A key European development investment wing has cut GE Power Sweden out of bank transactions globally for six years due to a fraud incident involving a predecessor of GE and a power plant project in Lithuania more than a decade ago.
The European Bank for Reconstruction and Development has imposed a six-year term of debarment on GE Power Sweden AB following an investigation in cooperation with the Serious Fraud Office of the United Kingdom.
The penalty means that GE Power Sweden cannot be a bank counterparty until November 26, 2025. The compliance also submits the GE affiliate’s possible debarment from the World Bank, African Development Bank, Asian Development Bank and Inter-American Development Bank.
“The EBRD’s decisive response in this case underscores how seriously the EBRD takes corruption, especially when it involves donor funds,” EBRD Chief Compliance Officer Lisa Rosen said in a statement.
The investigation relates to a project to install flue gas desulphurisation (FGD) units at the Lithuanian Power Plant, a project financed by donor funds administered by the EBRD.
The investigation found that, from as early as 2002, representatives of Alstom Power Sweden AB, a predecessor company to GE Power Sweden, had conspired with another Alstom entity to manipulate the technical specifications for the FGD contract in their favor by making payments to Lithuanian government officials.
The six-year debarment is the longest to have been imposed in the history of the bank, according to the announcement.
GE acquired French-based Alstom in 2015 in a $17 billion merger. The company noted that the investigation began long before that deal.
“GE cooperated fully with the investigation after the close of the Alstom transaction and has worked to close out legacy Alstom issues responsibly,” the GE statement reads. “Ethical behavior and compliance is foundational to GE’s ability to successfully operate in more than 180 markets around the world.”