French President Nicolas Sarkozy almost single-handedly saved Alstom from bankruptcy. Pictured here is the company's new high-speed AGV train, the planned successor to the TGV.Foto: AFP
The fax was sent in 1998, a time now long past. The corruption scandal that would consume German electronics and engineering giant Siemens was still in the distant future, and public trust in the big names of European industry was still intact.
The fax, from a bank in Liechtenstein, was sent to Oehri Treuhand, a Liechtenstein foundation, and Gerry Oehri, the head of the foundation. The bank wanted Oehri to explain a few things about one of his discreet companies.
The company, Crofthill Consulting, which Oehri managed, had an account with the bank, but its headquarters -- or, to be exact, its mailbox -- on the British Virgin Islands. And when a bank like this suddenly receives an incoming wire transfer for $4 million (€2.6 million), source unknown, it often becomes suspicious that money laundering is at play.
But no, Oehri responded pleasantly, Crofthill earned its money the hard way, as a consultant to a power plant in Indonesia. "Mr. Oehri," the bank noted, "assures us that this deal is legitimate, because it involves one of the largest companies in France."
The reference to the size of an industrial enterprise was still considered a calming factor in those days. Today though, in the wake of the Siemens scandal, it seems absurd. In fact, as is now known, the company mentioned in the fax was Alstom, and the French were apparently involved in deals very similar to activities at German competitor Siemens.
Siemens also apparently secured contracts with bogus agreements, letterbox companies and, especially, with large bribes. Using alleged consulting companies like Crofthill, Siemens apparently "removed millions from the company accounts and transferred them to so-called black funds," slush funds to be used as bribes to gain the support of decision-makers the world over. This, at least, is the conclusion Swiss investigators reach in a report on their investigation.
But while Siemens is being harassed by the US Securities and Exchange Commission, and the Munich-based company has been forced to shell out giant sums to conduct its own investigation and has fluctuated back and forth between self-doubt and self-destruction, the French are only too happy to quietly set aside their scandal.
A central figure in the Alstom file is Swiss banker Oscar Holenweger. He is believed to have distributed many millions to Alstom, with which the company, a maker of high-speed trains, subways and power plant turbines, secured contracts in Latin America and Southeast Asia.
But in Switzerland Holenweger first became known to authorities because investigators suspected that the businessman had something completely different up his sleeve: laundering money for a Columbian drug cartel.
In their zeal to pursue Holenweger, the Swiss even borrowed an undercover investigator from the state office of criminal investigation in the German state of Baden-Württemberg as a lure. But by the end of the operation, Valentin Roschacher, the Swiss Prosecutor General, had been dismissed, partly because the search for Columbian drug money yielded no results -- or, at least, almost no results.
When auditors from the accounting and consulting firm KPMG, hired by the Swiss Federal Banking Commission, visited Holenweger's secretary in January 2004 (she was on maternity leave at the time), the woman handed over 10 file folders Holenweger had given her for safekeeping: five black, two blue, one green, one red and one white folder. The colorful collection suddenly painted Holenweger in a new light: not as a banker to drug lords, but apparently as Alstom's middleman for deals that could only be obtained with bribes.
According to a document prepared by the Swiss investigators, "the Swiss investigative authorities strongly suspect that senior officials at the Alstom Group systematically embezzled money for years and horded it in so-called 'black funds'," and that it did so "with the help of the suspect, Holenweger." The investigators distinguish between two phases. One is the period from 1995 to 2000, when French companies could not be held criminally liable at home for paying bribes abroad, and when all they had to do was avoid being caught in those countries. The other is the ensuing period, which Swiss investigators believe continued until at least 2003, when Alstom was forced to conceal its questionable dealings more effectively, because French law had become more restrictive.
Holenweger was Alstom's man in both periods. On Oct. 22, 1998, for example, he met with Patrick M., an executive, at Alstom's Paris headquarters. Two months later, Holenweger sent M. a draft of a consultancy contract with a company called Compania de Asesores de Energia, supposedly founded in Panama by one of Holenweger's partners.
