NBN Co chief executive Mike Quigley has mounted a good-humoured defence against claims he and his chief financial officer could have contributed to a poor management culture at their previous employer Alcatel, which US regulators have fined for alleged corruption in the company’s South American subsidiaries.
The US Securities and Exchange Commission revealed in late December that Alcatel-Lucent had paid US$137 million to settle criminal and other charges arising from what it said were bribes paid to government officials in South-East Asia and Latin America between 2001 and 2006, with the aim of securing telecommunications contracts. During that period, both Quigley and CFO Jean-Pascal Beaufret held top-level roles in the French company.
Facing sustained questioning on the matter from elements of the press at an unrelated press conference on NBN Co’s headquarters in Sydney today, Quigley maintained his composure.
Quigley pointed out that Alcatel-Lucent wasn’t alone in having suffered alleged criminal activity amongst its employees during the period in question. “In the last three years, there have been 44 companies that have been subject to exactly the same thing,” he said of the US Securities and Exchange Commission investigation. Companies like Siemens, General Electric, Daimler, Volvo and Shell had also been investigated, he said – and another 150 were currently on the SEC’s list.
Quigley stated it was “complex” managing a company as large as Alcatel was at the time – employing some 60,000 people in 130-odd countries with revenues of AU$20 billion and in dozens of different languages.
In terms of his personal involvement and that of Beaufret, Quigley pointed out that at no time throughout the past five years’ worth of investigations had the SEC sought to interview either. He told journalists that at the time the bribes allegedly took place, in Costa Rica and Honduras, he was the regional president of a completely different geography.
“I was looking after North America,” he said. “They weren’t interested in us.”
Quigley also rejected SEC suggestions of a “reckless” management culture at Alcatel that could have contributed to the alleged bribes being overlooked. When thousands of transactions were occurring across 130 countries, he said, if two employees colluded as had appeared to have occurred in this case, they could get around the financial controls in place. “I wouldn’t say there was an endemic culture,” he said.
As for Beaufret’s role, Quigley said the executive wouldn’t have been appointed chief financial officer of the merged Alcatel-Lucent entity following the company’s matrimony if the then-CEO and board hadn’t had complete confidence in the executive. “Mr Beaufret is an extremely competent individual, a man of extremely high integrity, I’ve known him for many years. I can personally vouch for his integrity and his competence,” he said.
Quigley added that it was also a tough time for many telecommunications suppliers in the early years of the decade, courtesy of the dot com crash that wiped many out.
“It was one of the survivors, a lot of other telco companies went belly up,” he said of Alcatel. “If I can remind you, I was living through it at the time, we went through the tech wreck at the time some of these things were happening. It was an existential issue for companies at that time.”
Because of this, Quigley said, Alcatel did have strong financial and ethical controls in place; although he noted that in hindsight, it was always possible to find areas of weaknesses in companies.
The Coalition – including Opposition Leader Tony Abbott and Shadow Communications Minister Malcolm Turnbull – have demanded answers from Quigley and Beaufret over the issue. But today Quigley maintained strong financial controls had been put in place at NBN Co to stop corruption occurring – although he noted it was impossible for any CEO to guarantee no criminal behavior would ever be perpetuated by employees.
Prime Minister Julia Gillard has dismissed the Coalition’s demands as a “personal smear” agains the two NBN Co executives.
Video credit: Delimiter
As per usual, Quigley sounds like he was cool under pressure, and answered with honesty and integrity.
There has never been any implication of Quigley and Beaufret, except from those who seek to undermine the NBN. This is a very weak straw they are clutching at.
I 100 percent agree, and I’m planning to publish a video of the entire 1/2 an hour press conference later tonight. He went over the issue exhaustively; if there are still doubters, let them watch the video and make up their own mind.
What Quigley fails to mention was that after holding the position of “President and Chief Executive Officer of Alcatel USA.”, which was the ‘region’ of Nth America he keeps referring to, he went on to become COO of the parent company. As per below, this gave him total oversight of 55,000 staff and the company’s global operations. This would obviously include being ultimately responsible for the individual staff directly implicated in the bribery charges along with the processes, management and culture that allowed the corruption activities to exist.
“In 2005, he was appointed Alcatel’s President and Chief Operating Officer, overseeing 55,000 staff and operations in 130 countries.”
http://ow.ly/3zKIf
I don’t think anyone has claimed that Quigley as himself been directly involved in the bribery and corruption activities of the company, but the fact remains that he was ultimately responsible for allowing the culture to exist.
He claims that he knew nothing about the activities, this may have been the case but no one can deny that he SHOULD have known about it.
