on bribery charges.

Prosecutors with Sweden’s anti-corruption unit announced Friday they had arrested Evgeny Pavlov, a 37-year-old Russian national, in connection with a 2013 railway procurement deal by a Bombardier-led consortium in Azerbaijan. The consortium won a US$288-million order to design, manufacture and install a doubletrack line on the Kars-Baku corridor connecting Asia and Europe.

Azerbaijan is a former member of the Soviet Union bordering Georgia, Armenia, Iran and Russia. It is one of the world’s lowest-ranking countries on Transparency International’s Corruption Perceptions Index at 123rd out of 176 nations.

In the statement, the Swedish prosecutors said they had spoken with other Bombardier employees and obtained email evidence following a raid on the company’s office in October. “Despite the fact that Bombardier was in fifth place in terms of price, they won the 2013 tender when competitors that had offered a better price were disqualified by the rail authority in Azerbaijan,” the prosecutors said.

Bombardier Transportation spokesman Claas Belling confirmed Swedish police had detained the employee and questioned others while cautioning that the allegations have not been proven. “As always, we are committed to operating in full compliance with all legal rules and requirements and our own high ethical standards,” the statement said.

Marc Tasse, a professor at the University of Ottawa’s Telfer School of Management and senior instructor with the Canadian Centre of Excellence for Anti-Corruption, said Bombardier will have to provide proof of that if it wants to avoid being investigated as well. He said many jurisdictions require companies to demonstrate they have well-documented compliance programs that the culpable employee subverted without the knowledge of management.

“This incident underlines how important it is for companies to have a robust compliance in place to help them mitigate their risk and exposure to bribery and corruption,” Tasse said. “This is something we’re going to see more and more often.”

Martin Aquilina, an international business attorney and chief operating officer of HazloLaw Business Lawyers, said companies doing business in countries with rampant corruption like Azerbaijan need to be ready to walk away from deals where officials expect bribes. In the age of smartphones, digital records and increased enforcement, companies are more likely to get caught than ever, he said.

“You really have to have a zero-tolerance stance for that sort of thing,” Aquilina said. “You really have to have that all-or-nothing approach.”

In phone interviews with media, Thomas Forsberg, prosecutor at the anti-corruption unit of the Swedish Prosecution Authority, said Pavlov was being held in custody because of the risk he might flee to Russia. According to his LinkedIn profile, Pavlov was head of sales, marketing and country coordinator, Region North at Bombardier Transportation Sweden.