The American Trap, page 6
‘Aren’t you exaggerating a little?’
‘No Fred. I don’t want to worry you, but the US authorities consider that the slightest link with the United States, stock market listing, trade in dollars, use of an American mailbox, authorizes them to take action. It sounds a little crazy, but it happens a lot. Moreover, Alstom is far from being the first French company to be prosecuted for corruption. I checked: it has already happened to Total, Alcatel, or Technip. And that’s not to mention the dozens of other major European companies that have also been indicted.’
‘Have any executives been arrested, like me?’
‘Yes, apparently in the Alcatel case. And then, in an investigation opened against Siemens, the FBI even launched international arrest warrants against German senior managers. I get the impression that . . .’
I sense that Clara is very concerned by what she has read. At the same time, she is reluctant to tell me all. She probably doesn’t want to give me any more cause for alarm.
‘What impression do you get?’
‘You know the Americans; when their interests are at stake, they don’t cut any slack. And . . .’
‘Go ahead. I’d rather you tell me the truth.’
‘Well, even if they release you on bail, the question I have is, will they force you to stay in the United States?’
I don’t know what to reply to her. How do you announce to your wife that her life is about to be turned upside down? I have no idea how this is going to end. As someone who likes to master all the ins and outs of a question before making a decision, I find myself in limbo. But Clara is ahead of me.
‘Fred, if necessary, we could come to you in the United States in no time. We’ve spent our lives on the move, so it’s just one more journey . . . Don’t worry, if you need me, I’ll come with the children. You know very well that they are used to this nomadic lifestyle. Please do not worry. I am with you.’
I am moved by her sheer resolve. Clara has the ingenuity to project herself into the future at breakneck speed. But for the moment, the future is limited to my second bail hearing scheduled for tomorrow. Until then, we are all in limbo. Subject to the whims of the American judiciary and their ‘processes’.
Chapter 10
The second bail hearing
This time, they did not forget me. At precisely 4 a.m., two guards burst into my cell to awaken me. I am forced to undergo a new body search, before being chained from head to toe as I was during my initial transfer to Wyatt. Then they put me in an armoured truck, heading for the New Haven Court of Justice three hours away.
A few minutes before the start of the hearing, I am allowed to talk to my defence counsel, Liz and Stan.
They look drawn. They tell me they have just been talking to Assistant US Attorney David Novick.
‘He won’t back down,’ Stan tells me. ‘The amount of the bail we are prepared to put up is of little importance to him; he wants you to remain behind bars. I think your company’s lack of cooperation has stuck in his throat. He feels that Alstom has been taking him for a fool for several years now.’
I continue to slide down, and down, as if I’m never going to touch the bottom. What I discover at this point, reading between the lines of Stan’s remarks, is that the Department of Justice began its first investigations over three years ago. The investigation has therefore been ongoing since the end of 2009. Keith Carr has been very careful not to inform me of this chronology. All of a sudden I realize why the DOJ is pursuing me so relentlessly. They need a fall guy, someone to take the blame for Alstom’s doublespeak.
As soon as the Americans began their investigation, they alerted my company and asked it to cooperate. The DOJ has a process whereby each company under investigation receives an official offer to cooperate. Such companies are then given the opportunity to sign a DPA (Deferred Prosecution Agreement). To do this, the company must agree to incriminate itself by disclosing the entirety of its practices, and if necessary, by denouncing its own staff. It must also commit to setting up an internal anti-corruption mechanism and accept the presence of a monitor, i.e. a controller who reports to the DOJ for a period of three years. Provided all these conditions are satisfied, the court ratifies the deal made with the company, which generally culminates in a monetary penalty. As a rule, senior managers are not subsequently arrested (though, in theory, this type of agreement does not protect individuals from prosecution). It is precisely in this way that prior to Alstom, two other French companies, Total and Technip, agreed to pay fines of $398 million and $338 million in 2013 and 2010 respectively. However, Alstom, or rather Patrick Kron, as I would later discover, decided to try to outwit the DOJ by letting the DOJ believe that the company would co-operate, while in reality doing the opposite. When the Department of Justice realized that it had been fooled, its state attorneys went mad, and decided to change their strategy. They went on the offensive.
