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AlcaLu Severs Rotten Ties

2:20 PM -- Here's an interesting item from French magazine Le Point, which suggests in a report published this week that Alcatel-Lucent (NYSE: ALU) is purging itself of hundreds of international sales agents because of concerns over potential corruption issues.

The report, naturellement, is in French, so you need to copy and paste into a translation tool, such as the one found on the Google (Nasdaq: GOOG) home page, if you want an English version of the story.

The gist of the article is that, as part of AlcaLu's planned reduced reliance on contractors, which was announced last December as part of a broader new set of measures, the company is severing ties with 348 contractors based in overseas markets on the advice of its lawyers. (See Verwaayen Unveils AlcaLu's New Plan .)

According to Le Point's sources, the thing the lawyers are worried about is potential non-compliance with business rules and ethics -- or "corruption," as it's known on the streets. The report says an internal review of overseas engagements has revealed a number of potential legal timebombs.

AlcaLu has recent experience of the difficulties that arise when bribes are used to secure business, as one of its former employees was sentenced in September 2008 for making corrupt payments to land business in Costa Rica. (See Former Alcatel Exec Sentenced, Former Alcatel Execs Indicted, and Alcatel Faces Informal SEC Inquiry.)

Bribery, corruption, and general bad behavior, it seems, are hardly unknown in the wonderful world of telecom. (See APAC Update: Bids, Bungs & Capex Concerns, Telenor Bans ZTE From New Deals, Siemens Seeks Damages From NSN Vice Chairman, Virgin Trials Interactive Ads, Lucent Admits to Bribery, Not So 'Jolly', Lucent Purges China Leaders, Saudi Firm Sues Lucent for Bribery, and Siemens Pays.)

If, as the Le Point article suggests, AlcaLu's CEO Ben Verwaayen has instigated a major cleanup campaign as part of his new companywide measures, that would be consistent with past behavior. When he was CEO at BT Group plc (NYSE: BT; London: BTA) the British carrier implemented a very strict set of rules regarding engagements with suppliers, specifically that "BT employees will not offer or accept gifts, hospitality or other inducements which encourage or reward a decision, or engage in bribery." (See BT Gets Tough With Suppliers.)

AlcaLu declined to comment on the specifics of the Le Point article, but a spokesman told Light Reading that "The company is reviewing all outside spend, and the use of third-party intermediaries is no exception. After a careful review, the company has decided to reduce the number of outside consultants and agents. We do not have any other comments."

AlcaLu's share price closed today on the Paris exchange at €1.75, up 3.7 percent.

— Ray Le Maistre, International News Editor, Light Reading

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