Corrupt deals cost ABB millions

SFO investigating its activities

ASEA BROWN Boverti (ABB), a Swedish-Swiss multinational and multibillion-dollar corporation, headquartered in Zürich, Switzerland, has been sued for millions for alleged corrupt transactions over many years.

ABB was in the news recently when Eskom announced the termination of a R1 billion control and instrumentation (C&I) works contract placed with Alstom in 2011 for its 4 800MW Kusile power station, which was under construction near eMalahleni, Mpumalanga.

Eskom had to pay a cancellation fee of about R40million to Alstom to achieve a consensual termination agreement on a “co-operative walk-away basis”.

The cancellation delayed the Kusile project by about a year, various media sources revealed.

Interesting is that ABB and Siemens submitted tenders for the new C&I contract. ABB’s tender is believed to have been 25 percent higher than that of Siemens.

The ABB contract was valued at about $160m (R2.23 billion) according to various sources.

In February 2017 “Swiss engineering company ABB was under investigation by the Serious Fraud Office (SFO). Officials suspect the company’s UK operations of bribery and corruption, which the SFO said relates to their ongoing investigation into energy industry firm Unaoil.

“The SFO confirms that it has commenced an investigation into the activities of ABB’s United Kingdom subsidiaries, their officers, employees and agents for suspected offences of bribery and corruption.”

ABB, which already faces an investigation into suspected bribery and corruption in Britain, has been under shareholder pressure due to a shrinking order book, although Ulrich Spiesshofer, chief executive of ABB, won some breathing space when the firm reported the first up-tick in new business in nearly two years in the fourth quarter of 2016.

“Analysts at Zürcher Kantonalbank estimated the loss was equivalent to roughly 4 percent of ABB’s 2016 net profit of $1.96bn and raised questions about corporate governance at ABB.”

Further to this, research shows, as far back as September 30, 2010, that “Electrical technology giant ABB of Switzerland reached a settlement with the DOJ of criminal FCPA charges and will pay a fine $19m. And in resolving civil charges with the SEC, the company will disgorge $22.8m and pay a $16.5m civil penalty.

“ABB’s US subsidiary, ABB Incorporated, pleaded guilty to a criminal information charging it with one count of violating the anti-bribery provisions of the FCPA and one count of conspiracy to violate the FCPA. The court imposed a sentence that included a criminal fine of $17.1m.”