29471: Durban (article): IDT - Teleco Kickback Follow-up (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Lance Durban <lpdurban@yahoo.com>

Here (below) is an report popping up this morning in my inbox that I
thought might interest Corbetters.  Nothing current, mind you.  We all
know that Haiti has gotten over all of these bad times and practices...
 Heck, we're eagerly anticipating Transparency Int'l's NEXT report...
right?  (Side:  Given the timing of this one, it seems apparent that
Washington-based consultant David Lewis can read which way the wind is
blowing in Washington!)
L. Durban

U.S./HAITI: Top Republicans Leave Telecom Accused of Bribery
Lucy Komisar - New York-based investigative journalist writing a book
on the international impact of the offshore bank and corporate secrecy
system.
NEW YORK, Nov 6, 2006 (IPS)
www.ipsnews.net
Five nationally prominent U.S. Republicans, the independent board
members of a corporation that has been charged with paying hundreds of
thousands of dollars in bribes to get a sweetheart telecom deal in
Haiti, are leaving its board.

The company is IDT, the world's third-ranked international phone
company.

The Republicans are Rudy Boschwitz, former senator from Minnesota;
James S. Gilmore III, former Virginia governor; Thomas Slade Gorton
III, former senator from Washington State; Jack Kemp, former
congressman from New York and 1996 vice presidential nominee; and Jeane
Kirkpatrick, the former U.S. ambassador to the U.N. under President
Ronald Reagan.

They are not included among nominees on the IDT proxy statement filed
with the U.S. Securities and Exchange Commission (SEC) Oct. 30. Two
other independent board members, Warren Blaker and Saul K. Fenster, are
also leaving, and four company board members are stepping down, whilst
three others are coming on, reducing the board from 15 to seven
members, with the independents at a one-person majority.

IDT is run by James Courter, a former Republican congressman from New
Jersey. The company is under investigation by the SEC, the United
States Attorney in Newark, New Jersey, and a U.S. federal grand jury
for allegedly paying bribes to Jean-Bertrand Aristide, former president
of Haiti.

The five board members either declined or did not respond to requests
for comment. The Oppenheimer Fund, the largest institutional investor
in IDT, also chose not to comment.

However, Herb Denton, president of Providence Capital, a New York
investment firm with stock in the company until March, said,
"Kirkpatrick, Gordon, Gilmore, Kemp and Boschwitz were pals and friends
of James Courter," he told IPS. "Why do you put very powerful
politicians on your board? Because you like them, you think they're
capable, and they buy you protection."

Of the independents, only Marc J. Oppenheimer, president of Octagon
Associates, Inc., a banking and financial strategy firm, currently
serves on the board. The new members will be James R. Mellor, former
CEO of General Dynamics; Alan Claman, former president of an aerospace
company; and Judah Schorr, who owns an anesthesia supplier.

Denton noted that other than Mellor, the new board nominees had never
sat on other company boards, which was unusual. He explained, "You want
business people with public company board experience."

IDT spokesperson Gil Nielsen said that the company two weeks ago had
told the SEC it planned to reduce the size of its board "as part of a
cost saving and restructuring plan". He said, "Clearly, the fact that
several board members will not stand for re-election is only a result
of the proposed reduction in the number of board seats." Nielsen did
not explain why IDT, while removing some members, added three new
people to its board.

He said, "As far as any allegations concerning Haiti, IDT continues to
maintain that any such claims are false and without merit and are the
result of a former disgruntled employee."

Bribery allegations were first raised by a former IDT executive,
Michael Jewett, who said that IDT made a deal to pay off Aristide in
return for a lucrative contract to provide phone service to Haiti,
paying nine cents a minute instead of the legally mandated 23 cents. He
said that the money was paid to a secret offshore bank account
controlled by Aristide and listed in the name of a shell company in the
Turks and Caicos Islands. Jewett says that when he refused to go along
with the deal, he was fired. In October 2005, he sued the company in
U.S. court for wrongful dismissal.

Following the Jewett allegations, in November 2005, the government of
Haiti and the phone company, Teleco, filed a RICO (Racketeer Influenced
and Corrupt Organisations Act) lawsuit in Miami against the former
president and his alleged collaborators. It says that in one six-month
period, February to April 2004, IDT paid 302,588 dollars in kickbacks
to the Aristide group.

Through his lawyer, Ira Kurzban, Aristide has denied all charges and
described them as a "political investigation".

Regarding the recent shake-up of the board, Denton said, "I speculate
there's something rotten in Denmark." He said he thought the departure
of the Republican board members "goes back to the 27 million dollars
this company spent over three years on Bill Weld's law firm [McDermott,
Weld and Emery]."

Until he resigned in fall 2005, William F. Weld, the former Republican
governor of Massachusetts, was a member of the IDT board and chairman
of its corporate governance committee.

Denton said, "We have no investment in this company at this moment. We
used to own stock in the company until we started to wonder why the
company spent nine million dollars a year on Bill Weld's law firm.
There was something they were investigating, in my opinion. We got out
of it this year." Weld did not respond to a request for comment.

Denton explained, "This company acquired licenses to do
telecommunications in a lot of strange parts of the world. 'Notoriously
corrupt' are the words that come to mind. I think Weld's law firm was
looking at dozens of other countries that are notoriously corrupt, such
as Russia, the Caribbean, South America, where this company does
business. I asked Courter 'How did they get all these licenses?' He
said, 'We swarm all over them'."

Denton said, "I don't think so; that doesn't sound plausible to me.
This company was put together in 1993 and they sprung up like mushrooms
all over the world getting telecom licenses in notoriously corrupt
places. I don't think Teleco Haiti gave a darn whether they were
'swarmed'. They cared that Aristide got paid off."

He noted, "The Foreign Corrupt Practices Act goes right to the board of
directors. [The Act bans bribery and kickbacks.] Gorton, Kemp,
Kirkpatrick, Boschwitz and Gilmore have reputations to protect. Why do
they leave all at one time?"

After Weld's departure, his fellow Republicans were the sole members of
the corporate governance committee. Boschwitz was also on the audit
committee, which investigated the Haiti bribery charge and concluded
that there was no wrongdoing.

The directors are paid 25,000 dollars, plus 15,000 dollars if they are
directors of IDT subsidiaries. They also get stock options. Denton said
that the only serious new candidate who replaced them was James Mellor,
the former General Dynamics CEO, who is on a committee of Net-to-Phone,
an IDT subsidiary.

The IDT's shareholder's meeting will be Dec. 14 at the company's
headquarters in Newark, New Jersey. Denton said he would be there. He
said, "I wouldn't miss this for the world."

--
Dr. David E. Lewis
Vice President
Manchester Trade Ltd.
International Business Advisors
1710 Rhode Island Avenue, NW - Suite 300
Washington, DC 20036
Tel 202-331-9464
Fax 202-785-0376
Email: DavidLewis@ManchesterTrade.com
http://www.ManchesterTrade.com