TM to conduct “internal investigation” regarding Alcatel’s bribery case

According to the Securities and Exchange Commission (SEC) complaint, Alcatel’s bribes went to government officials in Costa Rica, Honduras, Malaysia, and Taiwan between December 2001 and June 2006.

It said two Malaysian consultants were paid a total of US$700,000 for “non-public information” related to competitors’ pricing and bids, believed to be related to TM’s subsidiary back then, Celcom Malaysia for the 3G mobile services which was launched in 2005.

The filing on Malaysia titled “The Malaysia Bribery Scheme” was eight paragraphs long and reported that “from October 2004 to February 2006, Alcatel bribed government officials in Malaysia to obtain confidential information relating to a public tender that Alcatel ultimately won, the result of which yielded a telecommunications contract valued at approximately $85 million.”


It noted that TM was owned by the government, who had the status of a “special shareholder” while most senior TM officers were political appointees, including the “Chairman and Director, the Chairman of the Board of the Tender Committee, and the Executive Director”.

“Between October 2004 and February 2006, Alcatel Malaysia personnel paid bribes to employees of Telekom Malaysia in exchange for non-public information. This nonpublic information included important documents and budget information relating to ongoing bids and competitor pricing information.

“Alcatel Malaysia’s management consented to these payments,” the filing said, adding “these bribes assisted Alcatel Malaysia in obtaining a contract with a potential value of US$85 million.”

The filing said the TM employees who received bribes were ‘foreign officials’ within the meaning of the US Foreign Corrupt Practises Act and “were in a significant position to influence the policy decisions Telekom Malaysia made.”

It added the Basel-based Alcatel Standard made significant lump-sum payments through U.S. bank accounts to two consultants labelled “Malaysian Consultant A” and “Malaysian Consultant B”, purportedly for market research.

“Alcatel Standard paid $200,000 to Malaysian Consultant A in 2005 for a series of ‘market reports’ describing conditions in the Malaysian telecommunications market. Similarly, Alcatel Standard paid $50’0,000 to Malaysian Consultant B in 2005 for a ‘strategic intelligence report.

TM said that it will conduct internal investigations and will cooperate with authorities when required. The latest development between the two companies indicated that TM awarded Alcatel-Lucent the contract for the expansion of Telekom Malaysia’s (TM) 10 Gigabit Ethernet network in 2009. The contract is worth 7 million Euro or an estimated RM28 million.

There could be more cases of irregularities in TM acquisitions from Alcatel that was not covered by the SEC probe.