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Telecom company reaches settlements with DOJ and SEC in bribery case

By Erin Bock

[JURIST] Global telecommunications organization Alcatel-Lucent [corporate website] on Monday agreed to pay more than $137 million [press release] to resolve investigations into its sales practices by the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) [official websites]. The company will pay $92 million as part of a deferred prosecution agreement to resolve the criminal charges filed today by the DOJ in the US District Court for the Southern District of Florida [official website]. The charges consist of one count of "violating the internal control provisions" of the Foreign Corrupt Practices Act (FCPA) [materials] and one count of "violating the books and records provisions" of the FCPA. Additionally, the DOJ filed charges against three of the company's subsidiaries for "conspiring to violate the anti-bribery, books and records, and internal control provisions" of the FCPA. The subsidiaries have agreed to plead guilty to these charges. According to the DOJ statement, the company and its subsidiaries made improper payments to foreign government officials in order to obtain contracts for business in Costa Rica, Honduras, Malaysia and Taiwan and also violated FCPA regulations by hiring third-party sales and marketing agents. The company profited more than $48 million dollars from these transactions. As part of the settlement, Alcatel-Lucent agreed to enhance their compliance procedures, retain an independent compliance monitor for three years, and submit yearly reports to the DOJ. In a separate settlement with the SEC, the company consented to a permanent injunction against FCPA violations and agreed to pay more than $45 million to resolve the matter. Alcatel-Lucent released a statement [text] welcoming the settlements and announcing procedures to prevent such violations from occurring in the future.

Alcatel committed these violations prior to merging with Lucent Technologies in December 2006. Lucent has fought its own legal battles relating to patent infringement. In 2003, Lucent filed 15 patent claims alleging that PC makers violated patents governing digit music technology developed by its research and development organization, Bell Laboratories [corporate website]. Microsoft [corporate website] joined the litigation as an intervenor and counter-claimant, due to its wide circulation of Windows Media Player through its Windows operating system. Claims were also filed against Gateway and Dell [corporate websites]. In February 2007, a federal jury in California found that Microsoft violated two patents and awarded Alcatel-Lucent $1.52 billion in damages [JURIST report]. One week later, a federal judge dismissed [JURIST report] Alcatel-Lucent's second patent infringement suit filed against Microsoft concerning patents related to speech recognition technology. In August 2007, a federal judge overturned the $1.52 billion jury decision [JURIST report], ruling that the verdict "was against the clear weight of the evidence." The US Court of Appeals for the Federal Circuit [official website] affirmed [JURIST report] the decision in 2008.

Full post as published by JURIST - The Paper Chase on December 28, 2010 (boomark / email).