Altice Co-Founder to Testify in Portugal Corruption Probe

The co-founder and former chief operating officer of telecommunications group Altice, Armando Pereira, will appear before a judge on Wednesday afternoon after being detained in Portugal as part of a sweeping investigation into alleged corruption.

(Bloomberg) — The co-founder and former chief operating officer of telecommunications group Altice, Armando Pereira, will appear before a judge on Wednesday afternoon after being detained in Portugal as part of a sweeping investigation into alleged corruption.

He’s scheduled to give testimony on Wednesday at 2 p.m. in Lisbon, Pedro Marinho Falcao, one of his lawyers, told Bloomberg News. Pereira was one of three people detained after police carried out 90 searches in homes and offices on Thursday and Friday in what authorities said was a three-year investigation into private corruption, tax fraud and money laundering.

Pereira “has been the target of a widespread attack in Portugal in recent days,” his lawyers said in an emailed statement on Tuesday. “The communication surrounding this operation was done in such a way that it led to his being immediately found guilty in public opinion” and his legal team will demonstrate “the reality is not so simple.”

Altice, the group founded by billionaire Patrick Drahi that includes Altice Europe NV and the listed unit Altice USA Inc., has made an effort to frame the events as isolated to Portugal and to individuals who don’t hold executive roles at the company.

While Pereira no longer holds a formal executive role at Altice, his influence on the group runs deep. After co-founding the company two decades ago with Drahi, he remained central to the company, handling the technical side of the business, the contracts with suppliers and cost-cutting in human resources.

“Historically, he was considered as Patrick Drahi’s right hand in the group,” said Olivier Lelong, a delegate for the CFDT union at Altice in France. 

Drahi founded Altice with Pereira and another partner in France in 2002 and grew it through high-profile acquisitions of companies like French carrier SFR Group SA, and Suddenlink Communications and Cablevision Systems Corp. in the US. Altice also became the biggest shareholder of British carrier BT Group Plc after starting to build a stake in 2021. Years of aggressive acquisitions fueled by cheap borrowing have saddled the businesses with more than $50 billion of debt.

Placed On Leave

Altice International said on Wednesday it placed several key legal representatives, managers and employees in Portugal and other countries on leave while the investigation is carried out, and said it will consider all “legal options.”

“The Portuguese prosecution authority clarified that its investigation related to harmful practices for which Altice Portugal and its subsidiaries are impacted and therefore victims of fraud by individuals,” Altice International said in an emailed statement. “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.”

Altice USA’s chief procurement officer, Yossi Benchetrit, is among those placed on leave while the company carries out an internal investigation begun “in response to the circumstances in Portugal,” according to an internal memo seen by Bloomberg News. Benchetrit is also Pereira’s son-in-law.

“We take this investigation very seriously and will continue to act diligently and with urgency to make decisions that are in the best interest of our employees, customers, and shareholders,” Dennis Mathew, chairman and chief executive officer of Altice USA wrote in the memo. “Altice USA conducts its business with the highest integrity.”

Portugal has become strategically important to Altice France, with various suppliers based in the country. Pereira was still working for the group in an advisory role and was seen at the Altice France headquarters last week. Last August, he was described in an internal memo as an adviser to the new CEO of Altice France.

Portuguese Probe

Prosecutors suspect that procurement decisions taken at Altice, the largest telecommunications operator in Portugal, were rigged in a way that harmed the group’s own companies and competitors, Portugal’s Central Department of Criminal Investigation and Prosecution said in a statement on Friday.

The company’s Portuguese unit said its offices were among those searched in relation to an investigation of individuals and entities outside of Altice Group. It has started an internal probe of its procurement and real estate sales, and has suspended payments to entities targeted by the authorities.

It also said in a statement on Monday that Alexandre Fonseca, the group’s co-chief executive and chairman of its units in the US and Portugal, had temporarily stepped down to “fully protect and safeguard” the company amid the investigation into events that occurred while he was CEO of the Portuguese unit. There is no evidence to suggest that Fonseca is under investigation himself at the moment.

Fonseca said in a Linkedin post that he was completely unaware of any activity related to the allegations in the ongoing investigation.

His lawyer, Rogerio Alves, said in an email on Monday evening that he wasn’t going to comment for now.

Following news of Fonseca’s suspension, second-lien bonds issued by Altice Finco maturing in 2028 on Monday posted the steepest daily drop since they were issued in 2017, according to data compiled by Bloomberg.

(Updates with statement from Altice International in eighth, ninth paragraph.)

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