Alcatel-Lucent Bribery Scandal: The Ugly Face Of High-Profile Telecom Deals?

by Gaurav Kheterpal on January 5, 2011

Alcatel-Lucent is best known for its world-class telecom products and strategic relationships with some of the biggest wireless carriers all over the world. However, in the past few days, the French telecom giant has been in the news for all the wrong reasons. It has been under the legal scanner for allegedly bribing officials to secure contracts in several countries including Costa Rica, Honduras, Taiwan, Malaysia and Kenya.

Alcatel-Lucent is one of the most widely respected global brands in the telecom world and ranks as the biggest supplier of fixed-line phone networks in the world. Though the company has agreed to settle the criminal penalties ($92 million) and civil charges ($45 million), I’m sure that a tarnished image would hurt the company much more than a few million dollars spent here and there.

While I have no intentions to open the Pandora’s Box on the good, the bad and the ugly of telecom world, I’m deeply concerned by the aftermath of the Alcatel bribery scandal and it’s implications for the global telecom industry.

IMO, the bribery accusations against Alcatel-Lucent are significant for several reasons. First, it raises critical questions over the functioning of a global telecom giant as well as several governments across multiple continents. Secondly, it resurfaces the dubious role of alleged middle men and the so-called consultants and/or sub-contractors in high-profile telecom deals. Third, and it’s anybody’s guess, can such deals lead to networks or telecom infrastructure which adheres to the expected quality standards. I, for one, have my doubts about it.

The issue became even more concerning for Alcatel when the U.S. Securities and Exchange Commission and U.S. Justice Department made documents public last week alleging that French telecommunications company Alcatel-Lucent paid bribes to employees of Telekom Malaysia in exchange for nonpublic information. To make matters worse, Honduras said Wednesday it will reopen investigations into alleged bribery accusations against Alcatel-Lucent and seek settlement details from the U.S. Securities and Exchange Commission.

It was alleged that Alcatel-Lucent paid bribes to employees of Telekom Malaysia in exchange for nonpublic information. After these shocking revelations, Telekom Malaysia and Axiata Group have formed separate subcommittees to conduct internal investigations into alleged improper payments.

The Alcatel-Lucent bribery scandal has also led to turmoil in Australian telecom circles with Communications Minister Malcolm Turnbull summoning the National Broadband Network Company top management and asking them for “a detailed explanation”. It’s surely not a coincidence that in June, Alcatel-Lucent won a contract to supply NBN Co with up to $1.5 billion of optical and Ethernet aggregation equipment.

The story is no different in Kenya where the Communications Commission of Kenya has been defending itself over accusations that its officials received bribes from Alcatel-Lucent for the award of the country’s second mobile phone license to Kencell 10 years ago, and the purchase of telecommunications equipment.

Just to make myself clear, I’m not singling out Alcatel-Lucent as the “bad boys” of the telecom world. I well and truly believe that there are no saints in the business world and the telecom industry is no exception to that rule. I read this beautiful piece which I believe strongly echoes my thoughts on the Alcatel-Lucent bribery scandal. Surely, there are lessons to be learnt from this episode.

While telecom giants talk about the so-called zero-tolerance policy on bribery and corruption, it’s not a perfect world. Can there be any processes or regulations in place to avoid such situations? I, for one, am clueless. What about you? Please share your opinion by leaving a comment below this post.

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Written by: Gaurav Kheterpal. >. Follow > by: RSS>, Twitter >, >, or Friendfeed >

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