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Alcatel-Lucent Agrees to $10 million Out-of-Court Settlement in Costa Rica Corruption Case

06 August 2015

According to reports, ALCATEL-Lucent paid $10 million in damages to the Costa Rican Electricity Institute (ICE) settling a civil corruption trial known as the ICE-ALCATEL scandal. The criminal case, however, will continue, according to an ICE press release.

It all started in the 1990s when Costa Rica started to transition from TDMA mobile telephone technology to GSM. In 2001, ICE awarded Alcatel a $419 million contract to supply 400,000 GSM lines. In 2004, however, headlines screamed “corruption” as the main Costa Rican newspaper, La Nación exposed that Alcatel executives paid bribes to win the contract. Top government officials including ex-President Miguel Ángel Rodríguez Echeverría, ICE managers and Alcatel top executives were indicted.

From there it reads like a “Who’s on First” routine. Defendants were convicted, acquitted, and then last year an appeals court ordered a review of the acquittals. Post ALCATEL/Lucent Technologies merger in 2008, the company began attempts to negotiate an out-of-court settlement in the civil case for damages against Costa Rica and ICE, making an initial $10 million payment to the Costa Rican government. Costa Rica rejected the proposals to settle until in early 2015, which then ICE accepted the $10 million proposal that was just paid.

The criminal case is particularly ugly as former President Rodríguez was sentenced to five years in prison for influencing awarding the contracts to ALCATEL. An appeals court overturned the conviction and acquitted him. Late last year, the acquittal was overturned and the appeals court was ordered to conduct a comprehensive analysis of the Rodríguez conviction and potentially issue a new ruling. Others involved were convicted and acquitted during the trial. Christian Sapsizian Auvignon, former vice president of ALCATEL Latin America, was not tried in Costa Rica, but pled guilty in a U.S. court to paying in excess of $2.5 million in bribes. He was sentenced to 30 months in prison in 2008 for conspiring to bribe Costa Rican officials, ordered to forfeit $261,500 and serve three years of supervised release.

There is still a $52 million civil action against the defendants, which will go nowhere until the criminal case is heard.

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