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Alstom shares reverse gains as corruption probe overshadows

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AFP Paris
Last Updated : Mar 30 2016 | 10:57 PM IST
Shares in French transport giant Alstom gave up early strong gains on an upbeat growth outlook today as its its UK chief stepped down over corruption allegations and its Brazilian managers were reportedly being probed for collusion.
Alstom, which has focused on transport since General Electric bought its energy business, said it expected to grow organic sales -- generated by its own businesses -- by five percent annually between now and 2020. It also announced a cost-cutting programme and said it would boost its operating margin.
Investors welcomed the outlook, initially sending Alstom shares more than five percent higher.
But by the Paris stock exchange's closing time all the early gains had been wiped out as investors pondered corruption and collusion cases hitting the company, and the shares ended flat at 22.88 euros, vastly underperforming the overall market.
Also today, the company said that the head of its British operations, Terence Watson, had stepped down over corruption allegations after being charged by the Serious Fraud Office (SFO).
"Alstom has been made aware of the recent decision by the SFO to press charges against Mr Terence Watson in the context of on-going proceedings by the SFO alleging illicit payments by Alstom Network UK Limited in relation to a transportation project," it said.

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Watson is accused of having been involved in corruption between 2003 and 2008 in connection with a contract to supply the Budapest metro with trains, the SFO said yesterday.
Watson told Alstom that he is contesting the accusations, the company said.
Meanwhile in Brazil, press reports said Tuesday that five Alstom managers were under investigation for operating a cartel with other companies to divide up Sao Paolo transport contracts without tendering competing bids.
A Sao Paolo judge said that only individuals were targeted by the probe, not Alstom as a company, they said.
Managers at Bombardier, Siemens and Mitsui, among others, were also being investigated for the "economic crime" of collusion, they said.

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First Published: Mar 30 2016 | 10:57 PM IST

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