Tag Archive for 'News from elsewhere'

Alcatel-Lucent SA Settles US Bribery Charges

Published on 31/12/2010. Closed Tags: , , .

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.

David Gold announced as BAE’s monitor

Published on 02/09/2010. Closed Tags: , , .

The DOJ have confirmed that David Gold, the former litigator and newly retired senior partner of  UK litigation powerhouse, Herbert Smith,  has been appointed as independent corporate monitor of  BAE Systems.  His role commences now, for at least 3 years, and will involve assessing and monitoring BAE Systems’ compliance with an agreement it entered into earlier this year with the DOJ (more here, and here).  The role will include the evaluation of practices put in place after Lord Woolf was appointed by the company to investigate its ethical conduct in 2007.

Gold stated:

“One of my big jobs will be to see how much work’s been done to bring the report alive”

He will apparently be in touch with Woolf during the first phase of the appointment.

It would be unfair to leave the topic without commenting briefly on the question of conflict.  As  highlighted by the FCPA Professor, here,  BAE are a long standing client of Herbert Smith, and indeed previously represented Saudi Prince Bandar – the person at the epicenter of BAE’s alleged Saudi bribery scheme who received £1bn from BAE. Good points from the Professor, but will this compromise Gold? I don’t really think it will.  The role of the monitor is to look at BAE’s systems and procedures, and lead – in the public spotlight – a team of lawyers and accountants that can do that.  Gold has lots of experience doing that, and I think he’s well suited to the role.  He’s not there to rake over the coals of BAE’s corporate history.

Kenneth Clarke Appointed New Anti-Bribery Champion

Published on 15/06/2010. Closed Tags: , .

Justice Secretary Kenneth Clarke has been appointed as the UK’s new international anti-corruption champion, suceeding former incumbent Jack Straw.  In his new role, Clarke  will have to ensure that the Bribery Act 2010 is fully implemented without any hitches.

 Mr Clarke said:

I will be working closely with colleagues across Departments, devolved Administrations, law enforcement, prosecution authorities and regulatory agencies to ensure a coherent and joined-up approach to combat international corruption.

The champion role sends out a clear message that the UK coalition Government will not tolerate bribery or corruption and that we will work together to stamp out these practices across the board.

Macmillan Debarred by the World Bank

Published on 06/05/2010. Closed Tags: , , .

UK-based publishers, Macmillan, which operates through 350 companies in over 80 countries, has been debarred by the World Bank after admitting bribery in Sudan. The debarment is under the bank’s rules and lasts initially for 6 years, reducing to 3 for good behaviour, which  involves appointing a compliance monitor.

Macmillan is fully owned by the Germany publishing giant Verlagsgruppe Georg von Holtzbrinck.

There are only sparse details of the unlawful payments, but it is clear that  Macmillan admitted engaging in bribes between 2008 and 2009 in an attempt to get a contract from a Sudan trust fund to print textbooks for the education rehabilitation project in the south of the country.  The fund had been set up by the World Bank  in 2006 to finance the rebuilding of South Sudan’s economy, government, health and education systems devastated by decades of civil war.

We understand the the SFO are now investigating, so it is likely that we have not heard the last of this.

The World Bank press release can be found here. More information about the World Bank compliance monitoring proram can be found here.

Robert Dougal: De Puy executive charged with Greek healthcare bribes

Published on 09/12/2009. Closed Tags: , , .

The SFO reports that it has charged Robert Dougal, a former Vice President of Market Development of DePuy International Limited.  DePuy are a part of Johnson & Johnson (it was acquired in 1998) which has already been (partway?) through the mill in the US. 

It will be recalled that in September 2007, leading manufacturers of orthopedic implants: Biomet, Stryker, Zimmer, Smith & Nephew, and Depuy settled with the DOJ and SEC (paying penalties of $310 million) and accepted that they had paid bribes and kickbacks to US doctors who had bought their products.

In all, according to statements from the five companies, more than $200 million was been paid to doctors, clinics and university health systems across the country in 2007.  The companies admitted to no wrongdoing: they said that fees and royalties were paid to doctors who helped invent and conduct clinical trials on experimental products; others were payments for those experts who advise the manufacturers or teach others how to implant the devices, or were reimbursements for “reasonable costs.”
But the domestic US investigations were just the tip of an iceberg, and we understand that investigations continued into payments to doctors in other jurisdictions, including  Greece, Poland and Germany.

This UK summons alleges that Dougal conspired to make corrupt payments and /or gave inducements to medical professionals working in the Greek public healthcare system in relation to the supply of orthopaedic products between February 2002 and December 2005.  The case was committed to the Crown Court until 3 February 2010.

It is likely that we will have more to report about this sector soon.

A copy of the (very short) SFO press release is found here  .  The Times 2007 article is here.