French prosecutors have intensified their scrutiny of Altice, the telecom group controlled by billionaire Patrick Drahi, by launching a preliminary investigation into potential corruption and money laundering. This development comes on the heels of the detainment of Altice co-founder Armando Pereira and other associates in Portugal. The probe, conducted by France’s Parquet National Financier (PNF), is examining suspicions of corruption involving individuals who don’t hold public office, money laundering, and attempts to conceal these offenses. Altice, already navigating substantial debt and asset sales, now faces additional challenges with the widening investigation.
The Background: Altice, founded by Patrick Drahi, Armando Pereira, and another partner in France in 2002, has grown into a telecommunications and media empire through high-profile acquisitions, including the French carrier SFR Group SA, Suddenlink Communications, and Cablevision Systems Corp. in the US. However, the aggressive expansion fueled by significant borrowing has left Altice with a debt pile of approximately $60 billion. As part of debt reduction efforts, Drahi has been attempting to sell off various assets, with Altice France, including French carrier SFR, being its largest revenue-generating unit.
The Portuguese Detainment: In Portugal, a three-year investigation into alleged corruption, tax fraud, and money laundering culminated in the temporary detainment of Armando Pereira, the co-founder and former chief operating officer of Altice. Pereira was released on a €10 million ($11 million) bail. The Portuguese authorities suspect that procurement decisions at Altice were rigged, adversely affecting the group’s own companies and competitors. The investigation focused on contracts with dozens of Altice’s suppliers in Portugal, with concerns extending to the broader procurement practices, considering that some Portuguese suppliers also served Altice in France.
The French Investigation: The French investigation, initiated by the PNF in September, is now shedding light on potential corruption within Altice’s operations. It encompasses an examination of alleged corruption involving individuals without public office, money laundering activities, and attempts to conceal these offenses. This development highlights the widening scope of the scrutiny faced by Altice, impacting its reputation and business operations.
Altice’s Response: Altice has maintained that it is a victim of the alleged wrongdoings in Portugal and has expressed its commitment to collaborating with judicial authorities. While bonds issued by Altice France’s holding company experienced a decline in the wake of the investigation, the company has stressed its dedication to addressing the issues raised by the authorities. Armando Pereira’s lawyer, Jean Tamalet, emphasizes Pereira’s desire for a swift and effective investigation to clear his name. Tamalet also advocates for auditing Altice contracts with suppliers in France to evaluate potential penalties, kickbacks, and beneficiaries.
Impact on Altice and Patrick Drahi: The French investigation poses additional challenges to Patrick Drahi’s empire, which is already navigating a complex landscape of debt reduction and asset sales. Altice France, a major revenue contributor, faces increased scrutiny, potentially influencing its financial standing. As the telecom industry evolves, Altice’s ability to weather the legal and financial implications of the investigation will be closely watched.
Conclusion: The probe into potential corruption linked to Altice signifies a critical juncture for the telecom group. With the PNF’s investigation underway, Altice’s future trajectory will depend on its ability to address the allegations, collaborate with authorities, and navigate the broader challenges within the telecommunications sector. As the legal proceedings unfold, Altice faces the imperative of maintaining transparency and rectifying any wrongdoing to safeguard its reputation and business operations.
