NBN Co chief executive Mike Quigley has mounted a defence against claims he and his chief financial officer could have contributed to a poor management culture at their previous employer Alcatel, which US regulators have fined for alleged corruption in the company's South American subsidiaries.
The US Securities and Exchange Commission revealed in late December that Alcatel-Lucent had paid US$137 million to settle criminal and other charges arising from what it said were bribes paid to government officials in South-east Asia and Latin America between 2001 and 2006, with the aim of securing telecommunications contracts. During that period, both Quigley and NBN CFO Jean-Pascal Beaufret held top-level roles in the French company.
The Coalition — including Opposition Leader Tony Abbott and Shadow Communications Minister Malcolm Turnbull — had demanded answers from Quigley and Beaufret over the issue. But today Quigley maintained strong financial controls had been put in place at NBN Co to stop corruption occurring; although he noted it was impossible for any CEO to guarantee no criminal behaviour would ever be perpetuated by employees.
Quigley faced sustained questioning on the matter from journalists at an unrelated press conference on NBN Co's headquarters in Sydney today.
The chief executive pointed out that Alcatel-Lucent wasn't alone in having suffered alleged criminal activity among its employees during the period in question. "In the last three years, there have been 44 companies that have been subject to exactly the same thing," he said of the US Securities and Exchange Commission investigation. Companies like Siemens, General Electric, Daimler, Volvo and Shell had also been investigated, he said, while another 150 were currently on the SEC's list.
Quigley said that it was "complex" managing a company as large as Alcatel was at the time. The firm employed some 60,000 people in 130-odd countries, with revenues of $20 billion and in dozens of different languages.
He pointed out that at no time throughout the past five years' worth of investigations had the SEC sought to interview himself or Beaufret. He told journalists that at the time the bribes allegedly took place in Costa Rica and Honduras, he was the regional president of a completely different geography.
"I was looking after North America," he said. "They weren't interested in us."
Quigley also rejected SEC suggestions of a "reckless" management culture at Alcatel that could have contributed to the alleged bribes being overlooked. When thousands of transactions were occurring across 130 countries, if two employees colluded — as had appeared to have occurred in this case — they could get around the financial controls in place, according to Quigley.
"I wouldn't say there was an endemic culture," he said.
As for Beaufret, Quigley said the executive wouldn't have been appointed chief financial officer of the newly merged Alcatel-Lucent entity if the then-CEO and board hadn't had complete confidence in the executive. "Mr Beaufret is an extremely competent individual, a man of extremely high integrity, I've known him for many years. I can personally vouch for his integrity and his competence," he said.
Quigley added that the early years of the decade had also been a tough time for many telecommunications suppliers, courtesy of the dotcom crash that wiped many out.
"[Alcatel] was one of the survivors. A lot of other telco companies went belly up," he said. "I was living through it at the time. We went through the tech wreck at the time some of these things were happening. It was an existential issue for companies at that time."
Because of this, Quigley said, Alcatel did have strong financial and ethical controls in place. However, he noted that in hindsight, it was always possible to find areas of weaknesses in companies.
Alcatel-Lucent has won a significant contract with the NBN Co for the provision of optical and Ethernet aggregation equipment, which had led to questions given Quigley's links to the company.
Quigley reaffirmed that he and Beaufret had stepped back from the procurement decision-making process, leaving it to Kevin Brown, chief HR officer and head of corporate services.
Brown said that the contract was, in any case, a small one considering the project's overall cost. "It's a small number of a much bigger picture," he said.
When asked how many former Alcatel-Lucent employees had made their way into the NBN Co, Quigley said he couldn't say.
"You can name the big companies on one hand so, of course, there are people here from Telstra, people here from Optus, people here from Alcatel, people here from Lucent and other places. That's not a surprise," he said.