In regards to Jean-Pascal Beaufret (current NBN Co CFO) and once again from the same NBN Co reference used above
“Mr Beaufret was a director and Chief Financial Officer at Alcatel-Lucent between 1999 and 2007”
Jean-Pascal Beaufret was ultimately responsible for ALL financial activities of the entire Alcatel-Lucent business globally as the CFO. Additionally he had certain responsibilities as a director.
Steve Reynolds, Alcatel-Lucent General Counsel, has the following statement:
http://ow.ly/3zKDp
“Alcatel-Lucent, created as a result of the merger of Alcatel and Lucent Technologies at the end of 2006, is a radically different company today:
It has different management, including a new CEO, a new executive committee and a different Board of Directors.”
Steven Reynolds has placed an emphasis on the fact that the entire executive committee and board were replaced. I note that
May I suggest that My Quigley in his press conference has deployed a smoke screen, a diversion perhaps? I put a call out to the media to challenge why he has not mentioned the fact that he was the global COO at the time of the bribery. Again why does he not mention that Jean-Pascal Beaufret was not only the global CFO, but also a company director?
Steve Reynolds has made a very clear statement that the company now has a totally new management committee and board of directors…. why does he keep mentioning this in company press releases and interviews. Could Steve Reynolds be emphasising that it was the previous senior management that was ultimately responsible?
On the contrary, I believe he has answered more than sufficiently as to the non-involvment in the matter of either man.
Quigley was made COO in 2005 by your own admission, yet according to the articles I read the bribery occurred between 2001 and 2006.
I personally think, therefore, that it is entirely possible, in fact very likely, he had no idea what was happening until well after it happened.
again you miss the point,he may not have know about it but he should have. His role as COO gave him the express and ultimate for all layers below his role. His profile on NBN Co’s website confims this “overseeing 55,000 staff and operations in 130 countries”
Ignorance is never an excuse for poor management.
In regards to Jean-Pascal Beaufret, well what can I say, he was the long term CFO from 1999-2007. The has significant responsibilities over a companies financial activities. On top of this he was a director!
Is it not amazing how no member of the management committee or board of directors from that period stll remains at Alcatel-Lucent. Read the statements made by Steven Reynolds.
Bad manager are like cancer, they spread within an organisation infecting it until either it’s exposed or the company dies. Companies are a living organism the same as any other living thing, you need to remove the diseased parts before it infects the whole. Steven Reynolds has basically stated that the diseased parts of management are no longer with the company “Alcatel-Lucent …… is a radically different company today”
You mean you personally could oversee the operations of any organisation across 130 countries and know exactly which of your fifty-five thousand employees were actively corrupt and have sufficient evidence to fire/convict them? I didn’t realise one of the job requirements for multinational C*O these days was omniscience. Perhaps you should apply.
More seriously, if you think it is humanly possible to put controls in place that will prevent 100% of corrupt behaviour 100% of the time, or even remotely close, without yourself committing crimes against humanity, then ignorance is not something you should be pontificating about.
+1 to this.
Sorry, Julian, I have to agree with this. There is an element of personal responsibility that is hard to justify when you are overseeing literally tens of thousands of staff. Frankly, an $8m corruption blooper, in a $300m contract — in short, a 2.6 percent variation — is not going to be on the COO’s radar when they’re managing a global operation worth AU$20bn. You could make a stronger argument that it should have been on the CFO’s radar. But I would argue it would probably better have been on the deputy-deputy CFO’s radar instead. These guys would have had bigger fish to fry.
Even Alcatel’s operation in Australia, with its key Telstra contracts, at that time would have been a much larger priority. And if you tell me that businesspeople don’t prioritise … well, I’ll tell you that you haven’t been in business.
I’m genuinely curious if really that nieve about management, have a vendetta against Quigley, or are seriously deluded enough to think that.
Management, especially when managing over 50 thousand people, are responsible for ensuring the controls put in place prevent actions such as what occurred. They are not responsible for every action that does or doesn’t occur below them.
Being that their a humans involved one of two things can happen, usually concurrently, 1) the management fails to create controls that address every circumstances and leave a strong enough audit trail, 2) an individual or group decides to circumvent or ignore the rules and controls for personal gain.
This is the exact some principle behind any crime. So, it comes down to this, while in Management did Quigley and Beaufret place adequate controls in place, and was it these controls that encouraged the, in this case bribery, to occur, or were the controls circumvented?
All evidence I have read points to the latter, so the question is now, were the controls changed to prevent this from occuring again if such a change was possible? Again, it appears this was done.
