A&O Shearman FCPA Digest | SEC v. Lucent Technologies Inc. (D.D.C. 2007)

Source Documents

Foreign Official
Chinese officials employed at state-owned or state-controlled telecommunications enterprises.

Nature of Business
Lucent Technologies Inc. (“Lucent”), a U.S. corporation, merged with Alcatel SA in 2006, forming a new entity, Alcatel-Lucent, incorporated in France. Lucent provides communications networks for telecommunications service providers, and its common stock was registered with the SEC pursuant to Section 12(b) of the Exchange Act during the relevant time.

Influence to be Obtained
Between at least 2000 and 2003, Lucent provided approximately 315 trips to the United States to over 1,000 Chinese government officials. The trips were primarily, and sometimes wholly, for sight‑seeing 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 or “services rendered – other services” (where no business‑related services were rendered). Lucent’s internal controls provided no mechanism for assessing whether any of the trips violated the FCPA. These trips and educational expenses were intended to procure contracts for the provision of communications networks systems worth at least $3 billion.

Enforcement
Without admitting or denying the allegations in the Commission’s complaint, Lucent consented to a final judgment on January 5, 2008, enjoining it from further violations of the FCPA, to implement an FCPA compliance protocol, and to pay a civil penalty of $1.5 million. Lucent also entered into a two‑year non‑prosecution agreement with the DOJ, admitting to the alleged conduct and agreeing to pay a $1 million penalty and to adopt new, or modify existing, internal controls.