Bribe countries on NBN boss's watch

MICHAEL Quigley was responsible for overseeing Alcatel operations in four countries where company employees paid bribes to corrupt officials.

Mike Quigley

NATIONAL Broadband Network chief Michael Quigley was responsible for overseeing the operations of his former employer, Alcatel, in four countries where company employees paid bribes to corrupt officials.

Mr Quigley has previously said the corruption at Alcatel, which was investigated by US authorities for five years, took place in areas of operations outside of his responsibility.

But on Friday Mr Quigley confirmed he was responsible for overseeing the company's business in Costa Rica - one of the countries where Alcatel bribed officials - after a special investigation by The Australian identified court documents and company reports that showed Mr Quigley had been Alcatel Americas president. He held the role from March 2001 until January 2003 and was later president and chief operating officer of Alcatel global in 2005 and 2006.

The court documents do not suggest or contain any evidence that Mr Quigley was aware of the activities of those officials. Nor did US regulator the Securities and Exchange Commission seek to interview him during its investigation.

Mr Quigley, in his role as Alcatel Americas president, was also responsible for overseeing operations in Ecuador, Nicaragua and Honduras, where Alcatel paid millions of dollars in bribes to corrupt government officials to secure contracts.

The Australian can also reveal details in the court documents of endemic corruption by Alcatel spanning at least nine countries across the world - most of them in developing countries - which occurred between 1999 and 2006.

In each of those nine countries, Alcatel paid large sums of money to sham consultants who funnelled much of that money to corrupt officials in return for Alcatel being awarded contracts.

In most countries where Alcatel paid bribes, the company also illicitly bought European holidays for government officials - and in some cases also for their family members or close associates - and bought officials gifts worth many thousands of dollars.

Mr Quigley has previously said the corruption at Alcatel primarily involved two employees and has likened it to a "rogue transaction".

The SEC claims Alcatel employees continued bribing officials for more than 18 months - between October 2004 and June 2006 - despite Alcatel being aware, from October 2004, that its employees had "paid bribes at the highest level of the Costa Rican government using sham consultants".

The SEC said that even though Alcatel was aware of the bribe scandal, which was "widely covered by the local press", Alcatel "continued to make these illicit payments until June 2006".

For much of the time - between October 2004 and June 2006, when Alcatel was aware that its employees were paying bribes to corrupt government officials but continued making the bribes - Mr Quigley was president and chief operating officer of Alcatel global.

The federal government has previously said "the actions of a number of individual Alcatel-Lucent employees detailed in the SEC statement fell outside the accountability and jurisdiction" of Mr Quigley.

In a series of written questions, The Australian asked Mr Quigley whether he knew that, as Alcatel Americas president, he was responsible for Honduras, Ecuador and Nicaragua, as well as Costa Rican operations. In a statement, NBN Co spokeswoman Rhonda Griffin referred The Australian to a statement released on Friday in response to the paper's revelations that Mr Quigley had been responsible for overseeing business in Costa Rica.

"I was not involved in any of these matters as is evident by the fact that in the course of their thorough investigation, the Securities and Exchange Commission and the US Department of Justice did not seek to interview me, nor did they make an adverse finding in relation to me," Mr Quigley said. In Friday's statement, Mr Quigley said: "I have today been advised by Alcatel-Lucent that, contrary to previous advice, Costa Rica was among the many countries and territories in North, Central and South America that were part of my wide-ranging portfolio of responsibilities in the period March 2001 to January 2003, including operations involving approximately 15,000 staff."

He said Alcatel-Lucent (Lucent was merged with Alcatel in 2006) had previously issued a statement on December 31 that said Alcatel-Lucent "in its investigations . . . had found no evidence that either Mr Quigley or Mr Beaufret had any involvement in, or knowledge of" the actions cited by the SEC.

Jean-Paul Beaufret, now the NBN's chief financial officer, previously worked for Alcatel as chief financial officer from 2002 to 2007. There is no suggestion that Mr Beaufret was involved in the corrupt activities.

As revealed by The Australian late last month, the federal government was unaware of the corruption scandal when it appointed Mr Quigley and Mr Beaufret to the top two posts at the NBN, which is handling the most expensive infrastructure project undertaken in Australia at a cost to taxpayers of $36 billion.

The corruption scandal at Alcatel has been public knowledge since 2004 and can be found via a simple internet search.

A spokesman for Communications Minister Stephen Conroy yesterday said "both Mr Quigley and Mr Beaufret enjoy the full support of the government".