Alcatel Faces Informal SEC Inquiry
For now, the SEC is only launching an "informal inquiry," according to a form F-3 filed by Alcatel on Wednesday. The form also says Alcatel has told the SEC and the U.S. Department of Justice that it would cooperate with any investigation, although it's unclear whether either organization will formally look into the matter.
The troubles stem from a bribery scandal where payments were allegedly made to "various state and local officials in Costa Rica," two political parties in Costa Rica, and representatives of Grupo ICE, the state-owned telephone company, on behalf of Alcatel, according to the SEC filing. The officials involved include Miguel Angel Rodriguez, who served as Costa Rica's president from 1998 to 2002.
The accusations led Alcatel to launch an internal investigation (see Costa del Kickback?). Rodriguez, bowing to pressure, has since resigned as secretary general of the Organization of American States.
An Oct. 27 press release from Alcatel noted the termination of "two senior employees" and an intent to pursue criminal charges. One of the officials apparently was Edgar Valverde, president of Alcatel's Costa Rican operations, who was detained by officials last month (see Former Alcatel Exec Detained). The other employee is described by the filing as "a vice president-Latin America of a French subsidiary."
Alcatel is terminating its contracts with the local consultants involved in the scandal and is "in the process of pursuing criminal actions" against them as well.
Of course, Costa Rican officials have investigations of their own going on, and the F-3 form notes that if they find Alcatel violated the law, it's possible the company could be barred from bidding for contracts for a time. This would be a PR blow to the company but would have relatively little financial impact; Alcatel was expecting $26 million from Costa Rican contracts in 2004, according to the filing.
— Craig Matsumoto, Senior Editor, Light Reading