Best of Times, Worst of Times for Alstom

Alstom Company Headquarters
Alstom Company Headquarters

On the same day that Alstom announced its biggest contract ever for dam-building equipment - a US$700 million deal to furnish turbines and other materials for Santo Antonio Dam on the Madeira River in the Brazilian Amazon, Brazil´s federal prosecutors announced they will begin a new investigation into charges that the company handed out millions in bribes to politicians in São Paulo to win a lucrative Metro contract.

The turbine deal was no surprise - Alstom has been "locked in" with Brazilian construction company Odebrecht ever since studies were undertaken for dams on the Madeira. In fact, the Brazilian government had to pressure the companies to cancel a pact which prohibited Alstom from even furnishing competitors with cost estimates for equipment for the dam, an accord the government considered damaging to the interests of electricity consumers.

Alstom has been the subject of investigations by Swiss and French authorities for alleged bribery schemes, including a US$4 million bribe to win a $26 million contract for the São Paulo subway system. The Wall Street Journal reported last week that Swiss investigators now believe the total of Alstom´s global bribes may exceed US$500 million, in countries as diverse as Mexico, Zambia, and Brazil. Alstom issued a statement saying it "categorically rejects all allegations contained in the article" and that it plans to sue the WSJ.

The implications of these investigations are unclear, as corruption in the global water sector is considered to be widespread. What´s clear, however, is that there may be as much business going on under the table as there is within the public´s view.