The Swiss-based engineering group ABB has settled two bribery cases, clearing the way for the sale of part of its oil, gas and petrochemicals unit.This content was published on July 7, 2004 - 13:40
The company said on Wednesday that two subsidiaries had pleaded guilty to charges of paying African and Asian officials $1.1 million (SFr1.35 million) to secure contracts.
The group, whose headquarters are in Zurich, was fined $10 million by the United States Department of Justice.
It also agreed to hand over alleged illegal profits of $5.9 million (SFr7 million) to the US Securities and Exchange Commission (SEC).
With the case settled, private equity investors Candover Partners and JP Morgan Partners can now buy the exploration and production side of ABB’s oil, gas and petrochemicals business, including the two Vetco Gray units involved in the bribery scandal.
"It was a condition of the sale that we had to satisfy the compliance regulations [by resolving bribery charges],” ABB spokesman Thomas Schmidt told swissinfo.
The company was also required to intensify a training programme for sales representatives and managers.
"Now, we will meet with our potential buyers, review our documents, and we hope the sale will go ahead soon."
Analysts say the settlement, coming one year after ABB first admitted irregularities, brings the engineering firm a step closer to the end of a major restructuring.
After almost collapsing in 2002, ABB has been selling off assets to reduce a multi-billion dollar debt mountain left over from a buying spree in the late 1990s. The company cut 7,100 jobs last year.
“Despite the fines, the end of the probe is positive because, in our view, the sale can be completed quickly now,” said analyst Mark Diethelm at Zurich Cantonal Bank.
Schmidt said irregularities were discovered a year ago, when ABB reviewed the books of Vetco Gray in preparation for selling the oil and gas unit.
“Certain things didn't make sense, so we turned it over to auditors. I think the SEC appreciated that we contacted them immediately,” Schmidt said.
"It was sort of sensitive for us, because we were just about to sell the operations involved when we found it. It was cumbersome to say the least, but we are ready to move on,” he added.
Lack of controls
According to the SEC, ABB recorded the payments improperly and lacked any “meaningful internal controls” to prevent or detect illicit payments.
The SEC, in accepting the group’s settlement offer, said it took into account ABB’s full cooperation in the case.
Payments were made to officials in Nigeria, Angola and Kazakhstan between 1998 and 2003.
According to the global anti-corruption watchdog, Transparency International, corruption is a problem in nine out of ten developing countries.
Nigeria is the second most corrupt country in the world; Angola and Kazakhstan appear in the top third.
The sale of its oil, gas and petrochemicals business is one of ABB's stated priorities for this year as it narrows its focus on power and automation.
It also hopes to resolve a major asbestos liability case, which is blocking the sale of another part of its oil and gas business.
ABB says this sale is on track for the end of the year, as a court prepares to rule on a proposed $1.2 billion settlement.
swissinfo with agencies
ABB has paid SFr20 million to US authorities after pleading guilty to bribing African and Asian government officials.
The settlement clears the way for the sale of part of ABB’s oil, gas and petrochemicals unit.
The company said payments were made to obtain information and consideration for contracts it was trying to secure.
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