Allegations that telecommunications giant Alcatel Lucent SA (ALU) bribed Malaysian government officials and company employees in securing contracts occurred during the tenure of the previous management team of Telekom Malaysia Bhd (TM).

This happened when Axiata (formerly known as TM International) was part of the TM Group before the demerger in 2008.

Previously ALU was a major vendor of network equipment, including radio access network infrastructure, peripherals and solutions to Axiata and TM.

It was also the principal vendor selected for the deployment of 3G/HSPA mobile services for Celcom Axiata back in 2006.

The alleged payment of bribes was revealed to have occurred between October 2004 and February 2006, following that, ALU has agreed to pay US$137 million in fines and penalties to settle the charges after reaching an agreement with the US Department of Justice and Securities Exchange Commission.

Elsewhere, according to news reports, the government viewed the allegations seriously and Information, Communications and Culture Minister Dr Rais Yatim has called on the Malaysian Anti-Corruption Commission to investigate the matter.

TM and Axiata, in separate filings to Bursa Malaysia yesterday, said they viewed the potential allegations seriously and vowed to probe the allegation.

Meanwhile, OSK Research is still positive of Axiata and TM.

"We view positively the move by both companies to carry out independent and joint investigations into allegations of graft, the findings of which should further strengthen and reinforce internal procurement policies and uphold integrity of dealings with equipment vendors," OSK Research said in a research note today.

It has maintained its 'Buy' call on Axiata with a target price of RM5.80 and taken a "Neutral" stance on TM with a target price of RM3.28.

"Axiata remains our top pick for exposure to Malaysian and regional telecommunication companies given its attractive regional growth prospects and undemanding solutions," it said.

- Bernama