The company's role was allegedly to provide information that would help in the bidding process for a hydroelectric power plant in Brazil. But Swiss investigators are convinced that the company never provided any consulting services, and that its sole purpose was to forward the supposed consulting fee, after deduction of Holenweger's usual two-percent cut, to the possible recipients of bribes, who secured the contract for Alstom. Investigators suspect that between 1995 and 2003, "several hundred million (French) francs" were laundered in this fashion through letterbox companies in Panama, the Bahamas or Liechtenstein.
To conceal the connection to Alstom, company executives allegedly faxed their handwritten payment orders to Holenweger. Documents indicate that Holenweger then carefully transferred the secret messages to his own letterhead, which included his name and a P.O. box in Zurich, but not the address of his Tempus Bank. Then he apparently sent these letters to those financial institutions where the ominous consulting firms had stashed the Alstom funds -- apparently to be transferred to bribed decision-makers.
Making it Easy for Alstom to Keep a Low Profile
As well-concealed as this French Connection was, the files investigators seized from Holenweger's secretary included such informative notes as one from the fall of 1997, in which a company employee, without taking the usual precautions, wrote that an electricity deal in the Brazilian state of São Paulo had been worked out with a "former secretary of the governor" and covered the following: "party funding, the auditors and the energy office." The author also wrote that the identity of the middleman was to remain secret. Even the name of the Alstom's chairman of many years, Pierre Bilger, appears in the letter. Apparently the author was unwilling to take action without his approval.
The elaborate payment system put in place in 2000 is also described in the documents. By that time, investigators believe, there were no longer any pseudo consultancy agreements coming directly from Alstom. Instead, Holenweger's companies apparently got their money from the next letterbox firm. But, as investigators believe, Alstom was also behind that company. In the end, it is believed that a large sum of money was accumulated in Hong Kong, in a slush fund, which investigators believe belongs to the company. Millions from Crofthill Consulting, in which the Liechtenstein bank had shown such a strong interest, also ended up by chance in the Hong Kong fund.
Ernst Roduner, the Swiss investigative judge assigned to the case, plans to conclude his investigation this year. Holenweger's attorney has declined to comment on the accusations. But when questioned by French investigators, two Alstom consultants with the authority to sign documents for a letterbox company confirmed that there was indeed a "caisse noire," or black fund, for useful expenditures. The company is believed to have regularly pumped Alstom funds into Holenweger's system.
This sort of news isn't the kind that causes an uproar in France. In fact, it has the opposite effect. On Tuesday of last week, at a company meeting under the glass pyramid at the Louvre, Alstom CEO Patrick Kron basked in the glow of the multinational concern's results, while shareholders were thrilled by the promise of nine-percent profits. Corruption? Not an issue.
Alstom's lucky stroke: The company isn't listed on the US stock exchange. Otherwise it, like Siemens, would be subject to intense scrutiny by the especially stringent SEC regulators. Nevertheless, it still faces the scrutiny of Renaud van Ruymbeke -- the judge in France assigned to the case there -- who is considered to be a tough-as-nails investigator. Still, the French press has run little more than a brief mention of the fact that one of the Alstom consultants who was authorized to sign documents at one of the letterbox companies is now under investigation.
This is hardly surprising. It was Nicolas Sarkozy, the current president, in his former role as economics and finance minister, who almost single-handedly saved the company from looming bankruptcy with an €800 million ($1.24 billion) financial bailout package. This is why any criticism of Alstom is quickly interpreted as practically treasonous, if not lèse-majesté. Elysée Palace, the French White House, doesn't even have to intervene directly to keep Alstom out of the headlines. The French media, partially owned by Sarkozy's friends, Martin Bouygues (private television broadcaster TF1), Bernard Arnault (financial daily Les Echos), Serge Dassault (daily Le Figaro) and Arnaud Lagardère (weekly magazine Paris Match), are clearly keeping watch to make sure that the president's hands-on manager image is not questioned excessively.
All of this makes it easy for the company to keep a low profile. Alstom CEO Kron brushes the matter aside, calling it "old affairs, of which I know nothing." A company spokesman calls the charges "hypotheses and speculation," and insists that they only affect "individuals who left Alstom long ago." One of them, former CEO Bilger, also refuses to comment on the subject.
Besides, didn't Alstom file a complaint against the investigation in mid-May, supposedly out of concern for its good reputation? But perhaps the real issue is to gain access to the files. Either way, the company will remain on its toes for as long as the follow-up investigation continues.