Home > China > Alcatel-Lucent Bribes Chinese, Realizes Solid “ROB”

Alcatel-Lucent Bribes Chinese, Realizes Solid “ROB”

December 27th, 2007

Alcatel-Lucent has settled its bribery case with the US Justice Department. The telecoms giant was busted for bribing Chinese officials, the graft having come in the form of lavish trips for their Chinese guests.

The cost of the trips was estimated at hundreds of millions of US dollars, and we can assume that the benefit to the company was in excess of what it had “invested”. And yet the company was ordered to pay only US$2.5mn! This is the brand of democracy we’re talking about when we note the rest of world wants to be more like us.

The multinationals should really create a new business ratio for benchmarking China efforts of this nature. Call it “ROB” - return on bribes. Consider it like an “ROE”, but, more specifically, for graft payouts. Alcatel-Lucent is going to end up paying $2.5mn, but they will have presumably receive hundreds of millions in benefit - and no one is going to jail - hey, that’s a nice “ROB”.

From the article:

The US Justice Department alleged that during those years, Lucent sponsored Chinese official trips to the U.S., Europe, Australia and other countries on the grounds of “factory visits” and “training.” In fact, Lucent had already outsourced most of its manufacturing overseas, and there weren’t any facilities for Chinese officials to see in the traveling destinations. Most of the trips, according to the Department, lasted for two weeks and cost 25,000-55,000 US dollars each.

Analysts say China is a lucrative telecom market, but also one where there’s a high level of business bribery. A case concerning Siemens is still under a bribery probe. But the Lucent case serves as a wakeup call to multinationals in China who are trying to find the balance between playing the “hidden rules of the game” in China and Western business codes.

And in Chinese, here.

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