Therein lies the ‘real’ reason for my bolt-from-the-blue arrest. The DOJ has now decided to show Alstom who holds the most cards, to force it to plead guilty. I have been stitched up, victim of Patrick Kron’s game plan and reduced to dummy-like status in the hands of the American judiciary. In a few moments, I will have confirmation from US Attorney David Novick himself. When Joan Margolis, the judge chairing the court hearing, gives him the floor, Novick starkly reveals the backdrop of the battle he has been waging against Alstom.
‘After pledging to cooperate, this company has repeatedly betrayed the trust of the Department of Justice. In reality, Alstom, who was supposed to assist us in our investigation, has acted in a very slow and piecemeal way. Its attitude is nothing less than ambiguous. I would also like to mention that the OECD has recently pointed to the attitude of France, which has failed to take measures against Alstom, whereas this multinational has been the subject for several years now of allegations of corruption in numerous countries, including Switzerland, the United Kingdom, Italy and the United States.’
The US attorney is unrelenting in his will to prosecute.
‘We have all the evidence. Documents reveal the discussions between the co-conspirators to bribe Indonesian government officials. We also have bank attestations, and we have witnesses who will come forward and testify.’
I wonder how the American judiciary could have obtained these documents. During our discussion, which preceded the opening of the proceedings, Stan and Liz astounded me by revealing what lay behind this battle. At first, I did not believe them. The manipulation appeared too blatant and resembled a movie script. Well, I was wrong. This is for real. To obtain evidence against Alstom, the DOJ had, inter alia, used the services of an ‘executive turned informant’, a snitch placed at the very core of the company who cooperated fully with the investigators. For several years he even wore a microphone hidden under his jacket, which allowed him to record numerous discussions with his colleagues. The FBI used him as a mole in the firm. How could an executive accept this role at nearly sixty-five years of age? What pressure did the FBI and DOJ officials exert on him to compel him to become a ‘traitor’?
Did they threaten him with a long jail sentence? I barely have time to delve deeper, because attorney Novick is now addressing my case. He doesn’t go in for half measures. According to him, I am one of the architects of one of the most astounding, brazen and extensive corruption scandals he has ever witnessed throughout his career.
‘Frédéric Pierucci is a very senior executive at Alstom. Over the past few years, his leadership has consistently entrusted him with major responsibilities. His firm is now offering to post bail of $1.5 million to have him released. But his firm is implicated in this case. It is a “co-conspirator” even though it has not formally been charged. Therefore, the question I have is: can a “co-conspirator” stand surety for a bail payment? And besides, we still don’t know exactly what turn this file is going to take. What will happen if, at some point, the interests of Alstom and Frédéric Pierucci diverge? What will happen if this senior executive decides to plead guilty? How will Alstom react then? Who will then be liable for the bail? Don’t forget that the use of electronic tagging is not an adequate insurance. Frédéric Pierucci could disconnect it at any time and flee. As for the guards that his company agrees to pay for his surveillance, what will happen if his firm suddenly decides to stop paying them?
‘Two years ago, the Department of Justice authorized the use of guards to monitor the residence of another French citizen, Mr Dominique Strauss-Kahn. But this case is very different. In the D.S.K. case, when the judge agreed to this arrangement it undermined the prosecution. The main witness for the charge against Dominique Strauss-Kahn was discredited. But here, on the contrary, we have a very solid and well-founded case. And as you well know, Your Honour, France does not extradite its citizens. Frédéric Pierucci represents a flight risk! He is fully aware that he faces a very stiff sentence in the United States . . . life imprisonment.’
