The Portuguese corruption probe targeting powerful figures within Patrick Drahi’s Altice is reverberating throughout the billionaire’s sprawling telecommunications empire.
(Bloomberg) — The Portuguese corruption probe targeting powerful figures within Patrick Drahi’s Altice is reverberating throughout the billionaire’s sprawling telecommunications empire.
Fallout from the investigation into alleged corruption, money laundering and tax fraud is spreading from Portugal to the bigger markets in which Altice operates, including France and the US. Executives and suppliers have been suspended, triggering operational changes and bringing some projects to a halt.
It comes as Altice faces pressure on other fronts. In addition to the investigation, the company’s debt pile has ballooned to more than $60 billion split between the company’s three main entities, with rapidly rising borrowing costs.
Eyes now turn to French-Israeli billionaire Drahi, who is due to publicly address the probe and its impact with debt investors next week, when Altice International (encompassing mainly Altice Portugal and Hot Telecommunication Systems Ltd. in Israel) and Altice France publish their quarterly earnings, respectively on Monday and Tuesday.
The group considers itself a victim of the alleged wrongdoings. “Portuguese authorities have identified that Altice Portugal has allegedly been defrauded as a result of harmful practices and misconduct of certain individuals and external entities,” an Altice spokesperson previously said.
American spinoff Altice USA, in which Drahi holds a stake, is conducting its own internal investigation, in parallel with others in Europe, the company’s Chief Executive Officer Dennis Mathew said after results on Wednesday. It has replaced Yossi Benchetrit, who was suspended last month in relation to the probe, with Jennifer Yohe as its new head of procurement, he added. Benchetrit is the son-in-law of Altice co-founder Armando Pereira, who was detained in Portugal on July 13 as part of the criminal investigation, and is now under house arrest. His lawyer denied the Portuguese prosecutor’s allegations.
Altice USA is also reviewing all supplier and vendor relationships and will pause some capital spending until the probe is complete, Mathew said during the earnings call. The company is conducting its own internal investigation, in parallel with others in Europe. Alexandre Fonseca, chairman of Altice USA, has also been suspended, along with about ten other employees, the company previously said.
In France, Tatiana Agova-Bregou, the executive director in charge of content, acquisitions and partnerships at the telecommunications company, was placed on leave starting Aug. 1, becoming the first Altice France employee to be suspended, Bloomberg reported. She is “surprised that her name is associated with the supposed financial embezzlement allegedly committed by people within the Altice group,” her lawyer said in a statement, and “believes she has committed no wrongdoing.”
During a meeting with unions yesterday, Altice France Chairman Arthur Dreyfuss said that the company was still reviewing its suppliers but had determined that the impact of the alleged fraud seemed limited, with less than 4% of Altice France’s total group purchasing expenditure appearing to be linked to the probe at this stage, according to a union readout of the meeting seen by Bloomberg.
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