Alcatel-Lucent Settles with U.S. on Bribery Charges

Alcatel-Lucent will pay fines totally $137 million to settle charges by the U.S. government that it paid bribes to win business in foreign countries. The company said it regrets the "improper activities" that took place.

Alcatel-Lucent has concluded settlements with the U.S. Securities and Exchange Commission and the Department of Justice, following investigations into violations of the Foreign Corrupt Practices Act, the company said in a Dec. 27 statement. The largest supplier of fixed-line phone networks, it entered into a deferred prosecution agreement with the DOJ and will be criminally charged with violations of the books and records and internal controls provisions of the FCPA, though it won't be prosecuted on these charges for a three-year period-should it be able to prove, in that time, that it has cleaned up its act, the case will be dropped.

Alcatel-Lucent said in the statement that it has additionally agreed to resolve "related civil anti-bribery, books and records, and internal controls charges filed by the SEC."

According to Bloomberg, the company has agreed to pay $137 million in fines related to allegations that it paid bribes in Costa Rica, Taiwan and Kenya, in order to gain business.

"We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again," Steve Reynolds, Alcatel-Lucent's general counsel said in a statement. "The violations largely occurred prior to the merger of Alcatel and Lucent Technologies and involved improper activities in several countries. These settlements resolve the company's FCPA liability with the DOJ and SEC. We are pleased to have reached these settlements and look forward to putting these matters behind us."

Reynolds added that in 2008, the company terminated the use of sales agents and consultants, which had been "the primary means by which certain former employees made the improper payments" that were the source of the DOJ and SEC investigations. According to Bloomberg, one consultant was a perfume distributor "with no telecommunications experience [who was hired] to perform --vaguely described marketing and advisory services,'" the company admitted.

Alcatel-Lucent now has a new CEO, new management, a new executive committee and a new Board of Directors, not to mention a new zero-tolerance policy regarding bribery and corruption. Finally, it has also implemented new live and Internet-based training that's designed to prevent "these types of situations" from happening again, said Reynolds.

During the fourth quarter of 2009, Alcatel-Lucent "recognized a provision" of the 93 million Euros connected to the FCPA investigations, so the settlement won't impact the company's bottom line this year, it added in the statement. In 2011, however, the settlement will be submitted to the U.S. Federal Court for approval.

"We are pleased to have reached these settlements," said Reynolds, "and look forward to putting these matters behind us."