Drahi in 'shock' over Altice corruption probe

Patrick Drahi, the billionaire founder and controlling shareholder of Altice International, said the corruption allegations aimed at the company's Portuguese operations over procurement activities have "come as a shock and come as a huge disappointment to me."

Drahi's public comments, made Monday during a Q2 2023 call for debt investors of Altice International, were his first since the corruption probe surfaced last month.

"If these allegations are true, I feel betrayed and deceived by a small group of individuals, including one of our oldest colleagues," Drahi said. And if the allegations are true, the individuals behind them had "carefully hidden their actions from me, their colleagues and the total group," he added.

Drahi reiterated that Altice International has launched internal investigations. He said the company acted immediately upon learning of the allegations and took "swift actions to understand the truth and to protect the group from any harm in the event these allegations are substantiated."

While the initial scope of the investigation is limited to Portugal, Drahi noted that the company has already identified Altice entities outside Portugal that have done some business with the affected suppliers identified by the Portuguese authorities.

"Although our investigations are still ongoing, we estimate that the case concerns a very small part of our global purchasing – low-to-mid single-digits of our total expenditure, mainly concentrated in technical purchasing," he said.

Steps taken

Drahi said Altice immediately placed 15 employees on leave in Portugal, France and the US. Linked to the investigation, Armando Pereira, an Altice co-founder and an exec purported to be Drahi's right-hand man, was recently placed under house arrest. Pereira has reportedly denied any wrongdoing.

Drahi noted that he has asked all the company's CEOs to implement measures including the suspension of payments to and purchases from entities potentially implicated by the initial investigation.

Altice USA, the company formed via the acquisitions of Cablevision Systems and Suddenlink Communications, detailed some of those moves last week during its own Q2 2023 earnings call.

In addition to launching an internal investigation into its procurement activities and the suspenion of some of them, Altice USA announced the hiring of Jennifer Yohe, an exec late of Comcast, DZS and MediaKind, as chief procurement officer. She takes over for Yossi Benchetrit, one of the Altice execs put on leave amid the ongoing investigation.

Drahi noted that Altice International has also moved to make arrangements for alternative suppliers where it can and will make additional changes "as soon as practical" in areas critical to the business that could not be changed in a matter of weeks.

No impact on guidance

Drahi said Altice International doesn't expect the corruption probe to impact the company's cash, liquidity or guidance for 2023 and beyond.

Drahi stressed that it's the company's understanding that the allegations are limited to a "very small group of individuals" who worked together "despite the clear internal controls in place."

"I do believe that our governance was good and that we can trust all of our management teams," he said.

Drahi added that he has been taken aback by the coverage of the investigation. "It is very unpleasant to see the word 'corruption' next to the name of our group and most of the time … next to my name, but not that our group is a victim and not accused," he said.

Drahi and the Altice International management team, including "some country CEOs," will host investor meetings in London and New York in September, according to the company.

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— Jeff Baumgartner, Senior Editor, Light Reading