By Joel Schectman, Rachel Louise Ensign and Andrew Grossman 

U.S. prosecutors are close to a deal with Alstom SA that would require the French engineering giant to pay nearly $700 million to settle a foreign bribery probe, people familiar with the matter said.

A settlement of that size would be the largest-ever related to foreign bribery allegations between a corporation and the Justice Department. A deal could be announced in coming weeks, the people said.

Prosecutors want to extract a large penalty from Alstom in part because of what they perceive to be the company's initial failure to cooperate with the government's investigation, they added. The large settlement also reflects the scope of the investigation, which spans the globe and covers years of activity, one of the people said.

The settlement talks come as General Electric Co. is closing its purchase of the bulk of the French company, which has faced a number of bribery investigations around the world in recent years. An Alstom spokesman declined to comment.

U.S. prosecutors have focused on an approximately $120 million Indonesian power project that Alstom and Japanese trading company Marubeni Corp. were awarded the contract for in 2004, according to people familiar with the matter and public documents. Earlier this year, Marubeni agreed to pay an $88 million fine and plead guilty to foreign-bribery charges in connection with a scheme to pay bribes to high-ranking Indonesian officials to secure the contract

But the Alstom probe also involves "other bribery around the world," a prosecutor said in court last year.

The settlement likely will reflect the increasingly global approach American prosecutors are taking to foreign bribery prosecutions. U.S. prosecutors began investigating Alstom in 2009, after French and Swiss authorities had begun their own bribery investigations of the firm, another person familiar with the matter said. The U.S. probe led to charges against a number of former Alstom executives.

The U.S. Foreign Corrupt Practices Act makes it a crime to bribe foreign officials in exchange for business. American companies have long complained the law causes them to lose business to less scrupulous foreign rivals, while leaving foreign bribe takers unpunished.

To address these complaints, prosecutors have sought greater cooperation from foreign law enforcement and aggressively prosecuted foreign companies that have a connection to the U.S. such as a local subsidiary. Prosecutors are pursuing allegations against Alstom's Connecticut subsidiary Alstom Power Inc.

The Alstom case has involved more than six years of investigation by law enforcement in the U.S., Switzerland and Indonesia. Indonesia's anticorruption unit Komisi Pemberantasan Korupsi helped U.S. prosecutors obtain evidence from the country, according to public records and people familiar with the matter. Indonesian prosecutors also obtained a three-year sentence for lawmaker Izedrik Emir Moeis, who was convicted of taking bribes from the company.

In the Alstom investigation, U.S. prosecutors have gone after individuals, which led to three former executives of Alstom pleading guilty to helping bribe Indonesian officials in exchange for energy contracts for the company.

One of these former executives became a confidential cooperator for the Federal Bureau of Investigation, according to court documents.

After admitting to helping bribe Indonesian officials 2012, former Alstom executive David Rothschild agreed to help the FBI investigation of Alstom in exchange for leniency. Mr. Rothschild agreed to help the FBI using "active investigative techniques" and keep his cooperation secret, according to court documents. His attorney Michael Jennings declined to comment.

Earlier this month, U.S. Justice Department criminal division head Leslie Caldwell made the rare move of publicly saying that she expects "additional law-enforcement actions" soon in a broader bribery probe of Alstom and other companies.

The company's level of cooperation has been a sticking point between prosecutors and the company, with the government complaining the company didn't cooperate for much of the yearslong probe, according to court documents.

Prosecutors were unhappy with the level of cooperation from the French firm, even after they sent the company a grand jury subpoena, according to a court transcript and another person familiar with the matter.

Alstom in 2011 replaced its lawyers in the probe with Washington, D.C., attorney Robert Luskin, a partner at Squire Patton Boggs that has represented high-profile clients including political consultant Karl Rove.

But the Justice Department remained unhappy with Alstom "The company really hasn't been cooperating," Connecticut-based federal prosecutor David Novick said in a November 2013 court hearing, adding that the firm had only complied in "fits and starts" with a grand jury subpoena and had not been producing documents from abroad not covered by the subpoena.

In March, Mr. Luskin said in a statement that "in the course of our regular consultations, the DOJ has not identified any ongoing shortcomings with the scope, level, or sincerity of the company's effort." He also said at the time that settlement negotiations had not yet begun. Alstom is "cooperating closely, actively, and in good faith," he said.

Write to Joel Schectman at joel.schectman@dowjones.com, Rachel Louise Ensign at rachel.ensign@wsj.com and Andrew Grossman at andrew.grossman@wsj.com

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