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Alcatel-Lucent’s $10 Million Question

A reader in Paris, France responded to our post about Alcatel-Lucent’s criminal fine. He agreed the company paid a high price for its initial recalcitrance, but came up with a different number.

Here’s his comment:

Dear FCPA Blog,
Your post on the Alcatel-Lucent deferred prosecution agreement was very interesting, particularly regarding the fine calculation.

So I have decided to do my own part of work, and I have other results.
If we look in the U.S. v. Alcatel-Lucent DPA:

    •    Base fine = $48,100,000

    •    Offense Level = 36

    •    Culpability Score = 9

With a low range fine of $86,580,000 and a high range fine of $173,160,000.

The DOJ imposed a fine of $92,000,000, which means +$5,420,000 or +6.26% (compared to the low range fine).
If we agree that Alcatel-Lucent would have been given two points if not for its “limited and inadequate cooperation for a substantial period of time,” the culpability score would have been 8. Let’s work on a new calculation:
    •    Base fine = $48,100,000

    •    Offense Level = 36

    •    Culpability Score = 8

That produces a low range fine of $76,960,000 and a high range fine of $153,920,000.

The DOJ applied a +6.26% to the low range fine. Let’s do the same with our hypothetical.

$76,960,000 x (1+0.626) = $81,777,888. That amount would have been the fine imposed by the DOJ using the same ratio with a culpability score of 8.
Finally, if we calculate the difference between the fine actually imposed by the DOJ of $92,000,000 (with a penalty of one point) and the hypothetical fine we just calculated, the amount is $81,777,888.
So, the cost of one point in the culpability score calculation would be $10,222,222, or if we simplify approximately $10 million.
All the best for this new year.
Best regards,
Jeremy Hibbert

(writing from Paris, France)


Jeremy Hibbert studies international relations and law in Paris, focusing on the FCPA, and on the European and French legislative framework related to corruption and white-collar crime. His most recent project focuses on the extraterritorial enforcement of American criminal law such as the FCPA, Sarbanes-Oxley, and the Patriot Act. He can be emailed here.

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