By Eric Johnston
THE man hand picked by Labor to head up the national broadband network has had to respond to questions over a bribery scandal that occurred during his time as a top executive at French telecommunications giant Alcatel.
US regulators have hit the telecom equipment maker with $US137 million in fines and savaged it for fostering a corporate culture that allowed millions of dollars in bribes to be paid to foreign government officials to secure contracts.
The scandal, which extends to Alcatel's operations through Asia and Central America, is alleged to have taken place between 2001 and 2006.
This coincided with the period when Mike Quigley, now boss of the federal government's NBN Co, emerged as one of Alcatel's most powerful executives, including a 19-month stint as global president and chief operating officer. Before that he headed up Alcatel's key US business and served on its executive committee. In August 2007 he resigned from the company, by then known as Alcatel-Lucent.
NBN Co's chief financial officer, Jean-Pascal Beaufret, also served as a director and chief financial officer at Alcatel between 1999 and 2007.
While the US Securities and Exchange Commission does not name Mr Quigley or Mr Beaufret in its filing, it accused Alcatel of having a ''lax corporate environment'' that helped foster a culture of improper conduct.
It also alleges senior executives ignored key warning signs.
''Alcatel failed to detect or investigate numerous red flags suggesting that its business consultants were likely making illicit payments and gifts to government officials at the direction of certain Alcatel employees,'' the SEC said in its complaint filed in a US court.
In a statement last night, NBN Co said that neither Mr Quigley nor Mr Beaufret ''had any involvement in the matters which were the subject of the US Securities and Exchange Commission announcement relating to Alcatel-Lucent''.
It said the actions of individual Alcatel employees detailed in the claim ''fell outside the accountability and jurisdiction of both Mr Quigley and Mr Beaufret''.
In their filing, however, American regulators noted that some of those who knew about the misconduct reported directly to the executive committee on which Mr Quigley served.
The SEC also said Alcatel lacked sufficient internal controls to prevent or detect improper conduct.
The filing said Alcatel subsidiaries used sham consulting agreements to funnel more than $US8 million in bribes to government officials to obtain or retain lucrative contracts.
According to the SEC's complaint, all of the bribery payments were undocumented or improperly recorded as consulting fees in the books of Alcatel's subsidiaries and then consolidated into the company's financial statements.
The SEC said the bribes went to government officials in Costa Rica, Honduras, Malaysia and Taiwan between December 2001 and June 2006. In one case an Alcatel subsidiary provided at least $US14.5 million to consulting firms for use in the bribery scheme in Costa Rica.
Alcatel last night agreed to pay more than $US45 million to settle the SEC's charges, as well as an additional $US92 million to settle criminal charges announced by the US Department of Justice.
In a statement, Alcatel-Lucent said: "We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again.''
Following its merger with US equipment maker Lucent in 2006, Alcatel said it was a ''radically different company'' with a new executive committee and a different board.
Mr Quigley started his career in the early 1970s as a cadet electrical engineer at ITT Australia, which was taken over by Alcatel in 1987.
With DANNY JOHN