Zurich banker charged in Alstom fraud case

Zurich private banker Oskar Holenweger has been ordered to stand trial in Bellinzona (Ticino) over charges of false accounting, breach of trust, money laundering and corruption in a case that involves French industrial giant Alstom.

The Swiss federal prosecutor’s office on Thursday referred the case to a federal criminal court following a lengthy investigation.

The probe began in July 2003 when a former Columbian drug trafficker, identified as Ramos, informed Swiss federal police about Holenweger’s alleged role in laundering money from illegal drug trafficking.

Based on the suspicions, investigators infiltrated a drug network and sought help from the banker to launder money that the police spy pretended came from trafficking, the government office said in a statement.

The banker fell for the trap and offered to launder the money through diverse banking transactions before he was arrested in December 2003, according to the statement.

After his arrest, a former colleague of the banker provided documents to investigators showing that Holenweger set up slush funds to manage significant sums of money from Alstom, the French railway transport and infrastructure group, through offshore accounts.

The banker was the chief executive of Tempus Privatbank, a small private bank based in Zurich.

The government alleges that Holenweger made false representations to banks in the process, while the money from the offshore accounts was used by Alstom to bribe officials to win projects and increase market share in foreign countries.

A lawyer for Holenweger earlier said the banker was innocent of any wrongdoing.

Swiss officials raided Alstom’s offices in Switzerland in 2008.

In March, Britain’s Serious Fraud Office arrested three Alstom executives in a related corruption probe following a raid of the company’s offices in Ashby de la Zouch and Rugby.

The directors included 52-year-old Stephen Burgin, president of Akstom’s UK division;  Robert Purcell, 44, its finance director; and Altan Cledwyn-Davies, 51, legal director and company secretary.

The trio were released after being questioned at a police station.

The British authority said it believed that bribes had been paid in order to win foreign contracts.

Alstom said at the time the British raids were part of an investigation by Swiss authorities into alleged bribery in the late 1990s involving a banker from Switzerland.

A company spokesman said the company was cooperating with law enforcement officials.

But British officials say they are also looking into issues related to the company’s operations in Britain.

The UK investigation was a massive operation involving 109 staff from the Serious Fraud Office (SFO) and 44 police and financial investigators.

Code-named Operation Ruthenium, it investigated the “suspected payment of bribes by companies within the Alstom group in the UK.”

Agents spent several days poring through files in the company’s offices in Leicestershire and Warwickshire in pursuit of evidence.

Additional search warrants were sought for additional company offices in London and four other counties.

The Wall Street Journal in 2008 reported that bribes were allegedly paid by Alstom between 1995 and 2003 from shell companies based in Switzerland and neighbouring Liechenstein.

The newspaper alleged money was funneled to people working for Alstom in Singapore, Indonesia, Venezuela and Brazil.
Tens of millions of dollars in bribes are believed to be involved in connection with such projects as a subway extension in Sao Paulo and a hydroelectric project elsewhere in Brazil.

Bribes - or “commissions” - were long seen as a way for European businesses to secure business in overseas markets but France outlawed such practices in 2000 after the OECD called for states to stop approving them.

Alstom updated its code of ethics this year and maintains it now has "rules and control procedures at the best international standards".

In a statement posted on the company's website, Patrick Kron, Alstom chairman and CEO says: "Our code of ethics is essentil and all our employees, in their day-to-day work, need to observe the same rules of personal and collective conduct that define Alstom as an ethical company."

With annual revenues of more than 18 billion euros, the French company is famous for producing the high-speed trains such as the TGV and the Eurostar.

But it is active around the world with activities that include power generation and environmental control systems.

By its own account Alstom is one of the largest industrial companies in Switzerland with annual sales of more than three billion Swiss francs and over 4,200 employees.

As a provider of railway rolling stock it supplied the automated Metro trains for Lausanne’s transit network, and has also won orders from the Swiss Federal Railways and Zurich public transport.

The company’s world headquarters for two power sectors are located in Switzerland, with electrical power plant activities concentrated in the Baden/Birr region.