Former Alcatel Exec Cries Foul

Pierre Suard, former chairman of Alcatel SA (NYSE: ALA; Paris: CGEP:PA), is out pumping a soon-to-be-published book in which he accuses his former employer of shady accounting practices. Suard himself resigned from Alcatel in 1995 amidst accusations that he was redirecting company funds to refurbish his home. Another scandal tied to Suard's reign involves a case in which Alcatel allegedly overbilled customer France Telecom SA.

After Suard aired some of his laundry in the French publication Le Parisien earlier this month, Alcatel's stock began to dip. Investors feared they were witnessing the birth of another Enron-like corporate accounting scandal.

In a message sent to Alcatel's employees, current chairman Serge Tchuruk downplayed Suard's accusations: "The least we can say, it is highly unusual that a former chairman, who left six years ago, now tries to destabilize a company that he used to manage [in order] to justify his past behavior and starts a press campaign in such sensitive times."

Suard contends that in 1995 Alcatel should have reported a substantial profit rather than the loss it reported. Alcatel says its results for that year were fine and that the charges it took against earnings were "not excessive." The company took a restructuring charge of €1.6 billion (US$1.38 billion) and a €1.7 billion ($1.47 billion) goodwill writeoff for companies it acquired that year.

Alcatel also said it doesn't deconsolidate its subsidiaries in order to transfer or hide operations. In fact, the company contends that one reason for its exceptional losses in 2001 was that it reduced the value of its assets and did not resort to "financial schemes to mitigate value losses."

Until Suard's book becomes widely available, it's difficult to say how he backs up his claims. But just his willingness to toss off allegations has emboldened other Alcatel critics.

Alan Dransfield, a former area manager for Alcatel in the Philippines, says he's intrigued by Suard's accusations. When Suard was chairman, Dransfield complained that several telephone systems Alcatel had designed and installed for the Philippines Long Distance Telephone Company were "inferior and unsafe." He also claims that several Alcatel managers misused the funds earmarked for the project.

When all was said and done, however, it was Dransfield who was sacked and charged with fraud. A warrant was issued for his arrest in the Philippines.

"When my original allegations went to Suard in 1995, he didn't do anything about it," says Dransfield. "It seems like now we're singing from the same songbook."

— Phil Harvey, Senior Editor, Light Reading
Confucius 12/4/2012 | 10:52:04 PM
re: Former Alcatel Exec Cries Foul These allegations have been peppering the Yahoo boards for weeks. Dransfield, who's been posting a steady stream of anti-Alcatel diatribes on the Yahoo board for quite some time now, comes across as an ex-employee with a vendetta and seems, to this reader, to be so consumed with hatred for his ex-employer that it seems difficult to take his criticisms at face value. Suard, for his part, also seems to have underlying motives other than complete discolure for his allegations.

I say let the allegations out into the light of day and let investigations into their veracity begin at once. I strongly suspect there is less here than meets the eye, but let the chips fall where they may.
The_Holy_Grail 12/4/2012 | 10:52:01 PM
re: Former Alcatel Exec Cries Foul Has LR turned into a rumor board? It would be nice to stay with relevant and factual articles (business & technical). Is there a company out there that hasn't been questioned? This does nothing to promote the almighty industry, but rather just air's a little dirty laundry.

FYI - supposedly the wall street journal published a black list of companies that may be in question.
Dransfield 12/4/2012 | 10:51:21 PM
re: Former Alcatel Exec Cries Foul Confucious,

I read your posting at the ALA site and concur with you 100% about letting the allegations out into the open. Let me also reasure that I am not on a vendetta or consumed with hatred, however, you are entilted to read the story as you wish.
You state that my claims on face value are difficult to accept. If Alcatel were operating a VALID transparency sytem, which they also wanted to be seen operating, they would have have taken my claims as PRIMA FACIE grounds for a FULL AND PROFESSIONAL INVESTIGATION, which they UNEQUIVOCALLY DID NOT.
ALA will NEVER allow a full and professional investigation as TOO many people will be embarrassment, not only at ALA but several international organizations and authorities who have failed their fiduciary duty.

I am amazed that not a single person at the ALA message board has not read Suard's New Book, which incidently would appear to be very supportive of my claims of serious shanigans at ALA.
I do believe the truth is slowly coming out and I expect the situation will get worse before it gets better as there ARE bigger skeltons yet in the cupboard.B.T.W., have you read Suard's book yet?
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