Alcatel finalizes bribery settlement; $137M in all

French telecommunications company Alcatel-Lucent SA finalized its settlement Wednesday with the U.S. over bribes paid to officials in Costa Rica, Honduras, Malaysia and Taiwan.

The deal concluded in Miami federal court includes a $92 million penalty as part of a deferred prosecution agreement with the Justice Department. Alcatel also has already paid another $45 million to settle a related Securities and Exchange Commission case and $10 million in a corruption case brought by the Costa Rican government.

"It is one of the largest resolutions in the history of the Foreign Corrupt Practices Act," said Charles Duross, a top Justice Department fraud prosecutor.

Three Alcatel subsidiaries pleaded guilty to violating the anti-bribery law and will pay a combined $1.5 million in fines. The pleas were entered Wednesday by Steven R. Reynolds, general counsel of parent company Alcatel-Lucent.

Prosecutors said the bribes enabled Alcatel to win numerous multimillion-dollar telecommunications contracts in the four countries and were deeply ingrained in the company's business around the world. The illegal arrangements continued from at least the 1990s until late 2006, often using local consultants and agents as conduits to bribe foreign government officials.

"It was basically, 'Bribes is us,'" said U.S. District Judge Marcia Cooke. "Meaning that everybody is involved."

Cooke refused to designate a Costa Rican telecommunications company as a victim in the case. Lawyers for the firm, Instituto Costarricense de Electricidad, known by its Spanish acronym ICE, urged Cooke to throw out the plea deal as inadequate and because it included no restitution for the company.

But Duross noted that many of ICE's top officials were recipients of the bribes and that it did not qualify as a victim or for any restitution.

Under the deferred prosecution agreement, Alcatel-Lucent must abide by a number of conditions to make sure it does not embark on a new worldwide bribery campaign, including hiring of an independent compliance monitor. The case will be dropped in three years if the company meets its obligations.

The company is headquartered in Paris and has its main North American office in Murray Hill, N.J. It bought U.S.-based Lucent Technologies at the end of 2006.

The settlement arose after a former Alcatel executive, Christian Sapsizian, was charged in Miami with violating the foreign corruption law and began cooperating with U.S. investigators. Sapsizian was sentenced to more than two years in prison in 2008 and has since been released.


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