Lucent’s possible violation of US law highlights China risks

  • Business
  • Thursday, 08 Apr 2004

BEIJING: Revelations that Lucent Technologies Inc's senior executives in China may have violated US law banning the payment of bribes overseas is unlikely to be an isolated case in a country where corruption is common despite government campaigns to stamp it out, analysts said. 

It is common for companies bidding for business in China to offer all kinds of financial incentives to potential customers, including foreign education for senior executives' children, gifts of residential property or a car or paid overseas travel. 

Industry sources said one company in the telecoms sector provided senior executives of one of its customers free holidays and a company car to drive their children to school. 

Intense competition in China's telecommunications industry may be forcing some companies to resort to bribery in order to win contracts, said Duncan Clark, managing director of BDA China Ltd, a telecoms consultancy firm. 

Lucent announced in the US on Tuesday that it had fired four senior executives at its China operations after the telecommunications equipment maker discovered potential violations of the Foreign Corrupt Practices Act, a US law that prohibits the payment of bribes overseas. 

Lucent had removed its China operations president, chief operating officer, a marketing executive and a finance manager after finding “internal control deficiencies” involving the law, the company said in a statement filed with the US Securities and Exchange Commission. 

While the incident is unlikely to have a material impact on its financial results, Lucent said that it “cannot ascertain at this time any impact this matter may have on the company's future business operations in China”. – AFX-Asia  

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