The American Trap, page 4
At this point, the board of directors decided to dismiss Pierre Bilger and hand over the reins of the group to Patrick Kron in an attempt to redress the situation. This choice was well received in-house, for Kron belongs to the ‘elite’, or rather the elite of the elite. He is an ‘X-Mine’ (alumnus of the elite French university for top scientists), selected from the list that each year assembles the top twenty students from the Polytechnics and the École des Mines. They represent a small aristocracy, or even a republican oligarchy, which for two centuries has been at the helm of France’s biggest companies and economy. After having spent the first part of his career at Péchiney, he became a director of Alstom in 2001, then Chief Executive Officer in January 2003, and ultimately Chairman and Chief Executive Officer. In the months following his ascension to power, he set about rescuing the company. To avoid bankruptcy proceedings, he even pleaded in person before the Paris Commercial Court, as well as in Brussels before the European Commission, and convinced the state to bail out Alstom, in exchange for a ‘realignment’ of the company’s activities and a major overhaul of its management. Over two hundred senior managers were given their marching orders. Throughout this salvage operation, Patrick Kron had the support of Nicolas Sarkozy. The future President of the Republic, at the time Minister of the Economy, knew how attached the French were to their large enterprises and did not want to appear as having stood by idly watching the demise of one of our rare multinationals. He succeeded in obtaining a partial renationalization of the company, with the French state acquiring just over 20 per cent of the capital. With the help of Patrick Kron, Nicolas Sarkozy became Alstom’s saviour.
At the time, I was light years away from the battles being fought at Alstom’s headquarters or within the government.
On arrival in the United States, I found myself in a real ‘vipers’ nest’. The Windsor, Connecticut unit where I was based was run entirely by ABB, with whom we had merged at the end of 1999. And to cap it all, I found myself having to deal directly with a senior manager, who disliked me.
In fact, a year earlier in 1998, while we were still rivals (he was working for ABB and I represented Alstom), we both fought hard to win the contract for the largest power plant in China at the time.
This contract was a priority target for boiler manufacturers around the world. The final decision was between ABB and Alstom, and Alstom walked away with the prize. This explains the wrath of my new Windsor colleague, who had missed his chance to take over global management of the boiler division. This position was eventually assigned to another former ABB executive.
Our relationship did not improve either when headquarters asked us to provide them with a complete list (and copies of contracts) of all the ‘consultants’ worldwide with whom we had contracts.
Before France’s ratification of the OECD Anti-Bribery Convention in September 2000, the use of intermediaries, ‘consultants’, to obtain international contracts was a perfectly tolerated practice. While the use of bribes on French territory was strictly prohibited, it was permitted abroad. Therefore, each year, the heads of French corporations would go to the Finance Ministry in Bercy to compile a list of their ‘exceptional expenses’; in short, the bribes paid to intermediaries or consultants, to win international contracts. These amounts were duly identified and then deducted from corporation taxes. It was the state’s very pragmatic way of legalizing the illegal.
However, after September 2000, this changed. France, like other countries before it, was committed to combating international corruption. As a result, Alstom’s management asked for a comprehensive insight into the undertakings made by ABB with all its intermediaries in order to comply with the new French legislation. My boss assigned this delicate task to me. I easily obtained the names and contracts of the consultants employed by the boiler business units from Alstom. However, it was another story for those from the former ABB (including the American unit in Windsor). Although we had merged, these units were reluctant to cooperate and disclose their networks of intermediaries. Furthermore, in each country, ABB companies behaved like local barons and did not want to bow to centralized control. Nevertheless, I managed to establish a first inventory. I ended up with a pile of contracts on my desk, each one drafted with different terms and often containing truly staggering clauses. Some consultants had succeeded in negotiating agreements with no expiry date, sometimes even with monthly payments, i.e. a licence to long-term corruption.
In the meantime, Alstom’s management started introducing new processes to show its commitment to the tightening up of its compliance processes (compliance with norms and laws and business ethics). Henceforth, a very specific procedure for the approval of intermediaries was implemented. As many as thirteen signatures would be required before a consultant could be hired. At the end of this process, a ‘project sheet’ must be established for each contract, which must clearly indicate the amount of the commission and payment terms (time frame and payment schedule). This sheet must be approved and signed at the highest level by three people:
1. The Senior Vice-President of the division preparing the offer for the project.
2. The Senior Vice-President in charge of Alstom’s International Network.
3. The Regional Senior Vice-President of the International Network region where the project is based.
Finally, all projects worth more than $50 million – i.e. almost all bids for the boiler business – become subject to validation by the ‘risk committee’, which reports directly to the CEO and includes the Chief Financial Officer.
In addition, the group set up a specific company within its structure, ‘Alstom Prom’, based in Switzerland, in charge of drafting, negotiating and signing virtually all the contracts concluded with consultants. This company was at that time headed by Alstom’s compliance officer, the same person responsible for enforcing the law and ethics within the company.
