November 16, 2004
Lucent FCPA Woes
Lucent Technologies Inc., one of the largest telecommunications equipment providers, is caught up in a foreign government bribery scandal involving payments and perks to Dr. Ali Al-Johani, who was Saudi Arabia's telecommunications minister. A front-page article in the Wall Street Journal (Nov. 16) describes the benefits provided by Lucent on Dr. Al-Johani's behalf, including a $2 million donation to a cancer hospital that treated him. The article also points out that Lucent received over $5 billion in contracts from the Saudi Arabian government while it was providing these benefits. Last week, the SEC sent Wells Notices to three former Lucent executives, including former CEO Richard McGinn, that it intends to sue them for violating the FCPA in connection to payments to Saudi Arabian officials. The Justice Department is also investigating the company.
The usual pattern in FCPA investigations is that the company will settle an SEC action and plead guilty to a violation of the Act, paying fines and taking measures to strengthen its internal controls. The FCPA is almost 30 years old, yet the same ways of doing business abroad remain troublesome. (ph)