Alstom Bribery Scandal Probe KUALA LUMPUR, Dec 7 — Transparency International Malaysia (TI-M) today urged national anti-graft officials to work with Swiss authorities and to act quickly in the latest bribery scandal to arrest Malaysia’s corruption perception slide. In a statement today, TI-M president Datuk Paul Low raised the questionable business dealings of French engineering giant Alstom in the country and called on the Malaysian Anti-Corruption Commission (MACC) “to leave no stone unturned” in investigating if there were such corrupt practices as alleged. It noted Alstom was fined €31 million (RM 130 million) by the Swiss Attorney General for failing to implement proper controls to prevent bribery in Malaysia, Latvia and Tunisia relating to payments to middlemen to secure government contracts to build power plants. “Given the continued slide in Malaysia’s Corruption Perception Index ranking and score as shown in the 2011 results released last week, it is crucial that all efforts are made to address any allegations of corrupt practices immediately,” Low said. He added that the commission must be allowed to conduct their investigations without fear or favor, and said any party that breached the MACC Act must be dealt with transparently in accordance with the law. Yesterday, scandal-hit Alstom denied it bribed an Umno veteran for a power plant project in Perlis as alleged. The French firm also declined comment when asked to confirm if its Malaysian executives were being investigated by national anti-graft officials over its connections to Tenaga Perlis Consortium (TTPC), a local company partly controlled by Tan Sri Abdul Hamid Pawanteh. In responding to The Malaysian Insider, Alstom maintained its stand that reported financial improprieties in its business dealings here were one of three isolated cases and were not the result of a “systematic bribery” endorsed by the company. “As underlined in the Swiss Attorney’s conclusions, Malaysia is one of the cases where the company has been a victim of the misconduct of its employees,” Beverly Ho, Alstom Malaysia’s communications manager said in an email reply yesterday. It stressed that the company was fined by Swiss authorities for “corporate negligence in the past, not for having organised a corruption scheme”. Abdul Hamid, a former Perlis mentri besar and Dewan Negara president who was reported to be directly implicated in Alstom’s indictment for bribery in securing foreign contracts, also denied accepting monies. “I wish to categorically state that the allegations contained in the above report are totally baseless and malicious,” Abdul Hamid said in a statement to The Malaysian Insider two days ago. He stressed that the company’s board of directors, including Ti Chee Liang who was named in the Swiss court papers, did not receive “7.5 million Swiss francs (RM25.5 million) to help Alstom Malaysia secure a contract to build a power plant in Perlis in late 1995”. The politician also disclosed that he was unaware of ongoing investigations into Alstom Malaysia by the Swiss authorities. “To date, I have not been notified or called by them to make any statements or provide any details. I am shocked that the Swiss authorities have accused Ti and me of wrongdoings, financial or otherwise. “For this reason, I have instructed solicitors in Switzerland to initiate proceedings to clear my name. I welcome any investigation pertaining to these baseless allegations,” Abdul Hamid said in his statement. Alstom is a major player in Malaysia in the power business, and is credited with supplying key equipment for nearly 7.5 gigawatts of the country’s installed power generation capacity, the paper added. Last month, Alstom’s Malaysian office denied it was aware of local investigation regarding the RM130 million fine by Swiss authorities involving contracts awarded to the company here. “There is no probe ongoing in Malaysia that we are aware of and Alstom has co-operated fully in Switzerland. The fine is for corporate negligence in the past and not for bribery,” Alstom Malaysia president Saji Raghavan said in a November 22 statement. “In fact, investigation confirms there is no systematic bribery and sufficient controls are in place,” he pointed out. The company described itself as a “subcontractor of a consortium” and a “victim of the actions of some of its employees, who would have benefited from kickbacks”, according to a previous Reuters report. The Swiss summary punishment order obtained by The Malaysian Insider showed that Alstom’s business units paid success fees, which totaled 7.7 million Swiss francs, to offshore companies belonging to Ti and Abdul Hamid “with accounts in Switzerland.” “Both of the aforementioned beneficiaries were at the time leading executives at the client of Alstom. In return for payment, they influenced both the award of contracts as part of this project in previous years (including securing of financing) and ensured that any difficulties encountered by the client in the performance of the contract was resolved in favor of Alstom,” according to the document signed by Swiss chief federal attorney Walter Mader and federal attorney Stefan Lenz from the Attorney-General’s Office. Alstom is the second French company in as many years to be fined for bribing government officials in Malaysia, after telecommunications firm Alcatel-Lucent paid RM435 million to resolve US criminal and civil probes in December 2010. The four-year probe centred on payments made by Alstom Network Schweiz AG to middlemen — termed “commercial agents” by the company — in return for securing