But don’t be fooled, this amounted to window dressing. The processes implemented since 2002–03 were purely cosmetic. There was never any question of launching a clean-up operation within the group. The only way to curb corruption would be to cease the use of consultants once and for all. That is not what was decided. In fact, it was quite the reverse. Under the guise of ‘project sheets’ and more rigorous ‘processes’, the use of consultants was largely continued under Patrick Kron’s leadership. The only difference being that, henceforth, the corruption became more covert.
On the surface, Alstom strictly complied with all the rules. For instance, all contracts featured two clauses: one detailing the anti-corruption law in force, and the other reminding the consultants of their obligation not to pay bribes. Such clauses were deemed by law practitioners as security in the event of prosecution. But behind this facade of good repute, Alstom continued to remunerate consultants to exert influence on ministries, political parties, consulting engineers, experts and evaluation committees in numerous countries. If the risk appeared too great, the group, rather than using consultants directly, would use the services of local subcontractors (civil engineering companies, erection companies, etc.), who were less hampered by the anti-corruption provisions in place. Alstom was by no means an exception. Many multinationals, all of them advised by the same major international consultancy firms, adopted this type of procedure.
The compliance department responsible for ensuring compliance with a code of professional conduct of course knew about these practices, as did the group’s senior management. And for good reason: they had set them up!
Chapter 6
The phone call
First night at Wyatt. Very agitated. I barely closed my eyes. Mason snores like a locomotive. The call to breakfast is almost liberating. I can finally exit the cell and take a shower. As the first to arrive in the communal shower room, I undress and start to wash, soon joined by another inmate who immediately hurls abuse at me.
‘We do not shower naked here! You keep your boxers and flip flops on. Not to contaminate the place.’
I have a lot to learn. And fast. At Wyatt, almost all inmates are repeat offenders. Everyone knows the rules of prison etiquette. I am the only ‘rookie’. And I risk having my head served up if I don’t take a crash course ASAP.
I also desperately need to find a way to contact my elusive lawyer, Liz. Once more I beg the Correction Officer who is monitoring the pod for permission to phone Seth Blum. ‘Take it up with the social worker,’ he replies. ‘She’ll be here after lunch.’
I’m having to learn patience, a cardinal virtue behind bars. The social worker shows up right after lunch, as promised. But it’s a mad rush. They all scramble to talk to her. Wait and wait . . . Prison is first and foremost about waiting. Finally, it’s my turn. The social worker receives me and I discover in disbelief that, notwithstanding the fuzzy communication during my desperate call to Seth Blum, the FBI inspector figured out what I wanted and, even more extraordinarily, he called Wyatt back and insisted that the supervisors give me Liz Latif’s number via the social worker. It makes me feel that good old Seth cares as much about my defence as does my own counsel.
But before I can reach her, I have a new hurdle to cross. Accessing one of the four wall phones installed in the common room, after observing a very exacting procedure. As a newcomer, I am required to provide Wyatt’s management, via the social worker, with a list of the people I will be contacting during my ‘stay’. Such a list has to be duly approved and registered by the prison authorities.
Problem number 1: apart from Liz’s number, which I was just given, I don’t know any other number by heart. Problem number 2: you have to pay before you can make a call. Each prisoner has to have a credited canteen account from which the exorbitant cost of telephone communications is debited. But my wallet and credit cards were confiscated, like all my other belongings, and entrusted to Liz! This is akin to Kafka in Connecticut! The social worker agrees. And she ‘exceptionally’ authorizes me to call my lawyer on her office line.
So, I can finally talk to Ms Latif again, who discovers in what prison I am housed.
‘But where are you?’ she naively enquires.
I had imagined her frantically trying to work out where I’d been imprisoned, but apparently not. The remainder of our conversation is no more reassuring either.
‘Well, Mr Pierucci, things are not looking very good . . . The hundred thousand dollars’ bail, which I envisaged offering the court in exchange for your release, is deemed very inadequate. Clearly, the Department of Justice wants you to remain in detention. The US attorney is going to raise the stakes. How much do you have in your bank account?’
I quickly do the maths in my head.
‘Putting everything together, maybe around four hundred thousand dollars.’
‘Hmm. That might still be a little tight. You cannot do more?’
‘No, I may be a senior executive, but I’m not that wealthy. I own a house in the Paris suburbs that was purchased on 100 per cent credit, and that’s all. But I’m not on my own in this, am I? What about Alstom? I’m their problem too. I guess they’re going to step in?’
‘No doubt. Well, look, I finally got a new bail hearing for tomorrow morning. So we’ll know soon enough. Don’t worry too much. We’ll find a solution.’
‘I hope so. And please also pass the message on to Keith Carr, Alstom’s general counsel, that I want him to come and see me here in Wyatt as soon as he has finished his meeting with the DOJ in Washington.’
Our conversation is now over. She had time to look in my BlackBerry and give me the phone numbers of my wife Clara, my sister and my parents. I gave her my credit card code and asked her to deposit $50 to my canteen account at Wyatt ASAP in case I need it . . . As usual, especially in the most challenging situations, I try to reason as coldly as possible. Is this due to my engineering background or my liking for mathematics? I tackle complex situations as operations.
