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January 03, 2011, 10:32 PM EST
By Barry Porter
(Updates with analyst’s comment in fourth paragraph.)
Jan. 4 (Bloomberg) -- Telekom Malaysia Bhd. and Axiata Group Bhd., two state-controlled telecommunications providers, said they will investigate alleged improper payments admitted to by Alactel-Lucent SA.
The Malaysian companies jointly appointed KPMG Corporate Services Sdn. as forensic accountants and Shearn Delamore & Co as legal advisor to assist in the probe, according to separate exchange filings late yesterday.
Alcatel-Lucent, the world’s biggest provider of fixed line phone networks, agreed on Dec. 28 to pay $137 million to resolve U.S. criminal and civil probes after admitting to bribing officials in countries including Taiwan, Malaysia and Costa Rica.
“This is much-welcomed news as it speaks well of both Telekom Malaysia and Axiata’s corporate governance procedures, given their quick response to investigate the case,” said Bernard Ching, a Kuala Lumpur-based analyst with ECM Libra Capital Sdn. in a report today. “It indicates the boards’ seriousness in tackling the issue.”
Alcatel Malaysia made at least 17 improper payments from 2004 to 2006 to employees of Telekom for “non-public information relating to ongoing tender offers,” according to a statement of facts admitted by Alcatel in its deferred- prosecution agreement with the U.S.
Axiata Demerger
The alleged bribes took place before Telekom Malaysia Group demerged its mobile phone operations in 2008 to form Axiata.
“Telekom Malaysia is working closely with Axiata to extend all necessary cooperation with the relevant parties and authorities,” Telekom’s statement said yesterday.
Telekom’s probe panel will be headed by Mahmood Fawzy Tunku Muhyiddin, a director and chairman of its risk committee. It will conduct an “independent and comprehensive” internal investigation into alleged improper payments to employees, its statement said. The company will decide on its next course of action once receiving a report, it said.
Axiata will form its own sub-committee headed by David Lau, chairman of its audit committee, to study allegations potentially linking to its subsidiaries, it said in a separate statement. “Axiata will synchronize its efforts and work closely with Telekom Malaysia on the investigations,” it said.
Telekom rose 0.6 percent to 3.54 ringgit at 10.11 a.m. local time today, tracking a 0.8 percent gain in the country’s benchmark FTSE Bursa Malaysia KLCI Index. Axiata was unchanged at 4.47 ringgit.
Alcatel-Lucent is now a “radically different company” with different managers and a culture that reflects integrity, spokeswoman Mary Ward said in a statement on Dec. 28.
--Editors: Douglas Wong, Garry Smith.
To contact the reporter on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net.
To contact the editor responsible for this story: Douglas Wong in Hong Kong at dwong19@bloomberg.net.
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(Updates with analyst’s comment in fourth paragraph.)
Jan. 4 (Bloomberg) -- Telekom Malaysia Bhd. and Axiata Group Bhd., two state-controlled telecommunications providers, said they will investigate alleged improper payments admitted to by Alactel-Lucent SA.
The Malaysian companies jointly appointed KPMG Corporate Services Sdn. as forensic accountants and Shearn Delamore & Co as legal advisor to assist in the probe, according to separate exchange filings late yesterday.
Alcatel-Lucent, the world’s biggest provider of fixed line phone networks, agreed on Dec. 28 to pay $137 million to resolve U.S. criminal and civil probes after admitting to bribing officials in countries including Taiwan, Malaysia and Costa Rica.
“This is much-welcomed news as it speaks well of both Telekom Malaysia and Axiata’s corporate governance procedures, given their quick response to investigate the case,” said Bernard Ching, a Kuala Lumpur-based analyst with ECM Libra Capital Sdn. in a report today. “It indicates the boards’ seriousness in tackling the issue.”
Alcatel Malaysia made at least 17 improper payments from 2004 to 2006 to employees of Telekom for “non-public information relating to ongoing tender offers,” according to a statement of facts admitted by Alcatel in its deferred- prosecution agreement with the U.S.
Axiata Demerger
The alleged bribes took place before Telekom Malaysia Group demerged its mobile phone operations in 2008 to form Axiata.
“Telekom Malaysia is working closely with Axiata to extend all necessary cooperation with the relevant parties and authorities,” Telekom’s statement said yesterday.
Telekom’s probe panel will be headed by Mahmood Fawzy Tunku Muhyiddin, a director and chairman of its risk committee. It will conduct an “independent and comprehensive” internal investigation into alleged improper payments to employees, its statement said. The company will decide on its next course of action once receiving a report, it said.
Axiata will form its own sub-committee headed by David Lau, chairman of its audit committee, to study allegations potentially linking to its subsidiaries, it said in a separate statement. “Axiata will synchronize its efforts and work closely with Telekom Malaysia on the investigations,” it said.
Telekom rose 0.6 percent to 3.54 ringgit at 10.11 a.m. local time today, tracking a 0.8 percent gain in the country’s benchmark FTSE Bursa Malaysia KLCI Index. Axiata was unchanged at 4.47 ringgit.
Alcatel-Lucent is now a “radically different company” with different managers and a culture that reflects integrity, spokeswoman Mary Ward said in a statement on Dec. 28.
--Editors: Douglas Wong, Garry Smith.
To contact the reporter on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net.
To contact the editor responsible for this story: Douglas Wong in Hong Kong at dwong19@bloomberg.net.
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