A&O Shearman FCPA Digest | In re Lucent Technologies Inc. (2007)

Source Documents

Foreign Official
Senior level officials of the Chinese government, including heads of state-owned telecommunications companies and provincial subsidiaries.

Nature of Business
Procurement of contracts for communications networks systems. Lucent Technologies Inc. (“Lucent”), a U.S. corporation, merged with Alcatel SA in 2006, forming a new entity, Alcatel-Lucent, incorporated in France.

Influence to be Obtained
From at least 2000 to 2003, Lucent paid all of the expenses, and often per diems, for approximately 315 trips to the United States by numerous Chinese government officials as well as providing various educational expenses for additional government officials. The trips were primarily, and sometimes wholly, for sightseeing and leisure rather than business purposes and were booked improperly in Lucent’s books and records, for example as “factory inspections” in locations where no factory existed. The educational expenses, which included graduate school tuition and expenses for an employee of a Chinese government ministry, were improperly recorded as “marketing expenses.” These trips and educational expenses were intended to procure contracts for the provision of communications networks systems worth at least $2 billion.

Enforcement
Lucent entered into a two-year non-prosecution agreement with the DOJ in December 2007, admitting to the alleged conduct and agreeing to pay a $1 million penalty and to adopt new, or to modify existing, internal controls. Lucent also consented to a final judgment with the SEC requiring it to cease and desist from further violations of the FCPA, to implement an FCPA compliance protocol, and to pay a civil penalty of $1.5 million.