Lucent suspected of bribing Saudi Arabian officials

[bigpoppanils]

Federal Probes Target Lucent Technologies

Fri Aug 22, 8:04 PM ET

By LINDA A. JOHNSON, AP Business Writer

TRENTON, N.J. - Telecommunications gear maker Lucent Technologies is being investigated by two federal agencies for possible violations of U.S. bribery laws in its operations in Saudi Arabia.

In a brief document filed Friday evening with the Securities and Exchange Commission (news - web sites), the company said it had been informed by the SEC and the Department of Justice (news - web sites) that they are investigating whether it violated the Foreign Corrupt Practices Act.

Murray Hill-based Lucent has been accused of bribing a Saudi official with cash and gifts worth $15 million in an effort to gain business from the Saudi Telecommunications Co., the country's monopoly wireless (news - web sites) provider.

The allegations were made by the National Group for Communications and Computers Ltd., a telecom company that provides Internet service in Saudi Arabia, in a lawsuit. The civil suit against Lucent was filed Aug. 8 in U.S. District Court for the Southern District of New York.

National Group alleges Lucent and a Swiss company, ACEC, paid more than $15 million in bribes between 1995 and 2002 to Ali Al-Johani, a former minister of Saudi Arabia's Ministry of Post Telephone and Telegraph, according to numerous news reports. The alleged bribes included payments for medical expenses, free use of private jets, payments for stays at luxury hotels in New York and Seattle and gifts to a Seattle hospital.

The lawsuit also claims Lucent was allowed to end a contract with National Group, costing that company more than $63 million.

A separate SEC filing Lucent made on Aug. 13 states that the lawsuit seeks damages of up to three times the $63 million under U.S. racketeering laws.

Lucent denied the allegations when the lawsuit was filed. In Friday's SEC filing, it said company officials were cooperating with the Justice Department (news - web sites) and the SEC.

Spokesmen for both federal agencies said late Friday that they could not confirm any investigation or comment on it.

Lucent spokeswoman Mary Lou Ambrus declined to discuss any details of the case Friday evening.

Lucent shares fell 2 cents to close at $1.84 on the New York Stock Exchange (news - web sites). The shares lost 3 cents more in extended trading.

Lucent has had previous troubles with the SEC. Two former sales executives were notified this spring that they could face civil charges from the SEC over their role in the company's aggressive sales and accounting conduct three years ago.

In February, Lucent reached a tentative agreement with the SEC to resolve an agency investigation that began in fall 2000, when Lucent disclosed that it had prematurely booked $679 million in revenues in the quarter ending the prior September.

That was at the beginning of the telecom industry slump, when the one-time Wall Street darling's fortunes reversed, setting off a spiral of massive layoffs, sales of parts of its business, and quarter after quarter of hefty losses.

___