Alcatel alleviates bribery probe with settlement agreement

Dec 28, 2010
<p>French-based telecommunications equipment company, Alcatel-Lucent has agreed to pay more than $137 million in fines and penalties to resolve a foreign bribery investigation.<br /><br /></p>

On Monday, the Securities and Exchange Commission (SEC) accused the firm of violating the Foreign Corrupt Practices Act (FCPA) by paying bribes to foreign government officials in Costa Rica, Taiwan and Kenya to illicitly win business in Latin America and Asia.

According to the Department of Justice (DoJ), the US and European phone company supplier, admitted it earned $48.1 million in profits from the improper payments and has agreed to pay more than $45 million to settle the SEC’s charges and $92 million to settle DoJ charges.

Prosecutors said, the illegal conduct started in the late 1990s and continued through 2006. Between December 2001 and June 2006, Alcatel’s bribes went to government officials in Costa Rica, Honduras, Malaysia and Taiwan. The company also hired agents without proper controls in Kenya, Nigeria, Bangladesh, Ecuador, Nicaragua, Angola, Ivory Cost, Uganda and Mali.

Moreover, the SEC alleged in its complaint that all of Alcatel’s bribes were undocumented or improperly recorded as consulting fees by Alcatel subsidiaries and then consolidated into the company’s financial statements. Also, several Alcatel subsidiaries and geographical regions, including those who reported directly to the company’s executive committee, were aware or severely reckless in not knowing about its unethical foreign practices, the federal watchdog agency said.

‘Alcatel and its subsidiaries failed to detect or investigate numerous red flags suggesting their employees were directing sham consultants to provide gifts and payments to foreign government officials to illegally win business,’ said Robert Khuzami, director of the SEC’s division of enforcement. ‘Alcatel’s bribery scheme was the product of a lax corporate control environment at the company.’

The Justice Department said it filed criminal information against Alcatel charging one count of violating the internal controls provision of the FCPA, and another count of violating the books and records provision.

‘Foreign bribery weakens economic development, erodes confidence in the marketplace and distorts competition,’ said Mythili Raman, principal deputy assistant attorney general of the DoJ Criminal Division. ‘The resolutions announced today and our related prosecutions of corporate executives demonstrate our sustained commitment to combating such conduct wherever we find it.’

The settlement places Alcatel seventh on the top-ten FCPA list, said Dick Cassin owner and writer of the FCPA Blog.

Calls to Alcatel remained unacknowledged as of press time.

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