Alcatel To Pay $137 Million In Bribery Settlement

The U.S. Securities and Exchange Commission has found that Alcatel began bribing foreign government officials nearly a decade ago and the company, now called Alcatel-Lucent, has agreed to pay $137 million in penalties relating to the violations, according to an SEC announcement issued this week.

The SEC complaint charged that executives acting on Alcatel's behalf concealed undocumented payments to government officials in Costa Rica, Honduras, Malaysia, and Taiwan between December 2001 and June 2006. Alcatel merged with Lucent Technologies late that year in a deal that has made Alcatel the dominant partner in the merger. The company is based in Paris.

"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 Robert Khuzami, director of the SEC's division of enforcement, in a statement. "Alcatel and its subsidiaries failed to detect or investigate numerous red flags."

The SEC stated that the payments were improperly recorded and were consolidated into the Alcatel's financial statements.

Without admitting any wrongdoing, the company agreed to pay more than $45 million to settle the SEC charges and also to pay an additional $92 million to the Justice Department on related charges. Alcatel was charged with violating the Foreign Corrupt Practices Act, which prohibits U.S. companies and companies whose stock trades on U.S. exchanges from making illegal payments to foreign governments to obtain favorable treatment.

An Alcatel-Lucent executive was quoted in media reports saying the firm has implemented procedures that will prevent such violations from occurring again.

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