Client Alert

Alcatel Executive Sentenced to Thirty Months in Prison Reflecting Ever-Increasing Reach of U.S. Anti-Corruption Laws

September 25, 2008

On September 24, 2008, in one of the latest of the growing number of Department of Justice (DOJ) prosecutions under the Foreign Corrupt Practices Act (FCPA), the former Deputy Vice President of Latin America for French telecommunications company Alcatel CIT was sentenced by a United States District Court to thirty months in prison.¹ Christian Sapsizian pled guilty to one count of conspiring to violate the FCPA and to one count of violating the FCPA arising out of $2.5 million in payments made to a Costa Rican official in order to obtain telecommunications contracts.

In 2000, the Costa Rican agency responsible for awarding all telecommunications contracts was considering which type of mobile phone technology to adopt when issuing future contracts to develop the country’s mobile network.² Sapsizian admitted to conspiring with a Costa Rican employee of Alcatel over a period of nearly five years to make more than $2.5 million in payments to a director of the Costa Rican agency so that the official would use his influence to initiate a bid process favoring Alcatel’s preferred type of mobile phone technology, and to ultimately award the mobile network contract to Alcatel. On August 28, 2001, the government agency awarded a contract to develop a new mobile network in Costa Rica to Alcatel. That contract was valued at approximately $149 million.

The FCPA’s anti-bribery provisions prohibit, inter alia, an issuer or employee thereof from paying money to officials of a foreign government with the intent to obtain or retain business.³ Sapsizian, despite being a non-citizen and an employee of a French company, was nonetheless subject to the anti-bribery provisions of the FCPA because his employer had registered American Depositary Receipts (ADRs) with the Securities and Exchange Commission and was therefore considered an “issuer.” Moreover, it was not necessary for Sapsizian to have entered the United States in connection with his payments to government officials for him to be liable under the FCPA. It was sufficient that Sapsizian wired funds from Costa Rica, through Miami, to the bank account of the Costa Rican official’s wife in Panama.

In addition to a sentence of thirty months in prison followed by three years of supervised release, Sapsizian was ordered by U.S. District Court Judge Patricia A. Seitz to forfeit $261,500.

This case demonstrates that the U.S. government is continuing to aggressively prosecute FCPA violations committed by foreign companies and their executives, including non-U.S. companies that list ADRs on U.S. stock exchanges.

<sup>1. See Press Release, DOJ, Former Alcatel CIT Executive Sentenced for Paying $2.5 Million in Bribes to Senior Costa Rican Officials (Sept. 24, 2008).
2. Indictment, United States v. Sapsizian, et al., No. 06-CR-20797-PAS (S.D. Fla. Mar. 22, 2007).
3.15 U.S.C. § 78dd-1.</sup>

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