Company News

UPDATE 1-Alcatel-Lucent to pay $10 mln in Costa Rica case

* Settles accusations of kickbacks to govt officials

* Costa Rica hails settlement as first by foreign company (Adds quotes from solicitor general, background on case, byline)

SAN JOSE, Costa Rica, Jan 21 (Reuters) - Telecom equipment maker Alcatel-Lucent ALUA.PA said on Thursday it would pay $10 million to settle a corruption case in Costa Rica.

Alcatel-Lucent was accused of paying kickbacks to former Costa Rican President Miguel Angel Rodriguez and other government officials in return for a 2001 contract worth $149 million to supply cellular telephone equipment.

Rodriguez, who was in office from 1998 to 2002, is set to go on trial this year for corruption. He denies any wrongdoing.

The case marks the first time in Costa Rica’s history that a foreign corporation has agreed to pay the government damages for corruption, Solicitor General Ana Lorena Brenes said.

“Alcatel recognizes that it did not have sufficient control of its officials and (it will) pay the state,” said Brenes, who led the case against the company, in an interview with Reuters.

Alcatel-Lucent spokesman Marco Malfavon confirmed the agreement.

Brenes said Alcatel admitted its executives paid bribes to officials of the Central American nation’s state-run telecommunications company in exchange for a contract to install 400,000 cell phone lines.

Some $7 million was paid out in the scheme, including $800,000 that went directly to President Rodriguez, the government says.

A former Alcatel employee pleaded guilty in U.S. court in October 2008 to making more than $2.5 million in corrupt payments to various Costa Rican officials.

The Franco-American company has been struggling to turn around its business during the global economic downturn that has hit the telecom equipment sector hard. Alcatel has yet to generate regular free cash flow since it was formed in a merger in 2006. (Reporting by Leslie Josephs; Editing Bernard Orr and Tim Dobbyn)