Tuesday, December 25, 2007

Yet Another FCPA Matter - This Time It's Lucent

Cases involving the Foreign Corrupt Practices Act (FCPA) are clearly on the rise.  This time it involves a settlement with Lucent Technologies, Inc. The company will be paying a fine of one million dollars to resolve FCPA allegations. What is happening with these settlements is that the contours of what is permitted expenses and what will not be tolerated are coming to light.  Companies are finding out the hard way, that it is better to err on the side of not paying sums that might in any way be considered bribery to a foreign official.  In the Lucent matter, the DOJ press release states:

"Lucent acknowledged that it provided Chinese government officials with pre-sale trips to the United States to attend seminars and visit Lucent facilities, as well as to engage in sightseeing, entertainment and leisure activities. In 2002 and 2003 alone, there were 24 Lucent-sponsored pre-sale trips for Chinese government customers. Of these, at least 12 trips were mostly for the purpose of sightseeing. Lucent spent over $1.3 million on at least 65 pre-sale visits between 2000 and 2003. The individuals participating in these trips were senior level government officials, including the heads of state-owned telecommunications companies in Beijing and the leaders of provincial telecommunications subsidiaries.

Between 2000 and 2003, Lucent also provided Chinese government officials with post-sale trips that were typically characterized as “factory inspections” or “training” in contracts with its Chinese government customers. By 2001, however, Lucent had outsourced most of its manufacturing and no longer had any Lucent factories for its customers to tour. Nevertheless, Lucent provided individuals with trips for “factory inspections” to the United States, Europe, Australia, Canada, Japan and other countries that involved little or no business content. These trips consisted primarily or entirely of sightseeing to locations such as Disneyland, Universal Studios, the Grand Canyon, and in cities such as Los Angeles, San Francisco, Las Vegas, Washington, D.C., and New York City, and typically lasted 14 days each and cost between $25,000 and $55,000 per trip.

In the agreement, Lucent admits to all of this conduct, as well as other instances of providing travel and educational opportunities to Chinese government officials and to the improper recording of those expenses in its corporate books and records."

An additional cost that many companies can face when having to deal with FCPA allegations is the cost of attorney fees to respond to government investigations and actions. See also the WSJ here that talks about Alcatel-Lucent paying 2.5 million in fines.

(esp)

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» Foreign Corrupt Practices and The Dream Factory: Recent Cases inPoint from The New Market Machines
Yet Another FCPA Matter This Time Its Lucent: The White-Collar Crime Prof also notes a trend toward more vigorous enforcement of the Foreign Corrupt Practices Act. On Lucent-Alcatel, see also Beyond Cisco and the Fisco: Alcatel in Ban... [Read More]

Tracked on Dec 28, 2007 2:02:51 PM

» Foreign Corrupt Practices and The Dream Factory: Recent Cases inPoint from The New Market Machines
Yet Another FCPA Matter This Time Its Lucent: The White-Collar Crime Prof also notes a trend toward more vigorous enforcement of the Foreign Corrupt Practices Act. On Lucent-Alcatel, see also Beyond Cisco and the Fisco: Alcatel in Ban... [Read More]

Tracked on Dec 28, 2007 2:21:58 PM

» Foreign Corrupt Practices and The Dream Factory: Recent Cases inPoint from The New Market Machines
Yet Another FCPA Matter This Time Its Lucent: The White-Collar Crime Prof also notes a trend toward more vigorous enforcement of the Foreign Corrupt Practices Act. On Lucent-Alcatel, see also Beyond Cisco and the Fisco: Alcatel in Ban... [Read More]

Tracked on Dec 28, 2007 2:39:44 PM

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