SEC Looks Into Alcatel Bribery Charges

The Security and Exchange Commission (SEC) has launched an informal inquiry into allegations that Alcatel made illegal payments to Miguel Angel Rodriguez, former President of Costa Rica, in order to secure contracts with ICE, the Costa Rican telephone company.

In an F-3 filing with the SEC, Alcatel noted that the SEC had launched the inquiry, and added that the allegations also involve "various state and local officials in Costa Rica, two political parties in Costa Rica and representatives of ICE, the state owned telephone company."

The payments were allegedly made on behalf of Alcatel in order to procure "one or more contracts for network equipment and services from ICE," the filing noted.

Miguel Angel Rodriguez was president of Costa Rica from 1998 to 2002, and in September of this year was named head of the Organization of American States (OAS). He resigned as head of OAS on October 8, after the allegations surfaced, and is under house arrest in Costa Rica.

The Costa Rican Attorney General and the Costa Rican National Congress are already investigating the matter. Additionally, Alcatel has contacted the U.S. Department of Justice to say that it will cooperate with any investigation it might pursue.According to the Associated Press, Jose Antonio Lobo, a former director of Costa Rica's power and telephone company, testified that he had accepted a $2.4 million "prize" on a $149 million cellular telephone contract that had gone to Alcatel in 2001, the year before Rodriguez left office. The Associated Press reported that Lobo said Rodriguez had received $510,000 of the payment, after asking for the majority of the money. It also reported that Rodriguez admitted receiving $140,000 from Lobo, but claimed it was only a loan that he used to finance his campaign for the OAS leadership.

The SEC investigation at this point is only an informal inquiry, and not a formal investigation. Depending on the results of the inquiry, it may launch a formal investigation.

The F-3 filing noted that "Alcatel has terminated the employment of the president of Alcatel de Costa Rica and a vice president-Latin America of a French subsidiary. We are also in the process of pursuing criminal actions against the former president of Alcatel de Costa Rica, the local consultants and the employee of the French subsidiary based on our suspicion of their complicity in an improper payment scheme and misappropriation of funds."

Alcatel's filing says that if it is found that Alcatel violated the law "Alcatel may be banned from bidding on public contracts within Costa Rica for a certain period and fines or penalties may be imposed on us."