Another NBN Co executive, Jean-Pascal Beaufret, has distanced himself from the corruption affair despite being Alcatel’s chief financial officer at the time. MIKE QUIGLEY, the man Kevin Rudd appointed to head the national broadband network, denies being involved in a multimillion-dollar bribery scandal that occurred during his time as a top executive at the French telecommunications giant Alcatel. The developments are likely to provide a further headache for the federal government, which faces claims the $36 billion network is on a financial knife-edge and that sluggish take-up will result in a heavy burden for taxpayers.

Advertisement: Story continues below
Photo: AFP NBN Co chief executive Mike Quigley.

According to the SEC, Alcatel’s bribes went to officials in Costa Rica, Honduras, Malaysia and Taiwan between December 2001 and June 2006. While the US Securities and Exchange Commission does not name Mr Quigley in its filing, it accuses Alcatel of having a ”lax corporate environment” which helped foster a culture of improper conduct. It also alleges senior executives ignored warning signs. Alcatel agreed yesterday to pay more than $US45 million to settle the SEC’s charges, as well as pay an additional $US92 million to settle criminal charges announced by the US Department of Justice. The actions of Alcatel-Lucent employees detailed in the claim ”fell outside the accountability and jurisdiction of both Mr Quigley and Mr Beaufret,” the statement said. The bribery affair, which extends to Alcatel’s operations in Asia and Central America, is alleged to have taken place between 2001 and 2006. US regulators have fined Alcatel $US137 million. Mr Beaufret was a director and chief financial officer at Alcatel-Lucent between 1999 and 2007. According to the SEC, all of the bribery payments were undocumented or improperly recorded as consulting fees in the books of Alcatel’s subsidiaries and then consolidated into Alcatel’s financial statements. This coincided with the period in which Mr Quigley emerged as one of Alcatel’s most powerful executives, including a 19-month stint as the global president and chief operating officer. ”The leaders of several Alcatel subsidiaries and geographical regions, including some who reported directly to Alcatel’s executive committee, either knew or were severely reckless in not knowing about the misconduct,” the SEC said. Mr Quigley resigned from Alcatel-Lucent, as it was then called, in August 2007. Alcatel lacked sufficient internal controls to prevent or detect improper conduct, the SEC claims. In a statement last night NBN said: ”Neither Mike Quigley nor Jean-Pascal Beaufret had any involvement in the matters which were the subject of the US Securities and Exchange Commission announcement relating to Alcatel-Lucent”. Following its merger with US telecom equipment maker Lucent at the end of 2006, Alcatel said it was a ”radically different company” with a new board. The SEC alleges Alcatel’s subsidiaries used sham consulting agreements to funnel more than $US8 million in bribes to government officials in order to obtain or retain lucrative contracts. In a statement Alcatel-Lucent said: “We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again”. Before that he headed Alcatel’s US business and served on its executive committee. They also savaged the telecom equipment manufacturer for fostering a corporate culture that allowed millions of dollars in bribes to be paid to foreign officials to win contracts. ”Alcatel failed to detect or investigate numerous red flags suggesting that its business consultants were likely making illicit payments and gifts to government officials at the direction of certain Alcatel employees,” the SEC said in its complaint filed in a US court.