ABB FCPA resolution over Eskom bribery (2022)

The DOJ resolution

DOJ said ABB Ltd., a Swiss-based company listed on the New York Stock Exchange, agreed to pay more than US$315 million to resolve an FCPA investigation ¹. ABB was charged with conspiracy to violate the FCPA anti-bribery provisions, conspiracy to violate its books and records provisions, and substantive FCPA violations ¹. The case was brought in the Eastern District of Virginia ¹.

ABB Management Services Ltd. in Switzerland and ABB South Africa (Pty) Ltd. each pleaded guilty to one count of conspiracy to violate the FCPA anti-bribery provisions ¹. The DOJ release is numbered 22-1296 ¹.

What ABB admitted

DOJ said that, according to ABB's admissions and court documents, the company "paid bribes to a South African government official" between 2014 and 2017 ¹. The official was a high-ranking employee of Eskom Holdings Limited, South Africa's state-owned energy company ¹. DOJ said ABB paid subcontractors associated with the official, some of whom were intended as conduits for bribes ¹.

The SEC said ABB consented to a cease-and-desist order ². The SEC release does not say whether ABB admitted or denied the SEC findings ². The SEC's FCPA Unit chief, Charles Cain, said "ABB lacked sufficient controls to detect or deter this egregious bribery scheme" ².

Amounts and credits

Under the DPA, ABB's total criminal penalty is US$315 million ¹. DOJ said up to one-half could be credited against amounts ABB pays South African authorities ¹. DOJ said it would credit payments to Swiss authorities and to the SEC, and payments tied to an anticipated German resolution made within 12 months ¹. The release gives no figures for those credits ¹.

The SEC set a US$75 million civil penalty ². It found disgorgement of over US$72 million, deemed satisfied by ABB's earlier reimbursement to the South African government ². The SEC headline refers to US$460 million owed to US authorities ². ABB's company statement puts its total at US$327 million, already recorded in its third-quarter 2022 results and including expected exposure to the German case ³. The two figures are stated on different bases and neither release reconciles them ^2,3.

Cooperation and terms

DOJ cited ABB's "extraordinary cooperation", prompt disclosure and remediation, including a root-cause analysis ¹. The penalty reflects a 25% discount off the midpoint of the applicable US Sentencing Guidelines fine range ¹. DOJ weighed ABB's prior FCPA resolutions in 2004 and 2010 and a 2001 bid-rigging guilty plea ¹.

The DPA runs for three years ¹. The release describes quarterly meetings with DOJ and yearly reports on remediation and compliance testing, and does not mention an independent monitor ¹.

Company statement

ABB said on 2 December 2022 that it had concluded settlements with the South African National Director of Public Prosecutions, DOJ, the SEC and the Swiss Office of the Attorney General, with a German resolution pending ³. Chief executive Björn Rosengren said: "We take the Kusile matter very seriously" ³.