Hence why SEC are giving them a “free ride” and not questioning them regarding the bribery.
Maybe, however, my understanding here is lax, maybe Mike Quigley is as incompetent as you say, but until I see evidence of this, actual hard evidence that he is a bad apple, not speculation nor circumstantial, I will assume good faith. As you should Julian, because if you don’t you’ll find it hard to trust anyone.
I don’t think I have ever claimed Mike Quigley or Jean-Pascal Beaufret were guilty of any criminal activities.
I would suggest that Mike Quigley or Jean-Pascal Beaufret failed in their duties as COO & CFO i regards to ensuring proper processes and controls were in place and those processes and controls were effectively managed.
Alcatel-Lucent as a company admitted to the charges made by the SEC and settled the matter without going through the courts. Many will see this as not only an admission of liability which it is, but also to reduce/eliminate any further SEC action against the company and it’s employees.
I am yet to find any reference to whether or not the Alcatel-Lucent chairman was ever questioned either or for that matter the CEO. The SEC stopped going after Alcatel-Lucent because of the following:
“Alcatel agreed to pay more than $45 million to settle the SEC’s charges, and pay an additional $92 million to settle criminal charges announced today by the U.S. Department of Justice.”
http://ow.ly/3zMtU
Even though Alcatel-Lucent is a substantial company with approx 55,000 staff and revenue of $20B, it’s no different to some of Australia’s largest companies such as CommBank, Qantas, MacBank etc.
What would you say or do you think shareholders would say if it was found that top level senior management effectively allowed corrupt activities to go on during their watch. Shareholders would be out for blood, and ASIC would be going for the directors throats.
As I have said before, Ignorance is never an excuse for poor management.
Quigley and Beaufret were the 2 key roles at the time responsible.
In charge on their watch of massive corruption.
Alcatel settled, it did not admit or deny the allegations but the facts are on the public record.
The deeper investigation, questioning and witnesses including Quigley and Beaufret that would have occured was thus avoided.
So Quigley saying he wasnt personally investigated and so on – is absolute deception and spin.
It was settled, rather than a full on detailed investigation.
The new management at Alcatel made it very clear that the board, COO, CFO and other executive were “REPLACED” as part of remediation. Quigley and Beaufret were sacked for this scandal and replaced. Its quite clear, on the public record now and spin is going to change that basic fact.
We didnt get worlds best practice or a leaders with integrity, but tier 2 spivs fleeing corruption charges.
For Quigley to say ‘everyone was doing it’ – is not an excuse and an insult to Australia.
He and Beaufret were ‘responsible’ for the channelling of hundreds of millions of dollars into corruption, bribery, revenue realisation and false accounting. Alcatel at the time was a failing company, desperately trying to sell fixed point solutions against better and cheaper competition, and Quigley and Beaufret absolutely would have known and been intimate with every major govt deal, win, what it would take, sales action and so on. Thats how it works inside these companies.
To say ‘oh it was complex and a big company etc’
If Quigley wasnt up to the job and wasnt in charge of setting the standards and ethics as well as business controls, tone and culture, then what chance has Australia in the same person being allowed to run a vast 40b, key national, complex set of projects employing probably the same number of people (25,000 directly funded is their estimate) and with national impacts. It has already failed in public confidence and now it will fail in execution.
And where is the supposed personal ethics ? Zero. We get embarrassed grins, “oh that, dont worry, nothing to do with me, wont happen again, in actual fact despite the facts, it was really this”.
This is a guy who lied about 10 x speed, lied about rollout, lied about the failures in tasmania, lied about the business plan, has lied and decieved as part of his corporate culture and ethos for decades as a spin spiv saleman. And now lies about his past.
Our own little penal colony of an NBN. – full of stuff like Quigley, Beaufret, Kaiser and half the non talent bench of the consutling companies spiving around chewing up tax payers money as they regurge global powerpoints as tho they were business plans or something.
A secretive, deceptive culture of spin and lies highly politiized – already well established.
Its already well off the rails, Tasmania showed the scale of the pending disaster and rorting.
We have no confidence that Quigley is the right person to run or manage the NBN.
+
Where is the NBN board or the Minister in all this ?.
Why are they mute – why are they not acting to the public interest as we pay them to ?.
Since it has been hashed to death about I don’t think Quigley and Beaufret should be held criminally accountable for this, nor that we can assume being the COO and CFO that they would automatically be aware of the dealings.
Also, if Quigley was such a lose cannon, why is it he turned down a far more lucrative offer to come and work for NBN Co? I’m sorry, but just because you accuse someone of a crime does not make the guilty of it, which is one of the primary concepts crucial to our society.
