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