By Ted Mann
General Electric Co. learned from a consultant’s report this past summer of corruption allegations against key business partners in Iraq, where the company is trying to shore up its position in one of the most important foreign markets for its struggling power business.
The industrial giant said it has a robust compliance operation and doesn’t believe it has violated any federal laws, including ones covering foreign corruption. However, that confidential report, parts of which were reviewed by The Wall Street Journal, underscores the dilemma GE (NYS:GE) faces as it chases new business in one of the few places with demand for its multimillion-dollar heavy duty gas turbines.
The study, prepared for GE by corporate intelligence firm Hakluyt & Co., paints a portrait of widespread corruption and bribery in the Iraqi power sector, accusing high-ranking officials in the Ministry of Electricity, from which GE is currently vying with Siemens AG (OTC:SIEGY) (FRA:DE:SIE) for $15 billion in new power contracts. Siemens declined to comment.
The Hakluyt report, based on interviews with business people and political officials working in the power sector, provides a broad overview of the corruption concerns in the industry and advises GE to distance itself from at least one of its contractors. Hakluyt’s staff includes former British MI-6 officers and strategic consultants from the business world.
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