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.