San José, Costa Rica, since 1956

ICE Seeks Damages In Corruption Case

A half year after the Costa Rican Electricity Institute (ICE) cut short its contract with French telecommunications giant Alcatel-Lucent, the institute is demanding the firm hand over $60 million for losses incurred while the company operated 400,000 GSM cell phone lines here.

Pedro Quirós, president of ICE, which runs the nation’s telecom monopoly, made the announcement during a press conference Monday. The news came after ICE decided last Friday it would attach a civil case to the criminal charges against former President Miguel Angel Rodríguez (1998-2002) and 10 others in the ICE-Alcatel corruption scandal that shook the nation in 2004.

Former Alcatel officials are accused of shelling out $9.6 million in bribes to Costa Rican officials in connection with the $149 million cell phone contract ICE awarded the company in 2001 (TT, Aug. 3).

In February, ICE announced it would end its contract with Alcatel two years early, and that it would assume operation of the 400,000 mobile phone lines – an option stipulated in the contract in case ICE was not satisfied with Alcatel’s service (TT, Feb. 9).

Though part of the decision stemmed from widespread problems with coverage in the areas for which Alcatel is responsible, Quirós said the corruption allegations “weighed heavily” in the final decision.

“It’s a story I don’t ever want to repeat,” said Quirós at the Monday press conference, during which reporters badgered him to set a timeline for improvements in coverage.

ICE is struggling to provide better GSM coverage amid the corruption scandal and fallout with Alcatel that prompted the litigation.

The acción civil resarcitoria the institute plans to file is a civil portion of the state’s criminal lawsuit, in which ICE is claiming a total $19 million in damages. The Government Attorney’s Office is attaching its own civil case to the criminal proceedings, a claim totaling $52 million, which includes legal fees and interest, Government Attorney Ana Elena Brenes told The Tico Times. Both plaintiffs, who will claim that the scandal caused social damages to the public at large, have until next Friday to file the paperwork.

Once ICE and the Attorney’s Office file their civil complaints, the Chief Prosecutor’s Office is expected to present all the charges in a criminal court, and a judge will determine if the charges merit a trial, explained Judicial Branch spokesman Fabian Barrantes.

Brenes didn’t explain what the “social damages” are that the state has allegedly suffered, but the Government Attorney’s Office has said in the past that it was considering holding Rodríguez and former President Rafael Angel Calderón Jr. (1990-1994), who is involved in a separate corruption scandal that also broke in 2004, financially responsible for keeping voters away from the polls after the highest voter abstention rates in four decades last year following the scandals (TT,March 3, 2006).

The Attorney’s Office has also filed a civil action for $135 million against those implicated in the Finnish medical equipment scandal involving Costa Rica’s Social Security System (Caja). In that case, ex-President Calderón allegedly masterminded the distribution of hefty illegal payments related to the approval of a loan from Finland to purchase $39.5 million worth of medical equipment for public hospitals run by the Caja from a Finnish company represented here by Corporación Fischel.

Expanding the Network

In an attempt to offer more GSM lines – which ICE ran out of last October – the institute has awarded a $65 million contract to Swedish telecom firm Ericsson to purchase 300,000 lines from the company.

Though ICE had planned to have the lines available for clients by the end of this year, the contract has yet to be approved by the Comptroller’s Office, according to Comptroller spokeswoman Mariela Azofeifa.

Once the Comptroller’s Office approves the contract, Ericsson will have five months to install the new lines. ICE telecommunications manager Claudio Bermúdez said the network expansion will allow for more extensive coverage areas and more traffic of calls and text messages, thus less congestion.

ICE says there are 1.5 million cell phone lines connected in Costa Rica, just over a million that use GSM technology and the rest the older TDMA technology. Though GSM technology allows for a more efficient use of radio bandwidth and more users per channel, the better technology’s entrance into the Costa Rican market has been marred by the scandals and contractual problems that have meant poor coverage for users.

As for the $60 million ICE is demanding from Alcatel for a failure to meet its contract, the company hasn’t said whether it is willing to fork over any cash.

“We’re evaluating ICE’s decision and we’re going to prepare an adequate response. For now we don’t have any additional comments,” Marco Malfavon, Alcatel-Lucent communications director in Latin America, told The Tico Times via e-mail.

If Alcatel refuses to pay, that case could go to court as well, Bonilla said.

ICE has yet to begin fully operating the network Alcatel will leave behind, apparently because the takeover proved to be more complicated than expected. ICE has had to not only train its personnel in how to operate and upgrade a cell network, but it also has to negotiate the takeover with the Central American Bank for Economic Integration (CABEI). Under the contract, CABEI owns the network and Alcatel operated it. The training and negotiations will take several months, Quirós said.

Once ICE takes over the network in coming months, it will integrate the lines into the Ericsson network. As part of the contract, the Swedish company is to improve Costa Rica’s cell phone network by expanding the capacity of radio base controllers that balance telephone traffic and adding coverage to parts of the country without coverage.

Quirós said clients can expect to begin seeing improvements in coverage starting the end of this year.


Comments are closed.