You have no evidence that they were sacked for the scandal, he left because of health concerns, and in fact was suggested for CEO in 2008. Why would the company want him back if he was such a bad apple?
As for your other statements:
Lied about 10x speed – They are rolling out 1Gbps/400Mbps capable lines (PIR) to all fibre connected premises, which is 10x the original proposed speeds of 100Mbps. So this is false.
Lied about the rollout – In what way? The rollout has been completely consistent in that it will take approximately 8 years, with 6000 homes per day at peek being connected, to 93% of the population with the rest served by wireless and fibre. I have yet to see any statements or action to indicate the contrary. So this is false.
Lied about the failures in Tasmania – You’re going to have to be more specific, if you’re refering to the phone issues I don’t know much about it, I have only seen one article, if you’re referring to the Tassie school only get 30Mbps, that was proved to be a backhaul issue which was fixed by Internode taking up more fibre across the bass straight. Besides, I don’t actually recall NBN Co, let alone Mr Quigley, denying either issue. So this false.
Lied about the business plan – The released it and it said pretty much exactly what was Conroy and Quigley said it would from day one, with a few amendments regarding recent changes such as the ACCC mandate to include more POIs. So this is false.
So, in closing, I don’t actually think Quigley has lied about anything so far, but Renai can likely confirm that knowing a little more about the press releases and statements that have happened over the past few months regarding the NBN.
And also, could you please break up your post a little bit next time? Kinda of hard to read a big wall of text. :(
Lets look at it this way.
If you were some random sales executive at Alcatel-Lucent in South America, doing something dodgy/unethical/illegal in cahoots with another random sales executive at Alcatel-Lucent in South America, to increase your sales volumes and hence your commissions, would you try and hide it from management?
Would you want to let the boss know all about it?
If their direct managers knew it was happening, and did nothing – would he/she not also want to hush it up, lest they get sacked for it as well?
It’s naive of anyone to suggest that any CEO, COO, CFO, etc of a company of this size would be able to know about every single individual sale/transaction going on across such an organisation – let alone one that’s going to be kept quiet by the people perpetrating it!
Apply some logic here.
This is not just about what an individual did, or what their boss did. This is about a company that had allowed this behaviour to occur and more importantly keep going on. This is about management that failed in their duty to perform their roles, which is one of the reasons none of the management committe or board from that period is any longer associated with Alcatel-Lucent.
It’s one thing to have a rouge sale guys giving preferential treatment to specific customers in regards to specific deals. If the sales guys screws his own company in the process then thats a sales/commercial related matter. This particular matter isn’t about taking clients to lunch or to strips clubs etc, it relates to individuals acting as/for & on behalf of Alcatel engaging in the bribery of foreign government officials, which is as bad as it gets.
Quigley & Beaufret were never implicated in any criminal offence. If they were then I am sure their names would have appeared on the SEC charge sheets, bt neither was the CEO or Chairman both of which no longer work for Alcatel-Lucent. Having said that, their management of Alcatel-Lucent allowed this behaviour occur, this in itself would be hard to detect at CX level, but they also allowed it to continue to occur and for a period of time without being noticed.
After lengthy discussion last night with a selection of highly respected legal professionals, CxO management of some of Australia’s largest companies and a group of respected investment bankers was agreed that these incidents occured on the watch of Quigley & Beaufret.
Quigley & Beaufret were no doubt paid a lot of money each year to perform their duties as COO & CFO, they are considered to be very experienced in what they do. If this is the case, why did they not have management, process & reporting structure in place that would have detected the corrupt activities? Why was it only when the SEC starting probing that it was discovered? Why is it now a case that no member of the then Management Executive Committee or the Board of Directors no longer works for Alcatel-Lucent?
Alcatel-Lucent has never denied the allegations and as per the statement of Steve Reynolds (Alcatel-Lucent General Counsel) they have in fact that have accepted full liability for the actions as a company.
“We take responsibility for and regret what happened and have implemented policies and procedures to prevent these violations from happening again.”
http://ow.ly/3ACIt
This statement alone confirms the fact that the management of Quigley & Beaufret failed by way that Alcatel-Lucent has now confirmed that they have as a result of the SEC findings “implemented policies and procedures to prevent these violations from happening again”
If the new management can implement these policies and procedures now, why in the hell couldn’t the highly experienced and respected Mike Quigley and Jean-Pascal Beaufret implement these same policies and procedures during their tenure at Alcatel-Lucent?
