It has been widely reported that Paris-based Alcatel-Lucent SA has settled US charges for bribing officials in Costa Rica, Honduras, Malaysia, and Taiwan.
The French telecoms giant was formed in 2006 after US-based Lucent Technologies merged with French-based Alcatel. It works for companies and governments around the world, proving solutions for voice, data, and video, including through its Bell Labs subsidiary. It has operations in more than 130 countries, revenue of €15.2bn (2009) and employs over 77,000 people. Its corporate website is here.
It was announced on 28 December 2010 that the company and three subsidiaries will pay $137m in total comprising $92m to resolve criminal charges with the DOJ and $45m in disgorgement to the SEC. It had already paid $10m in January to settle corruption charges brought by the government of Costa Rica.
The DOJ and the parent company entered into a three-year deferred prosecution agreement (‘DPA’) for violating the accounting (internal controls and books and records) provisions of the FCPA. There were no charges brought under the anti-bribery provisions against the top company. Three subsidiaries (Alcatel-Lucent France S.A., formerly known as Alcatel CIT S.A.; Alcatel-Lucent Trade International A.G., formerly known as Alcatel Standard A.G.; and Alcatel Centroamerica S.A., formerly known as Alcatel de Costa Rica S.A.) were also charged and each agreed to plead guilty to conspiring to violate the antibribery, as well as the accounting provisions of the FCPA. A compliance monitor was imposed for a 3 year period.
The charges relate to behavior in Alcatel between 1999 and 2006. DOJ prosecutors said Alcatel-Lucent’s three subsidiaries bribed foreign officials to win business in Costa Rica, Honduras, Malaysia, and Taiwan. The company also hired agents without proper controls in Kenya, Nigeria, Bangladesh, Ecuador, Nicaragua, Angola, Ivory Coast, Uganda, and Mali. Overall, Alcatel-Lucent admitted making $48.1 million in profits as a result of its bribery.
The SEC’s civil complaint said all of Alcatel-Lucent’s bribes were “undocumented or improperly recorded as consulting fees in the books of Alcatel’s subsidiaries and then consolidated into Alcatel’s financial statements. The leaders of several Alcatel subsidiaries and geographical regions, including some who reported directly to Alcatel’s executive committee, either knew or were severely reckless in not knowing about the misconduct.”
Interestingly, one of the terms of the DPA was that Alcatel-Lucent agreed to stop using third-party sales and marketing agents in conducting its worldwide business. The DOJ said the unprecedented pledge was made on the company’s “own initiative and at a substantial financial cost.”
The other side of the merged company, Lucent, FCPA charges of its own in December 2007 with the DOJ and SEC. The settlement included a $1m criminal fine with the DOJ and $1.5m in civil penalties with the SEC. Lucent’s offenses involved payment of travel expenses for Chinese government officials from 2000 to 2003.
The case appears to stem from investigations by Costa Rican authorities, which Alcatel learned of in 2004. the investigations. It fired Christian Sapsizian, a French citizen and the company’s deputy vice president for Latin America and disclosed to the DOJ authorities that it had uncovered payments from employees and consultants to government officials and political parties. In September 2008, Sapsizian was sentenced to 30 months in prison for breaching the FCPA by bribing employees of the state-owned telecoms company in Costa Rica.
The FCPA Blog has further information, including the original DOJ and SEC charges, here.