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Lucent Agrees to Pay $1 Million Fine to Resolve FCPA Allegations


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December 26, 2007

Lucent Agrees to Pay $1 Million Fine to Resolve FCPA Allegations

By Anshu Shrivastava
TMCnet Contributing Editor

Lucent Technologies has entered into an agreement with the Department of Justice (DOJ) and has agreed to pay a $1 million fine to the United States Treasury, to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA).
Announcing the recent agreement, Alice S. Fisher, assistant Attorney General at Criminal Division, said that the agreement concludes a multi-year investigation into whether Lucent violated the FCPA when the company — prior to its November 2006 merger with Alcatel — provided travel and other things of value to Chinese government officials. In addition, the company is also said to have improperly accounted for certain corporate expenditures on behalf of those officials in company books and records.

DOJ noted that from 2000 to 2003, Lucent spent millions of dollars on approximately 315 trips for Chinese government officials that included primarily sightseeing, entertainment and leisure.
According to DOJ, these trips were requested and approved with the consent and knowledge of the most senior Lucent Chinese officials and with the logistical and administrative assistance of Lucent employees in the United States, including at corporate headquarters in Murray Hill, New Jersey.
Lucent, Fisher pointed out, improperly recorded expenses for these trips in its books and records and failed to provide adequate internal controls to monitor the provision of travel and other things of value to Chinese government officials.
Lucent has acknowledged that it provided Chinese government officials with pre-sale trips to the United States to attend seminars and visit Lucent facilities, and also engage in sightseeing, entertainment and leisure activities.
By 2001, DOJ noted that Lucent had outsourced most of its manufacturing and no longer had any Lucent factories for its customers to tour. However, Lucent still provided individuals with trips for factory inspections to the United States, Europe, Australia, Canada, Japan and other countries that involved little or no business content. As per DOJ, these trips consisted primarily or entirely of sightseeing and lasted for around 14 days each and cost between $25,000 and $55,000 per trip.
In the agreement, Lucent admits to all of the alleged conduct. In addition, the company also admits to other instances of providing travel and educational opportunities to Chinese government officials and to the improper recording of those expenses in its corporate books and records.
DOJ has agreed not to prosecute Lucent if it complies with all of the requirements contained in the agreement over a two-year term.
Anshu Shrivastava is a contributing editor for TMCnet. To see more of her articles, please visit her columnist page.
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