Alcatel reaches settlement in Costa Rica bribe scandal

January 3, 2011

French telecommunications company Alcatel-Lucent agreed to pay $137 million last week to settle a foreign bribery investigation spearheaded by the U.S. Justice Department over illegal payments made to Costa Rica, Honduras, Taiwan and Malaysia. Former Alcatel officials paid an estimated $9.6 million in bribes to Costa Rican officials, including former President Miguel Angel Rodríguez (1998-2002), from 2000 to 2004.

Alcatel’s international bribes, which earned the company an estimated $48.1 million, violated the U.S. Foreign Corrupt Practices Act, investigators charged. The company will pay $92 million as penalty for the criminal suit and $45 million in civil damages to the U.S. Securities and Exchange Commission.  

Alcatel’s bribes in Costa Rica were used to obtain a contract with the Costa Rican Electricity Institute (ICE), the state-run telecommunications company. ICE awarded Alcatel a $149 million mobile telephone contract in August 2001 for 400,000 GSM cell phone lines. During that time, Alcatel allegedly paid bribes to several Costa Rican officials, including former ICE board member José Antonio Lobo and his wife, U.S. citizen Jean Gallup (TT, Oct. 8, 2004). Lobo admitted to receiving payments.  

Lobo also testified that ex-President Rodríguez accepted 40 percent of the bribe payments (TT, Oct. 15, 2004). Rodríguez served a five-month prison sentence in Costa Rica’s La Reforma penitentiary from November 2004 to March 2005.

“We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again,” said Steve Reynolds, Alcatel-Lucent general counsel, in a statement released last week. “The violations largely occurred prior to the merger of Alcatel and Lucent Technologies and involved improper activities in several countries. We are pleased to have reached these settlements and look forward to putting these matters behind us.”

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