Alcatel-Lucent Pays $137 Million to Settle Bribery Lawsuits
Published on: 28th Dec 2010
Note -- this news article is more than a year old.
Alcatel Lucent has settled a long running bribery case with the USA's Securities and Exchange Commission and the Department of Justice. The initial agreements in principle with the two U.S. government agencies were disclosed in public filings last year and as part of the company's year end 2009 results filing issued in Feb 2010.
The case dates back to before the merger of Alcatel and Lucent and relates to the French side of the company.
According to the Department of Justice, Alcatel-Lucent's three subsidiaries paid millions of dollars in improper payments to foreign officials for the purpose of obtaining and retaining business in Costa Rica, Honduras, Malaysia and Taiwan. In addition to the improper payments, Alcatel-Lucent also admitted that it violated the internal controls and books and records provisions of the FCPA related to the hiring of third-party agents in Kenya, Nigeria, Bangladesh, Ecuador, Nicaragua, Angola, Ivory Coast, Uganda and Mali.
Overall, Alcatel-Lucent admitted that the company earned approximately US$48 million in profits as a result of these improper payments.
Alcatel-Lucent entered into a deferred prosecution agreement with the DOJ by which the company will be criminally charged with violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA), but prosecution of those charges will be deferred for a three-year period.
In addition, three Alcatel-Lucent subsidiaries will each plead guilty to a criminal information charging one count of conspiracy to commit anti-bribery, books and records, and internal controls violations of the FCPA. Alcatel-Lucent also agreed to resolve related civil anti-bribery, books and records, and internal controls charges filed by the SEC. Alcatel-Lucent recognized a provision of EUR93 million (USD137 million) in connection with these FCPA investigations in the fourth quarter 2009 so it will not impact this year's results. Early next year the settlements will be submitted to the U.S. Federal Court for formal approval.
Alcatel-Lucent announced in 2008 that it would terminate the use of sales agents and consultants -- the primary means by which certain former employees made the improper payments involved in the violations described in the DOJ and SEC settlement papers.