Life imprisonment! I immediately turn to look at my lawyers. Stan Twardy averts his eyes. Liz Latif is also afraid to catch my gaze. She is more at ease focusing on her notes. I’m facing life imprisonment. A life sentence! I am forty-five years old and may have to spend the next thirty or forty years behind bars. I’ve only been in Wyatt jail for five days now and am already at the end of my tether. I don’t even know if I can handle this nightmare for the next few hours, let alone for the rest of my life. And on what grounds? Because, ten years ago, I was one of the Alstom executives who endorsed, at middle manager level, the selection of a consultant, whom I didn’t know from Adam or Eve, who allegedly paid bribes to help the group win a contract. I have neither stolen, nor injured, nor killed anyone, nor received the slightest kickback. I have not benefited from any personal gain. To top it all, everything was carried out in strict conformity with Alstom’s internal processes. Life imprisonment! It’s just absurd. This is blackmail. This attorney is trying to intimidate me. He’s messing with my head.
Yet, when he sits down, David E. Novick, unlike my two lawyers, stares me straight in the eye; he isn’t bluffing, he looks deadly serious. What if it is true? What if I really do risk spending the rest of my life in prison?
I’m so shocked that I barely even hear Liz Latif asking for my release. Her voice sounds faint and blurry to me, as she attempts to point out a procedural error in the indictment. She claims that the charges against me are time-barred because they were allegedly committed between 2003 and 2004, whereas my indictment is dated November 2012. However, the prescription period is five years for FCPA violations.
So why is she bothering with this legal pitch? Why doesn’t she just tell the truth? Is it so hard to explain to the court that I am being subjected to unjustifiable differential treatment? David Rothschild, who has already pleaded guilty, was not incarcerated. And he only had to put up $50,000 bail, which is disproportionate compared with the amount proposed for my release. Is it lawful that attorney Novick should use me as leverage in the power struggle he has mounted against Kron? He makes no secret of it: he is holding me hostage. I am a pawn in the game of chess he is playing with Alstom. Is that justice?
Judge Margolis takes recess for a few moments to deliberate. When she returns, I immediately realize that the case has been decided.
‘This is an unusual case for our court,’ she says. ‘Usually we deal with requests from very modest families. The sureties do not exceed one and a half thousand dollars and these often represent life savings. In this case, the defence has proposed bail of more than $1 million. However, I deem this to be insufficient. I would like to see, in addition to the one and a half million dollars pledged by Alstom and the four hundred thousand dollars proposed by the defendant, an American citizen commit to putting his own home up for bond. If you come back to me with this commitment, then I will agree to reconsider your release on bail.’
In short, Joan Margolis distrusts Alstom and questions my credibility. To convince her to change her mind, she requires a pledge by an American citizen. By contrast, attorney Novick had no difficulty in persuading her. He strides out of the courtroom, stiff as a post, looking like the cat with the cream.
I am totally devastated and having a hard time containing my anger against my defence lawyers. The astronomical amount proposed by Alstom as surety was a strategic miscalculation. This solution has backfired on me. I placed my trust in them; how could I have done otherwise? And I made a monumental error. How could a lawyer as experienced as Stan, himself a former United States Attorney for Connecticut, not see the major threat of a possible conflict of interest with Alstom, and not anticipate the reactions of Novick and the judge? I start to have serious doubts about him. Who is he really working for? At the end of the hearing, I also discovered that an attorney from Patton Boggs (representing Alstom) was present in the chamber as an onlooker. He was watching my every move.
Alstom can rest assured: I didn’t say a word. Oh yes, I have received the message loud and clear: I am under surveillance, trapped between Alstom and the DOJ, and represented by a lawyer I didn’t even choose.
Chapter 11
125 years in prison
I thought I would never see these walls again . . . I’m back in my cell in Wyatt. And I could be there for a long time, even several weeks; however long it takes to be able to make a new bail application: the third.
