Friday, October 23, 2020

Hong Kong firm sues Alstom in possible corruption case

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A multinational company that manufactures tube carriages for the London Underground is embroiled in a legal dispute with an obscure Hong Kong firm over suspected corrupt payments.

Alstom, a French-headquartered multinational that makes railway carriages and rolling stock, is being pursued in the English courts by the Hong Kong firm, Alexander Brothers Limited, for more than £2m.

Alstom and its British subsidiary are refusing to pay the money, arguing that the Hong Kong firm’s work is likely to have involved corrupting public officials, and if they paid, they would run the risk of being prosecuted for bribery. Alexander Brothers says it did not act corruptly.

The skirmish in the London courts is the latest phase of a campaign by Alexander Brothers, which is run by a former Alstom employee, Guo Qi.

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Previous battles have been fought in Switzerland and France. Guo has initiated the case in the English courts as she is seeking to obtain the money she says her company is owed. A hearing is due to be held this month in London.

Details of the dispute are set out in judgments in French and British courts. It marks another legal showdown for Alstom, which in 2018 was revealed to have pleaded guilty to bribery charges in the UK. Several of its directors also pleaded guilty or were convicted by a jury on charges unrelated to the current dispute.

In 2003 Alstom hired Guo’s firm to help it to secure three multimillion-pound contracts in China. It was hired because it was “close to the decision makers and that she was aware of the decision-making process in the Chinese ministry [of] railways,” according to an agreed statement of facts submitted to a French court.

The court added that Alstom won the contracts “thanks to the efforts and services” of her firm and started to pay her firm the agreed fees.

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However, in 2010 their arrangement began to unravel after Alstom discovered it was facing an inquiry into alleged corrupt practices by the UK police.

Alstom carried out an audit of Alexander Brothers’ work, and decided it could not carry on paying money to the firm on the contracts without risking criminal prosecution for corrupting public officials, according to the French judgment.

In one instance in 2008, Guo informed Alstom that the company had won its bids for a contract thanks to her contact with Shanghai mayor’s office, despite Alstom’s bid having been scored worse than those of other companies, and despite the results of the tender not having been announced yet, the judgment says.

Alexander Brothers spent money on furniture and works of art, as well as an average of $40,000 a year on “entertainment”, according to the judgment.

Guo took Alstom to a private arbitration court in Switzerland, demanding €2.9m in unpaid bills plus interest, as well as a further €2.5m in compensation and damages. The Swiss tribunal ordered Alstom to pay her €1.5m.

Alstom then brought its own case to the Paris court of appeal, which ruled that the manufacturer did not have to pay the money to her as it had found evidence that Alexander Brothers was bribing Chinese officials.

The Paris court noted that a contact of Guo’s, the former railways minister Liu Zhijun, had in 2011 been jailed for life in China for accepting €9m of bribes over a 25-year period, alongside his deputy.

An Alstom spokesperson said: “The Paris court of appeal overturned the order to enforce the arbitral award, considering that Alstom could legitimately suspect that its former consultant had acted contrary to its ethics and compliance policy and therefore justified not making any payment to it.

“The court thus validated Alstom’s position and considered that the arbitral award could not be enforced because it was contrary to international public policy.”

A lawyer for Alexander Brothers said it was not appropriate to comment as the matter was sub judice.

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