government contracts to build power stations in 15 countries since the 1990s. Alstom was awarded a RM2.8 billion contract by Tenaga Nasional earlier this year to provide key power generation equipment to Southeast Asia’s first 1,000- megawatt (MW) supercritical coal-fired power plant Manjung. It also won turnkey contracts in 1994 and 2000 to build four power plants including the 1,300MW Lumut and the 670MW Kuala Langat plants and deals in 2003 and 2004 to install environmental control systems for the Tanjung Bin and Jimah coal-fired power plants. Alstom was also appointed by Tenaga to supply two 125MW hydro power turbines, a generator and ancillaries for the 250MW Hulu Terengganu hydro power plant in 2010. Alstom says it is “the largest original equipment manufacturer in Malaysia”, having supplied key equipment for nearly 7.5 gigawatt (GW) of the country’s installed power generation capacity. ( The Malaysian Insider, Kuala Lumpur, Dec 7) Ethics Involving Bribery Preserving the quality of engineering work is a vital duty for an engineer. The most important of all is to preserve the standard quality as per stated by the engineering codes in practice to ensure that what is being invented or created satisfy its factor of safety. There might be some adding to the engineering design that might seem unnecessary, for example: building sustainability during earthquake or other natural phenomenon are also included in its design calculation which will certainly increase the cost but it is to serve its purpose during time of need. If a company wins a contract through bribery it would certainly try to recover the lost on winning the contract by cutting down the cost for implementing the project. The project is not being executed by its original design and this may affect the safety factors. In this case the power plant that is being constructed to serve its function to provide electricity to certain continent of Malaysia may fail due to improper construction. These may cost power failure in the area that it was meant to supply electricity. A major failure will affect the people and country in many ways. Businessman will suffer lost and eventually forced to stop work which will affect the employees who are earning through that business. When many business starts to close down through the period of power failure it will cause an economical drop to the country. Besides if the power failure causes an explosion or current leak which may harm life makes the situation even worse. Thus a proper tendering in the contract will help bring about the right cost to construct the plant according to its respective design hence pushing away all the consequences of bribery. We must always bear in our mind that engineers invent the future and their work affects the lives of millions of people, for better or worse. Many engineering ethics are involved when it comes to bribery and is discussed below. Following the code of ethics in engineering profession, it’s stated that, An engineer should not knowingly mislead the public by giving misrepresented information so as to gain commercial advantage/mileage. In this case, the authorities involved have given the wrong information to the upper government or other respective entities to make them accept the contractor as the sole winner for the project bid. This indirectly gains advantage for the management or authorities involved to get cash from the contractor. There are a few code of conduct for professional conducts can be related to this case. Code of conduct: 4.2 A registered Engineer shall not accept compensation, financial or otherwise, from more than one party for services on the same project, from more than one party for services, on the same project, or for services, pertaining, to the same project, unless, the circumstances are fully disclosed and agreed to by all interested parties. 4.3 A registered engineer shall not solicit or accept financial or other valuable consideration, directly or indirectly, from outside agents in connection with the work for which he is responsible. 5.2 A registered engineer shall not offer, give, solicit, or receive directly or indirectly, any contribution to influence the award of a contract which may be reasonably construed as having the effect of intent to influencing the award of a contract. He shall not offer any gift or other valuable consideration in order to secure work. He shall not pay a commission, percentage, or brokerage fee in order to secure the work. To overcome the corruption in this case and also to address the unethical way of cutting corners to achieve the work, the engineering firm or company must first obey or follow the code of conduct. Alstom must be aware that the code of conduct states that several guidelines should be followed as a professional engineering firm. Besides, the company or organization is also equally important. The company must set up a body to monitor all handling of tenders and also projects to prevent corruption of gratification from happening. The company in this case must have a rigorous selection process for choosing the correct and suitable agent for taking all the projects and also tenders. In this case, it was not done, or it didn’t take place. The contractor dealt directly with the in charge authority or management to take over the project with the director taking in a sum of money to favor for the contractor. The company must implement financial monitoring and internal control procedures. This is to ensure that all money went in and out of the company is controlled and recorded for all purposes no matter small or big.