In prison, while every hour seems like an eternity, I still have no news from Alstom. Stan told me that Keith Carr, the general counsel, had been to Washington to negotiate with the Department of Justice. He arrived just twenty-four hours after my arrest, but it appears the FBI did not question him, which continues to puzzle me, as this experienced lawyer has held a strategic position in the company for the past ten years.
He knows its nuts and bolts. In 2004, he was deputy general counsel for the Power division. A year later, he was appointed Power Sector’s general counsel before being promoted in 2011 to group general counsel. He is therefore well acquainted with all the company’s business ‘practices’. He knows better than anyone how Alstom recruits and remunerates its ‘consultants’. Why didn’t the investigators arrest him? They would have certainly learned more from him than from me. Why did they target me? This is what I can’t understand.
I had hoped that Keith Carr would also use the opportunity of being in the United States to visit me in Wyatt, yet no sight nor sound from him. No response from the other company officers either. I know there is no sentiment in the business world, but this does not stop me from feeling profound disgust. Overnight, I have become the black sheep of the group. A shady individual, not to be associated with, to be avoided like the plague. I was expecting a bit more peer support from general management, with whom I have worked for twenty years.
Stan and Liz come back to see me midweek. We are to search for people in my circle of friends and professional contacts in the United States who are prepared to put their houses up for bail bond so that I can get out of jail.
‘As you suggested to me,’ says Stan, ‘I have asked Tim Curran, the head of Alstom Power in the United States, and I have also made the request to Elias Gedeon, vice-president of sales. They both said no. They both said that it is up to Alstom, and not them, to ensure that the judge is satisfied.’
‘Frankly, I understand them,’ I remark to Stan. ‘I wouldn’t have taken that risk myself.’
‘Do you have friends or relatives in the United States?’
‘Very few. We left the country seven years ago and we have no family here. I have kept in touch with some people, but we’re not that close. Clara is nevertheless contacting everyone. Our greatest hope is one of her closest friends, Linda. We are waiting for their replies, including hers. What if we proposed to put up our home in France as bond?’
‘No, the judge will refuse. The American judiciary has had great difficulty in the past in seizing property in your country.’
I’m back in the slide. An endless tunnel with smooth walls. Nothing to grip. As soon as I see a solution, it slips away. I already know what Stan is going to announce. To put it mildly, he doesn’t beat about the bush.
‘For the time being, you will remain in prison,’ he summarizes. ‘This morning our office received a first proposal for a trial date: 26 June 2013. In two months.’
I try to hold onto the slippery walls of the endless tunnel.
‘But if Alstom includes me in its deal with the DOJ, that should change the game, right?’
‘I’m afraid not,’ says Stan. ‘These are two different prosecution cases. The DOJ can indict a legal entity and make a deal with it, but that doesn’t prevent them from prosecuting you, as an individual.’
‘That, I understand. But they can still include me in their deal.’
‘In theory, yes, but it is more difficult after an indictment, which is the case here. I also doubt that they will do so as their lawyers will try to persuade them otherwise, to minimize the fine and, above all, to protect the other executives who haven’t been charged.’
‘And can I negotiate too?’
‘Yes, you can plead guilty.’
‘I meant negotiating a fine in exchange for my release.’
‘No, you can plead guilty and it will be up to the judge to decide whether or not you are given a prison sentence.’
‘Therefore, if I plead guilty as did David Rothschild, I risk five years in jail . . .’
The end of the tunnel. A long tunnel. But at least I can see the end. In vain, Stan tells me that I am not even allowed this poor fate.
‘Unfortunately,’ he explains to me, ‘your situation is more complex than that of Rothschild. He was approached by the FBI first and he agreed to cooperate immediately; he therefore secured the best negotiating terms. Undermining your own bargaining position. You are in second place in the race to satisfy the prosecution and therefore less able to help them in their investigations, and you turned down the deal that Novick proposed to you.’
