Altice: Drahi expresses ‘shock’ and ‘disappointment’ at alleged corrupt practices

Altice boss Patrick Drahi used the Altice International first half debt investors call today to express his “shock” and “huge disappointment” following the Portuguese police probe into Armando Pereira and other individuals linked to the company.

“This has come as a shock and as a huge disappointment to me. If the allegations are true, I feel betrayed and deceived by a small group of individuals including one of our oldest colleagues,” said Drahi.

“A few individuals, mainly part of the procurement teams, have carefully hidden their actions from me, from their colleagues and from the total group.”

If the allegations prove to be well-founded, he said, it meant that individuals had “taken advantage of their position at the expense of the group and therefore at my personal expense”.

Drahi said that the group had taken “swift proactive action to understand the truth and to protect the group from any harm in the event that these allegations are substantiated”.

Suspension of payments and purchases

Noting that the judicial investigation was so far restricted to Portugal, Drahi said that Altice International had estimated that the case concerned “a very small part” of total procurement by the group, amounting to low-to-mid single digits, and restricted to margin or commission on those purchases.

Operating company CEOs had been asked to suspend all payments to and purchases from entities potentially implicated in the probe.

He said that “around 15 employees” had been placed on leave in Portugal, France and the US.

Altice International – the part of Altice that covers operations in Portugal, Israel and the Dominican Republic ­– said it had “taken immediate action” to “protect the interests of the group and its shareholders” by launching its own probe into allegations of corruption involving Altice Portugal.

The group said it had launched its own investigations in Portugal and across other jurisdictions under the authority of a global investigation committee, with (Ropes & Gray and DLA Piper France appointed as global co-ordinating counsel by Next Alt, with local counsel in addition to other advisors in local jurisdictions.

It said that “a small number of key legal representatives, managers and employees in Portugal and abroad have been placed on leave while this investigation is conducted” with the “internal organisation reconfigured with the appropriate individuals covering the relevant positions”.

Altice also said it had begun a “full review and thorough reinforcement of the approval process on all procurement, payments, purchase orders and related processes” and that it had already begun “transitioning from suppliers” potentially implicated in the Portuguese investigation.

Drahi and his management team including in-country CEOs are to host investor meetings in London and New York in September as the group battles to contain the fallout from the probe.

Solid results

The update comes as Altice International posted solid results for the second quarter, with total revenue up 4.6% on a reported basis and up 87.5% at constant currency, and EBITDA up 4.3%, or 7.2% at constant currency.

Portugal was in fact the strongest performer within the international group, posting revenues of €718 million, up 11.8% and EBITDA of €254 million, up 9.5%. Total international group revenue was €1.277 billion and EBITDA was €456 million.

Altice International had 3.07 million fixed customers at the end of June, including 2.659 million fibre customers, and 1.358 million mobile customers, including 4.9 million post-paid customers.

Separately, lawyers representing Tatiana Agova-Bregou, the French executive reportedly suspended last week in connection with the probe, have issued a press statement on her behalf in which she denied any wrongdoing.

The statement said that Agova-Bregou “is surprised that her name is associated with the so-called white-collar offences which would have been committed by some people within Altice Group”.

“Ms Agova-Bregou considers herself not to have committed any unlawful activity. She has proven her honesty throughout her long recognized professional career. She makes herself available for any judicial hearing, if she had to be heard, noting that, as of today, she has not been contacted by the judicial authorities for any hearing,” it said.