Alcatel Lucent fined over bribes

Alcatel Lucent fined over bribes

Summary: French-based telecom equipment giant and NBN contractor Alcatel-Lucent has agreed to pay US$137 million in fines and penalties to settle US charges it paid bribes to win contracts in Latin America and Asia, officials said.

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TOPICS: Broadband, Legal, NBN
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French-based telecom equipment giant and NBN contractor Alcatel-Lucent has agreed to pay US$137 million in fines and penalties to settle US bribery and corruption charges, alleging it paid bribes to win contracts in Latin America and Asia, officials said.

The US Securities and Exchange Commission (SEC) said Alcatel's subsidiaries "used consultants who performed little or no legitimate work to funnel more than US$8 million in bribes to government officials in order to obtain or retain lucrative telecommunications contracts and other contracts."

According to the SEC complaint, Alcatel's bribes went to government officials in Costa Rica, Honduras, Malaysia, and Taiwan between December 2001 and June 2006.

"The SEC alleges that the same Alcatel subsidiary bribed officials in the government of Honduras to obtain or retain five telecommunications contracts. Another Alcatel subsidiary made bribery payments to Malaysian government officials in order to procure a telecommunications contract," the SEC said in its statement.

Alcatel-Lucent admitted that the company earned some US$48.1 million in profits as a result of the actions, officials 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."

Alcatel agreed to pay more than US$45 million to settle the SEC's charges, and pay an additional US$92 million to settle criminal charges with the US Department of Justice.

The Justice Department said the company violated the Foreign Corrupt Practices Act (FCPA) by Alcatel prior to its 2006 merger with US-based Lucent Technologies.

The US Justice Department and SEC reached the settlement with the Paris-based firm, according to a statement on Monday.

US officials said the bribery payments were undocumented or improperly recorded as consulting fees in the books of Alcatel's subsidiaries and that head of units in the regions "either knew or were severely reckless in not knowing about the misconduct".

Locally, Alcatel-Lucent is a major contractor to the National Broadband Network Company (NBN Co), after scoring a deal in June for the supply of Gigabit Passive Optical Network (GPON) gear and ethernet aggregation equipment needed to operate the NBN.

ZDNet Australia contacted NBN Co for comment regarding the impact the settlement would have on the supplier relationship, however no response was provided at the time of publication.

The case stemmed from an investigation by US agencies along with those from Costa Rica and France, US officials said.

Topics: Broadband, Legal, NBN

Luke Hopewell

About Luke Hopewell

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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