Alcatel pays $137m to settle bribery accusations

By Sean O’grady
Wednesday 29 December 2010 01:00

In the latest dramatic move by the authorities against corruption in trans-national corporations, telecoms giant Alcatel has agreed to pay more than $137m (£89m) to settle charges brought against it by US government agencies.

The Securities and Exchange Commission said that the French-based group had been paying bribes to officials in Latin America and Asia, in order to win business illegally, under the Foreign Corrupt Practices Act.

Alcatel agreed to pay some $45m to settle the SEC's suit. It will also hand over an additional $92m to settle separate charges which are being pursued by the US Justice Department.

The SECT claimed that Alcatel made illegal clandestine payments to officials in Costa Rica, Honduras, Malaysia and Taiwan between December 2001 and June 2006.

"We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again," said Steve Reynolds, the company's general counsel.

The SECT complaint, filed in Miami, said that all of the 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.

Robert Khuzami, director of the SEC's division of enforcement, said: "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."

The statement went on: "This business model was shown to be prone to corruption, as consultants were repeatedly used as conduits for bribe payments to foreign officials and business executives of private customers to obtain or retain business in many countries."

Shares in the Alcatel-Lucent group gained 1.9 per cent in European trading on news that the dispute had been resolved.

A rovion of $127bn had been made in the accounts.

The settlement is subject to court approval.

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