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July 30, 2007 

Telecom Executives Plead Guilty to FCPA Violations

The Justice Department recently announced that two former executives of ITXC Corporation, a provider of Voice over Internet Protocol services, recently pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act (FCPA) and the Travel Act. The defendants face up to five years in prison and a $250,000 fine when they are sentenced in October.

In their guilty pleas, both defendants admitted they conspired with each other and other former ITXC employees and officers to make corrupt payments to employees of foreign state-owned and foreign-owned telecommunications carriers in Nigeria, Rwanda and Senegal to obtain and retain contracts for ITXC.

In a related case, a former regional manager of ITXC was sentenced to 18 months in prison and required to pay a $7,500 fine for conspiring to violate the anti-bribery provisions of the FCPA and to violate the Travel Act stemming from corrupt payments to foreign officials in order to retain business for ITXC in Africa.

The Securities and Exchange Commission (SEC) also brought parallel civil enforcement actions against these individuals and is seeking injunctions, disgorgement of all ill-gotten gains derived from the alleged misconduct and civil penalties for the alleged FCPA violations.

ITXC was acquired by Teleglobe in 2004. Teleglobe was acquired by VSNL Ltd. in 2006.

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