policy frameworks

Following years of investigation into alleged bribery and fraud, the African Development Bank (AfDB) and GE Power have reached a settlement on legacy Alstom misconduct.

The AfDB imposed debarments of 76 months and 12 months on former Alstom companies after it was found to have engaged in bribery and fraud in 2006 and 2011 in relation to two bank-financed Egyptian power generation projects. GE Power acquired the companies in 2015.

Last week, the bank announced a conclusion of a settlement agreement with GE Power, thus resolving sanctionable practices committed by former Alstom companies.

“Corrupt practices in the power generation sector directly undermine the African Development Bank’s operational priority to light up and power Africa. This can never be accepted by the Bank”, said Bubacarr Sankareh, manager of the investigations division within the Office of Integrity and Anti-Corruption.

Sankareh added: “We are very pleased that GE Power is joining us today in our efforts to fight corruption and to ensure the delivery of value for money to the bank’s regional member countries.” 

Corrupt practices

An investigation conducted by the bank’s office of Integrity and Anti-Corruption established that in 2006 and 2011 the companies, then named Alstom Power Generation AG, Alstom Power GmbH, and Alstom Egypt for Power & Transport Projects, engaged in two instances of corrupt practices and in one instance of a fraudulent practice in the context of the bank-financed Suez Thermal Power Plant Project and the El Kureimat III Power Project, both in Egypt.

GE Power assumed control over these three companies in 2015, after the misconduct had occurred, when it acquired Alstom’s thermal power generation business. Read more: Egypt is set to construct El Dabaa nuclear power plant

As part of the settlement, the bank imposes on former Alstom Egypt for Power & Transport Projects S.A.E. (now known as Alstom Egypt for Power Projects S.A.E.), based in Cairo, Egypt, and on former Alstom Power Generation AG (now known as GE Power Systems GmbH), headquartered in Mannheim, Germany, a debarment of 76 months.

Debarment period

The debarment period may be reduced to 48 months if the companies comply with all conditions of the agreement early.

This debarment may be enforced by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.

Further, pursuant to the settlement, former Alstom Power GmbH (now known as GE Power GmbH), equally based in Mannheim, Germany, is debarred for a period of 12 months.

Among other conditions for release from debarment, GE Power commits to collaborate with the Office of Integrity and Anti-Corruption in the fight against corruption in the power generation and transmission sector.

Tender processing

In 2006, Alstom Egypt for Power & Transport Projects S.A.E. and Alstom Power Generation AG participated in a tender for steam turbine generators in the context of the Bank-financed El Kureimat III Power Project.

The companies indirectly paid an amount of €963,477 to their local agent.

The Office of Integrity and Anti-Corruption has concluded that one purpose of the payment was to ensure the support of public officials involved in the procurement process in order to gain an unfair competitive advantage in the tender.

Further, the Office of Integrity and Anti-Corruption established that the companies had erroneously only declared €50,000 in fees paid to its local agent.

In 2011, Alstom Egypt for Power & Transport Projects S.A.E., Alstom Power GmbH and Alstom Power Generation AG, by then renamed Alstom Power Systems GmbH, participated in a tender for a steam turbine generator and condensers for the Bank-financed Suez Thermal Power Plant.

In the context of this tender, the companies indirectly offered €1.7 million to their local agent.

The Office of Integrity and Anti-Corruption has concluded that one objective of the offer was to ensure that public officials would assert undue influence on the procurement process in favour of the companies’ bid. 

In reaching this settlement, the African Development Bank 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 programme, which now applies to the Alstom entities acquired by GE Power.