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Alcatel-Lucent Settles Bribery Charges with SEC and Justice Department

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December 29, 2010

Alcatel-Lucent Settles Bribery Charges with SEC and Justice Department

By Tracey E. Schelmetic, TMCnet Contributor

Though bribery may be the normal routine in business in some parts of the world, it turns out that there are still rules against it. European telecom giant Alcatel-Lucent SA discovered this the hard way, and the Paris-based company has agreed to pay more than $137 million to settle charges brought against it by the Securities and Exchange Commission and the Department of Justice, according to the Associated Press.

The SEC (News - Alert) recently accused the company of violating what's known as the “Foreign Corrupt Practices Act” by paying bribes to foreign government officials to illicitly win business in Latin America and Asia. Alcatel, which is a top supplier to U.S. and European phone companies, agreed to pay more than $45 million to settle the SEC's charges. It will pay an additional $92 million to settle criminal charges announced by the Justice Department.

Unsurprisingly, a representative for Alcatel couldn't immediately be reached for comment.

According to the SEC's complaint, Alcatel's bribes went to government officials in Costa Rica, Honduras, Malaysia and Taiwan between December 2001 and June 2006. All bribery payments were undocumented or improperly recorded as “consulting fees” by Alcatel subsidiaries and then consolidated into the company's financial statements. The complaint also says leaders of several Alcatel subsidiaries and geographical regions either knew or were severely reckless in not knowing about the misconduct.

“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,” said Robert Khuzami, director of the SEC's division of enforcement, said in a statement.

The settlement is subject to court approval.

Last month Alcatel reported a profit for the third quarter after losses last year, helped by recovering demand for wireless and growth in Asia and eastern Europe.

Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Tammy Wolf

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