In its January 13 meeting, the Cabinet approved a request from the state-owned Egyptian Electricity Holding Company (EEHC) to ink an energy deal with French power and rail transport firm Alstom to develop Egypt’s electrical grid.
In 2014, Alstom officials pled guilty to bribing Egyptian officials to receive preferential treatment when bidding for government electricity contracts.
Documents from a court case in the United States reveal that between 2002 and 2011, Alstom hired at least three consultants to bribe EEHC officials in order to secure or retain contracts for power generation and transmission projects in Egypt.
Alstom officials admitted to paying at least 5 million euros in connection to the Nubaria and El Tebbin power stations, as well as other electricity projects in Egypt.
Alstom also bribed officials to secure contracts for transmission and distribution projects aimed at upgrading Egypt’s electricity grid, including the US$15 million Reactive Power Compensation project and the US$30 million Three Substations project.
“Alstom’s corruption scheme was sustained over more than a decade and across several continents,” said US Deputy Attorney General Cole in a 2014 press statement. “It was astounding in its breadth, its brazenness and its worldwide consequences.”
The company was charged under the United States’ Foreign Corrupt Practices Act, a law that allows the US government to prosecute US-linked companies for overseas fraud. Alstom agreed to pay a US$772 million fine for corrupt practices in Egypt, Saudi Arabia, Indonesia and the Bahamas.
In a related case, Asem al-Gawhary, a dual US-Egyptian national pleaded guilty in 2014 to charges linked to a kickback scheme to manipulate the bidding process for power contracts in Egypt. Gawhary was a former Bechtel executive and also served as the general manager of PGESco, a joint venture between Bechtel and the EEHC.
Gawhary was among the “consultants” hired by Alstom to fix contracts with the Egyptian government.
Although the company has admitted to corrupt practices and been punished in the United States, Egypt appears to be willing to continue a business relationship with them. In early January, an official from the Egypt Electrical Transmission Company, an EEHC subsidiary, told Al-Mal newspaper that Alstom won a LE200 million contract for an electricity transformer station in Giza.
The January 13 Cabinet statement does not specify the location or value of the approved Memorandum of Understanding between Alstom and the EEHC. It simply notes that the project aims to develop a unified network using intelligent network technology and to establish transformer stations.
Since being convicted of corruption in the United States, Alstom has also been awarded several other high-value contracts in Egypt.
In November 2015, it signed contracts worth 190 million euros to provide signaling, telecommunications and infrastructure for the Cairo metro, and in January 2015, it was awarded a 100 million euro contract to supply railroad signaling equipment.