The good news is, I only have a few more hours to survive in this hellhole of a prison. Tomorrow morning, the judge should order my release, even if I have to put my house up for bail. Any other decision seems unimaginable to me in a country that releases murder suspects onto the streets. The worst news is that the judge responsible for deciding my fate could, in exchange for my release, prohibit me from leaving US territory while awaiting trial. In terms of family and work, this situation is of course far from ideal. But it is not catastrophic either. I already worked in Connecticut for seven years, before leaving for France in 2006. I know the American subsidiary perfectly well, so I should be able to continue to run the boiler business from the United States instead of Singapore without any difficulty, at least for a few months. On the understanding, of course, that my company grants me customized status. Given all the trouble the latter has caused me, it should be accommodating, at the very least.
In terms of family, however, this could become a nightmare. With Clara and our four children, we only recently moved to Singapore. We arrived in August 2012. This move to Asia was a godsend for the whole family. After overcoming some difficulties in our relationship, the move to Singapore heralded a new start. And the wager was won. The children were happy there. Our two sets of twins settled in perfectly. They liked the new international schools they attended and quickly made many friends. I can still remember Gabriella, the first week after our arrival, walking through the rooms of our large house with her iPad, giving her grandfather a guided tour. She was so proud and happy, as were her sisters and brother. And Clara and I gradually reconnected.
It has now been almost seventy-two hours since I gave her any news. Although I rarely call when travelling, she will need to be informed. I’ll tell her tomorrow after the hearing. That is what was arranged with my lawyer. By then I will be free again and the impact won’t be as harsh. So how am I going to explain to her what’s happened to me? If I have to remain in the United States for several months, while awaiting trial, then how exactly are we going to organize things? Will the whole family have to move again? Thanks to her PhD in neurobiology and professional experience, Clara has just been recruited by a major French company based in Singapore. She loves her new job. Maybe it would be better if I moved to Boston by myself for a while? But could Clara handle such a separation? And the children?
I lie on my bunk in the cell, mulling over my thoughts. The questions go round in my head. I reread the summary of the indictment and continue to fill in the timeline of events surrounding the Tarahan case, but it was all so long ago . . . The hearing is scheduled for tomorrow morning at 11 a.m. Therefore, calculating the time it takes to get me out of the cell and ready, the guards will come to wake me before daybreak, i.e. 4 a.m. I should really try sleeping, but the bunks are so narrow, only twenty inches wide, and the plastic mattress is so thin that I worry about falling out of bed in my sleep. My fellow inmates did show me a technique to avoid falls: you have to package the mattress, blanket and sheet using large knots. It works, but you feel so tightly squeezed, like a perfectly tied-up roast. I don’t get a wink of sleep. Motionless and silent, I wait.
Chapter 7
They forgot me!
As soon as I arrived in Wyatt, the supervisors confiscated everything from me. They took my watch, my wedding ring, and I have lost all notion of time. It is daybreak, a ray of light is slowly breaking through the slit that serves as a window in the cell. I’m still waiting. I listen out for the slightest noise with the hope, each time, that the guards will come and get me to escort me to the courtroom. No one comes. It must be at least 6 a.m. What if they have forgotten me? I tap on the door. Nothing. I tap again and again. Louder and louder. Finally, a warden agrees to talk to me. This time it’s not unwillingness that I detect in his face, but sheer surprise. He swears to me that neither he nor any of his colleagues received any instructions to arrange for my transportation to the New Haven courthouse. But he checks it out.
When he returns, he confirms that I definitely am not on the agenda for extraction. I’m devastated. I feel like I’m going crazy, trying not to let paranoia get the better of me. Suppose my lawyer lied to me? What if she’s in collusion with the prosecuting attorney? After all, I don’t know anything about her, it was Alstom who chose her. How can I trust her? I have never felt so helpless. I punch the door again with my fists. The screw puts his head in the cell, but has run out of patience.
He gets angry as I continue to argue with such frenzy. I explain to him that it is vital that I call my lawyer, that all this is a huge misunderstanding, that I must get out, that I am being summoned by a judge who will release me, that all this is absurd and that he must help me. The guard leaves and reappears one minute later with a book to help cure my stress.
Wyatt Prison’s internal regulations. This fifty-page book stipulates, inter alia, the conditions under which a prisoner may file complaints to the prison administration. I want to scream. What do they want from me? To drive me crazy? Put me in a straitjacket? Then little by little I calm down. Besides, I have no choice but to shut up and wait a very long time. It was only in the middle of the afternoon that I managed to call Liz Latif.
‘The prison officers at Wyatt screwed up big time,’ she said. ‘They simply forgot to come and get you from your cell. The hearing that was supposed to decide on your bail application began as scheduled; however, the judge, after noticing your absence, decided to defer it again for another two days!’
Do not crack. Take a deep breath and remain focused.
‘Under these circumstances Liz, it is imperative that you inform my wife. She must be worried sick.’
‘I’ll do it right away. Don’t worry, Mr Pierucci. I’m coming back tomorrow with my boss. I shall also bring the key exhibits from the prosecution file with me. We will have time to examine them.’