If a sales manager has badly performing sales staff, resulting in the company going belly up, does the CEO and Chairman blame the lazy arse sales guys for the failures of the company, the answer is NO. The same goes in this situation, the management cannot blame their ignorance or lack of direct visibility as an excuse. The were in those positions for a purpose and paid accordingly. They were commercially responsible for all staff below them regardless of the fact that those staff were direct reports or not.
If a company COO, CFO CEO etc are not responsible for their staff, then who is? This is why companies have management structures, policies & procedures and internal and external reporting. If we are to discard the model of management responsibility then companies would run out of control.
If you were to run a company as a director in Australia with complete disregard for your responsibilities as a director, ASIC would be so far up you that you would need significant surgical intervention to remove them. Regulators and shareholder have no sympathy for badly performing Cx managers and directors who blame their own ignorance for failure.
There is a reason why good managers are good managers and why others are not so good managers.
The concern moving forward re Quigley & Beaufret and their management of NBN Co is, if they failed in their duties at Alcatel-Lucent to effectively management the company, a company of 55,000 people and revenue of $20B, then how can we have the confidence in their ability to run NBN Co which is a $40B project?
If all of the above is true then why is Quigley running NBN Co?
—————————————————————————————-
This is pretty simple, the federal government based on the public’s opinion of a certain ex Telstra CEO, would never put themselves in a position to empower a foreigner to run NBN Co. They had no choice but to appoint an Australian to the role f CEO. Besides this, and to the shock and horror of some, the Australian NBN is being joked about globally within the telco community. They would probably not get a respected international telco boss to jump ship to run NBN Co for the risk that if/and when the project fails, they certainly would not want their name attached to it.
Quigley had no other real options. His role at AL essentially put him on the blacklist of many international telcos. Quigley is also from a vendor background rather than a operational telco background and lacks the experience to run a telco. There is a difference between the job of selling bits and pieces and the job of putting them together and coming up with a commercial operational concern that provides ROI and generates shareholder value.
Oh god…
You realise that Beaufret was at Lucent, and the incident occurred at Alcatel BEFORE the merger? Beaufret can’t possibly have any responsibility.
Quigley was boss of North America at the time of the incident. The incident occurred in South America, outside of his jurisdiction.
That wasn’t directed at you specifically NightKaos… :)
Just an observation on the fascinating Quigley body language (watch the video to see this).
When Quigley is about to tell a lie, he micro flashes a smirk on the right hand side of his face, This is common in salesmen as they know they have to lie with confidence but not to overdo it, therefore the conflicting impulses result in an almost tic like micro smirk.
He then figits with his left hand including increasing over exaggerated gestures as he completes the lie. This is very common in body language when somebody lies.
Once the lie is completed and he then returns to a mainly right handed only gesture stance if he thinks it has gone over ok, or otherwise he continues with exaggerated gestures until he can divert it off.
This occurs in the video in these areas. When he says it was just a handful of people (not true, the company even had sales manuals on how to wash unclean transactions), when he was not really in charge, when it was someone else, when he was somewhere else and so on.
Anyone watching this video would have little confidence Quigley is being honest.
If he had said – I was in charge as the COO and President and i was accountable for the companies actions at the time. I was responsible for a company that decieved hundreds of millions of citizens globally in the area of NBN’s. And these were reasons why – then that would be honest.
Quick..take your evidence to the police! Your detective skills are astounding.
Here I was thinking Quigley could actually be telling the truth, but after reading your infallible scientific proof, there’s no doubt in my mind whatsoever that the man should be apprehended, tortured and shot immediately. His head should then be placed on a spike in the centre of the village as a deterrent to other men who might dare to work in a company where they aren’t aware of every single action of every single on their employees.
Thanks for making the world a safer place Mr Lie Detector.
Quigley is a salesperson, and I agree that he presents himself as a salesperson. Facial expressions and hand movements are critical items covered in any professional sales training.
Sales is like playing poker, you present an impression you are doing one thing while doing something completely different.
Who are you trying to convince?
Us, our yourself?
I wonder if all the people calling for the head of Quigley just on the basis of management responsibility would hold Turnbull to the same standard.
Because I hear that Turnbull was a global partner of a firm called Goldman Sachs during a period in which we now know they committed numerous offences against the public, with massive fines that dwarf the Alcatel-Lucent ones.
Maybe this is why Robb is running with this one. Because he’s a no-account political hack with no record with public companies. Turnbull is a respected businessman and worthwhile politico but the hypocrisy might be too much to bear for the coalition with his Goldman Sachs past. (Or
Or maybe Turnbull – being an apparently decent bloke – just refuses to participate in such a tawdry and intellectually dishonest smear.)
That shut ’em all up Chris…LOL!
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