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Alcatel to pay $137 mln bribery settlement

It seems Hewlett-Packard isn’t the only technology giant willing to engage in a little backhanded deal-making to secure lucrative government contracts: communications gear maker Alcatel has agreed to pay some $137 million to settle charges brought by the SEC and Justice Department that it paid sham consulting fees to bribe government officials in Asia and Latin America to secure lucrative contracts.

“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 the SEC’s enforcement division director Robert Khuzami, in a statement. “Alcatel’s bribery scheme was the product of a lax corporate control environment at the company.”

According to the SEC, between December 2001 and June 2006 Alcatel bribed officials in Honduras, Costa Rica, Taiwan, and Malaysia, with the bribes typically being recorded as as “consulting fees” in the records of Alcatel subsidiaries and then consolidated into Alcatel’s financial statements—if they were recorded at all. The SEC says the heads of several Alcatel subsidiaries either knew about the bribes or were “severely reckless” in not knowing about the conduct. Some of those heads reported directly to Alcatel’s executive committee.

The settlement requires Alcatel pay back all the profits it made on the illegally-obtained contracts.

“We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again,” said Alcatel-Lucent general counsel Steve Reynolds. Alcatel maintains that it is a completely different company today than it was when these abuses occurred through the end of 2006: they have a different executive committee and CEO, no longer employes sales agents and consultants, and has a “zero-tolerance” policy regarding corruption and bribery.

Paris-based Alcatel is a leading supplier of communications gear to U.S. and European phone companies and communications operators.