Alcatel-Lucent & Subsidiaries to Pay $92M for Bribing Foreign Officials
On December 27, 2010, the Justice Department announced that Alcatel-Lucent S.A. and three of its subsidiaries agreed to pay a combined $92 million penalty for bribing Costa Rican and Honduran government officials and Taiwanese legislators in violation of the Foreign Corrupt Practices Act, prior to its 2006 merger with Lucent Technologies Inc.
Alcatel-Lucent Enters Deferred Prosecution Agreement, Subsidiaries Plead Guilty
The Justice Department and Alcatel-Lucent entered into a deferred prosecution agreement for a term of three years. The three subsidiaries, Alcatel-Lucent France S.A., formerly known as Alcatel CIT S.A.; Alcatel-Lucent Trade International A.G., formerly known as Alcatel Standard A.G.; and Alcatel Centroamerica S.A., formerly known as Alcatel de Costa Rica S.A., were each charged with conspiring to violate the anti-bribery, books and records, and internal controls provisions of the FCPA and each has agreed to plead guilty to the charges. Additionally, Alcatel-Lucent and its subsidiaries agreed to implement FCPA compliance enhancements.
Subsidiaries Used Third Party Consultants to Pay Bribes to Foreign Officials
Alcatel-Lucent was formed in late 2006 after Lucent Technologies merged with Alcatel, a French telecommunications equipment and services company. From the 1990s through late 2006, Alcatel pursued many of its business opportunities around the world through subsidiaries and used third-party agents and consultants as conduits for bribe payments to foreign officials and business executives of private customers for the purpose of obtaining and retaining business in Costa Rica, Honduras, Malaysia and Taiwan.
Alcatel CIT won three contracts worth more than $300 million as a result of payments to Costa Rican government officials through its consultants in Costa Rica. Another subsidiary, Alcatel Standard, was able to retain contracts worth approximately $47 million by hiring a consultant in Honduras who would then pay the family of a senior Honduran government official. Alcatel Standard additionally used two consultants on behalf of another Alcatel subsidiary in Taiwan to assist in obtaining an axle counting contract worth approximately $19.2 million. According to court documents, Alcatel Standard’s purpose for hiring the consultants was so that Alcatel SEL could funnel payments through the consultants to Taiwanese legislators who had influence in the award of the contract.
Justice Dept and SEC Related Cases Result in Penalties of $137M
Coordinated enforcement actions by the Justice Department and the Securities and Exchange Commission have resulted in penalties of more than $137 million for related cases. Former executives of Alcatel subsidiaries were charged for FCPA violations in March 2007. In January 2010, Alcatel-Lucent agreed to pay $10 million to settle a corruption case brought by the Costa Rican government for bribing Costa Rican officials. The SEC also reached a settlement filed December 27, 2010 in which Alcatel-Lucent consented to a permanent injunction against FCPA violations and agreed to pay $45,372,000.
(See ITT’s Online Archives or 09/26/08 news, 08092699, for BP notice on former Alcatel CIT executive being sentenced for anti-bribery FCPA violations in Costa Rica.)