ABB Ltd and Subsidiaries Caught in $19 Million Bribery Scandal

ABB Ltd’s $19 Million Bribery Scandal

WASHINGTON – ABB Ltd, a Swiss corporation, and two of its subsidiaries have been caught in a massive bribery scandal, agreeing to pay $19 million in criminal penalties as part of a settlement with federal authorities.

The plea hearing took place in the Southern District of Texas, where ABB Ltd’s U.S. subsidiary, ABB Inc., pleaded guilty to violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and conspiracy to violate the same provisions. The court imposed a sentence that included a criminal fine of $17.1 million.

According to court documents, ABB Inc.’s business unit, ABB Network Management (ABB NM), paid bribes from 1997 to 2004 totaling approximately $1.9 million to officials at Comisión Federal de Electricidad (CFE), a Mexican state-owned utility company. In exchange for the bribe payments, ABB NM received contracts worth more than $81 million in revenue.

Fernando Maya Basurto, a principal of a Mexican company, pleaded guilty to his role in the conspiracy in 2009, admitting to conspiring with others to make corrupt payments to CFE officials, laundering bribe monies, and obstructing investigations by the U.S. Securities and Exchange Commission (SEC) and the U.S. government.

Another key figure, John Joseph O’Shea, ABB NM’s former general manager, was charged with conspiracy, FCPA violations, international money laundering, and falsification of records related to his alleged role in the bribery scheme. His trial date has not yet been set.

As part of the settlement, ABB Ltd’s Jordanian subsidiary, ABB Ltd – Jordan, was charged with conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA, agreeing to pay a criminal penalty of $1.9 million. The subsidiary admitted to paying kickbacks to the former Iraqi government in connection with contracts to sell vehicles under the U.N.’s Oil for Food program.

Under the terms of the three-year agreement, ABB Ltd has agreed to fully cooperate with investigations by U.S. and foreign authorities. The company has also voluntarily disclosed the misconduct and cooperated fully with the investigation.