Lucent Agrees to $1 Million Fine for FCPA Violations
December 2007
Lucent Technologies Inc., a global communications solutions provider has entered into an agreement with the Department of Justice to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA). The company provided travel and other items of value to Chinese government officials and included it as expenses in company books and records.
During 2000 to 2003 the company spent millions of dollars on 315 trips for Chinese government officials that included sightseeing, entertainment and leisure. On all occasions the trips were approved by senior officials and even by corporate headquarters. Some trips were characterized as “factory inspections” or “training” in contracts, however by early 2001 Lucent Technologies Inc. had outsourced nearly all of its manufacturing and did not have any factories for customers to tour, yet many Chinese government officials were provided with trips for “factory inspections” around the world which involved little or no business content. These trips consisted of sightseeing to locations such as Disneyland, Universal Studios, the Grand Canyon and many other attractions. The trips lasted around 14 days and each costs between $25,000 and $55,000 per trip.
In the agreement with the Department of Justice Lucent admits all of this conduct and even other instances of providing travel and educational opportunities to Chinese government officials and admits to improperly recording them as expenses in its corporate books and records. The company has agreed to pay a penalty of $1 million to the United States Treasury and will adopt new internal controls, policies, and procedures. The new internal controls must ensure that the company makes and keeps fair and accurate books, records, and accounts as well as an anti-corruption compliance code, standards and procedures to ensure that any violations of the FCPA will be detected immediately.
The Justice Department has agreed not the prosecute Lucent Technologies Inc. as long as it complies will all requirements contained in the agreement over a two year term. The Securities and Exchange Commission (SEC) has filed a settled complaint against Lucent and the company has agreed to pay them $1.5 million in civil penalties in connection with similar conduct.
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