Alcatel-Lucent charged with FCPA violations

• Date: January 19, 2011
• Source: Admin

The Securities and Exchange Commission (SEC) has charged Paris-based telecommunications company Alcatel-Lucent, S.A. with violating the Foreign Corrupt Practices Act (FCPA) by paying bribes to foreign government officials to illicitly win business in Latin America and Asia. The company is to pay over $137 million to settle these charges levelled by SEC and the US Department of Justice (DOJ).

SEC ALLEGATIONS

The SEC has alleged that Alcatel’s subsidiaries bribed $8 million to government officials through consultants who did little or no legitimate work, in order to obtain or retain extremely lucrative telecommunications and other types of contracts. Alcatel has to pay $45 million to settle SEC’s charges and another $92 million to settle the criminal charges against it levelled by DOJ.

Robert Khuzami, Director of the SEC’s Division of Enforcement said, “Alcatel’s bribery scheme was the product of a lax corporate control environment at the company,” and added, ““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.”

According to the complaint lodged by the SEC in the Southern District of Florida, Alcatel had bribed government officials in Costa Rica, Honduras, Malaysia and Taiwan between December 2001 and June 2006. A subsidiary of Alcatel had provided at least $14.5 million to consulting firms in Costa Rica through sham consulting agreements for being used in the bribery ply. Various high-level government officials in Costa Rica received at least $7 million to ensure that Alcatel obtains or retains three contracts to provide telephone services in Costa Rica. Government officials were also bribed in Honduras to obtain or retain five telecommunication contracts. An Alcatel also bribed Taiwanese government officials for winning a contract for supplying railway axle counters to the Taiwan Railway Administration.

THE VIOLATION

The SEC has primarily accused Alcatel-Lucent of violating Section 30A of the Securities Exchange Act of 1934 which prohibits from making illicit payments to foreign government officials, through subsidiaries and agents, in order to obtain or retain business. Besides, it has also violated Section 13(b)(2)(B), Section 13(b)(2)(A) and Section 13(b)(5)of the Exchange Act.

Alcatel has received an injunction to pay $45.372 million to disgorge the wrongfully obtained profits and has been ordered to comply with certain undertakings, including an independent monitor for a three-year term. However, this settlement is subject to court approval.

ON ALCATEL-LUCENT

With operations in more than 130 countries, Alcatel-Lucent is a transformation partner of service providers, enterprises and strategic industries such as defense, energy, healthcare, transportation and governments all over the world, providing solutions to end-users. It leverages the technical and scientific expertise of Bell Labs, one of the leading names in the communications industry. The company combined two entities — Alcatel and Lucent Technologies — in 1986.
 

Source:

http://www.sec.gov/news/press/2010/2010-258.htm