Alcatel has bigger worries than XT fix

The company that installed Telecom's troubled XT network faces different problems with other parts of its business elsewhere in the world, a United States corruption probe shows.

Alcatel-Lucent has agreed to pay US$137.4 million ($196.37 million) and change internal procedures to avoid US prosecution for alleged bribes paid in Costa Rica, Taiwan and Kenya, says a company regulatory filing.

Under an agreement in principle, the Justice Department would defer prosecution of Alcatel on charges it violated the internal controls and books and records provision of the Foreign Corrupt Practices Act (FCPA), according to the February 11 filing.

Alcatel would enter into a three-year probationary period and agree to a French anti-corruption monitor.

Three subsidiaries - Alcatel-Lucent France, Alcatel-Lucent Trade and Alcatel Centroamerica - would plead guilty to violating the FCPA's anti-bribery provisions, according to the filing.

Paris-based Alcatel, the world's biggest supplier of fixed-line phone networks, also agreed in principle on a civil accord with the Securities and Exchange Commission.

"There can be no assurances, however, that final agreements will be reached with the agencies or accepted in court," according to the filing.

"If finalised, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya."

Under the Justice Department agreement, Alcatel would pay a US$92 million criminal fine over three years. Alcatel also would enter into a consent decree with the SEC and pay US$45.4 million, according to the filing.

Alcatel said yesterday, "Within months of joining the company as CEO, Ben Verwaayen announced that we will no longer conduct our business through the use of sales and marketing agents and consultants."

The Alcatel case has spanned several years and led to criminal charges in a federal court in Miami against two former company executives.

In spite of the action affecting other parts of the business, Telecom's problems are a top priority, Alcatel-Lucent has said.

"Resolving the XT network problems in New Zealand is the single most important operational matter in the world for Alcatel-Lucent right now," said the company's Asia Pacific president, Rajeev Singh-Molares, last week. "Our entire executive and senior engineering team, including global chief executive Ben Verwaayen, are involved."

- BLOOMBERG