Alcatel-Lucent SA agreed to pay $137.4 million and change internal procedures to avoid U.S. prosecution for alleged bribes paid in Costa Rica, Taiwan and Kenya, according to a company regulatory filing.
Under an agreement in principle, the Justice Department would defer prosecution of Alcatel on charges it violated the internal controls and books and records provision of the Foreign Corrupt Practices Act, according to the Feb. 11 filing. Alcatel would enter into a three-year probationary period and agree to a French anti-corruption monitor.
Three subsidiaries — Alcatel-Lucent France, Alcatel-Lucent Trade and Alcatel Centroamerica — would plead guilty to violating the FCPA’s anti-bribery provisions, according to the filing. Paris-based Alcatel, the world’s biggest supplier of fixed-line phone networks, also agreed in principle on a civil accord with the Securities and Exchange Commission.
“There can be no assurances, however, that final agreements will be reached with the agencies or accepted in court,” according to the filing. “If finalized, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya.”
Under the Justice Department agreement, Alcatel would pay a $92 million criminal fine over three years. Alcatel also would enter into a consent decree with the SEC and pay $45.4 million, according to the filing.
Alcatel fell as much as 2.6 percent in Paris trading today. The company’s American depositary receipts, each representing one ordinary share, dropped 6 cents, or 2.1 percent, to $2.77 at 10:27 a.m. in New York Stock Exchange composite trading.
“Alcatel-Lucent’s new management has implemented vigorous compliance and training programs designed to prevent similar situations from happening in the future,” the company said in an e-mailed statement today. “In particular, within months of joining the company as CEO, Ben Verwaayen announced that we will no longer conduct our business through the use of sales and marketing agents and consultants.”
Justice Department spokeswoman Laura Sweeney and SEC spokesman Kevin Callahan declined to comment.
The Alcatel filing comes amid increased enforcement of the FCPA, a U.S. law used to fight bribery and illicit foreign payments.
On Feb. 5, BAE Systems Plc, Europe’s biggest defense company, said it would pay almost $450 million to settle U.S. and U.K. bribery investigations.
Daimler AG, the German carmaker, has agreed to pay about $200 million to settle claims with U.S. regulators over violations of the act, people familiar with the case said last week. The agreement is awaiting the approval of a U.S. judge, the people said.
The Alcatel case has spanned several years and led to criminal charges in federal court in Miami against two former company executives. One of those, Christian Sapsizian, is a former deputy vice president who pleaded guilty in June 2007.
Sapsizian, who negotiated Latin American contracts for Alcatel, admitted that he helped bribe a member of the board of Costa Rica’s state-owned telecommunications authority to secure lucrative cell phone contracts for the company.
Prosecutors said Sapsizian and Alcatel used a consulting company to funnel bribes to the Costa Rican official, who helped reward Alcatel with the cellular contracts. Sapsizian cooperated with prosecutors and is serving a 30-month prison term.
“The investigation has not yet concluded,” prosecutors said in a September 2008 court filing. “This is primarily because of the breadth and depth of illegal conduct around the world by the defendant’s former employer, its subsidiaries, its executives, and its ‘consultants,’ which was uncovered in large part with the defendant’s assistance.”
The Feb. 11 filing by Alcatel also discussed allegations about bid-rigging and illicit payments involving a Taiwan Railway contract, an investigation into an unidentified supply contract in Kenya, payments made by subsidiaries in Nigeria, and a French investigation of a submarine cable contract in French Polynesia.
In November, subsidiary Alcatel-Lucent Submarine Networks was charged in French Polynesia with “benefitting from favoritism” over contracts it was awarded in 2007 for a submarine cable between Tahiti and Hawaii, Alcatel said.
“Alcatel-Lucent is unable to predict the outcome of this investigation and its effect on ALSN’s business,” the company said.