AlcaLu Pays Up in Chinese Bribes Case
The U.S. Department of Justice announced today that Lucent Technologies Inc. -- now Alcatel-Lucent (NYSE: ALU) -- has agreed to pay a $1 million fine "to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA)."
What the FCPA was that all about?
Well, apparently, after an investigation lasting several years, Lucent was found to have "provided travel and other things of value to Chinese government officials and improperly accounted for certain corporate expenditures on behalf of those officials in company books and records."
Who knew Lucent was such a booster for international tourism?
The DOJ says, in its statement, that "from at least 2000 to 2003, Lucent spent millions of dollars on approximately 315 trips for Chinese government officials that included primarily sightseeing, entertainment and leisure."
And donuts? Were there donuts?
"These trips were requested and approved with the consent and knowledge of the most senior Lucent Chinese officials and with the logistical and administrative assistance of Lucent employees in the United States, including at corporate headquarters in Murray Hill, N.J.
"Lucent improperly recorded expenses for these trips in its books and records and failed to provide adequate internal controls to monitor the provision of travel and other things of value to Chinese government officials," the Justice Department says.
Want details? Keep reading:
"In 2002 and 2003 alone, there were 24 Lucent-sponsored pre-sale trips for Chinese government customers. Of these, at least 12 trips were mostly for the purpose of sightseeing. Lucent spent over $1.3 million on at least 65 pre-sale visits between 2000 and 2003. The individuals participating in these trips were senior level government officials, including the heads of state-owned telecommunications companies in Beijing and the leaders of provincial telecommunications subsidiaries."
Wow. Now that's customer service. Wait, it gets better:
"Between 2000 and 2003, Lucent also provided Chinese government officials with post-sale trips that were typically characterized as 'factory inspections' or 'training' in contracts with its Chinese government customers. By 2001, however, Lucent had outsourced most of its manufacturing and no longer had any Lucent factories for its customers to tour."
Load up the bus, everyone. We're going to do a factory inspection at Disneyland, and some training at Harrah's casino. Oh, you think we made that part up? Keep reading:
"These trips consisted primarily or entirely of sightseeing to locations such as Disneyland, Universal Studios, the Grand Canyon, and in cities such as Los Angeles, San Francisco, Las Vegas, Washington, D.C., and New York City, and typically lasted 14 days each and cost between $25,000 and $55,000 per trip."
Lucent admits to all of the conduct alleged, the agreement says, and has agreed to pay $1 million to the United States Treasury.
The Justice Department has agreed not to prosecute Lucent if it complies with all of the requirements contained in the agreement over a two-year term.
Separately, the Securities and Exchange Commission (SEC) today also settled a complaint against Lucent. In that deal, Lucent agreed to $1.5 million in civil penalties in connection with similar conduct.
Calls to Lucent officials in Disneyland were not returned by press time.
— Phil Harvey, Managing Editor, Light Reading