Russia-focused telco Vimpelcom has agreed to pay US$795m to settle US and Dutch claims related to bribery in Uzbekistan. Meanwhile, the US Department of Justice has filed two civil complaints seeking a total of $850m in forfeiture in connection with alleged bribery involving Vimpelcom and two separate telcos in the Central Asian country.
Russia-focused telco Vimpelcom (NASDAQ:VIP) has agreed to pay US$795m to settle US and Dutch claims concerning bribery in Uzbekistan.
Vimpelcom said in a statement that it has agreed to a deferred prosecution agreement with the US Department of Justice (DoJ), a consent agreement with the US Securities and Exchange Commission (SEC), and a settlement agreement with the Dutch Public Prosecution Service (OM) relating to their investigations into its business in Uzbekistan.
The settlement follows wider corruption investigations by US, Dutch, Swedish and Swiss authorities into the activities of three foreign telcos in Uzbekistan. The others include Vimplecom rival MTS (NASDAQ:MTSC) and Sweden’s TeliaSonera (STO:TLSN).
The DoJ said in its own statement that the telcos paid more than US$800m in bribes so that an Uzbek official would help them to obtain and retain business in Uzbekistan. The official’s associates then laundered the proceeds through accounts held in Latvia, the UK, Hong Kong, Ireland, Belgium, Luxembourg and Switzerland, the authority added.
Vimpelcom and its Uzbek unit Unitel have admitted to a conspiracy to make more than US$114m in bribery payments to a government official in Uzkekistan between 2006 and 2012 to enable them to operate in the local market, the DoJ said, The official was a close relative of a high-ranking government official with influence over the country’s telecoms regulator, the authority noted.
Vimpelcom has agreed to pay a US$230m criminal fine to the US, including US$40m in criminal forfeiture. It has also agreed to implement rigorous internal controls, retain a compliance monitor for three years and cooperate with the DoJ’s ongoing investigation, according to the DoJ.
In related proceedings, Vimpelcom agreed to a total US$375m in disgorgement of profits and prejudgement interest, to be divided between the SEC and OM. The telco has also agreed to pay OM a criminal penalty of US$230.16m, bringing its total resolution amount to some US$835m. However, the DoJ agreed to credit the criminal penalty paid to OM as part of its agreement with the company and the SEC agreed to credit the forfeiture paid to the DoJ. As such, Vimpelcom will pay a total US$795.33m in criminal and regulatory penalties, one of the largest ever global foreign bribery resolutions.
Meanwhile, the DoJ has filed two civil complaints seeking a total of $850 million in forfeiture. One, filed yesterday, seeks the forfeiture of US$550m in Swiss bank accounts which the DOJ says constitute bribe payments made by Vimpelcom and two separate telcos to the Uzbek official. The second, filed earlier, seeks an additional $300 million in proceeds of illegal bribes paid to the same Uzbek official.
Vimpelcom CEO Jean-Yves Charlier acknowledged the company’s “wrongdoing” in its statement, describing its actions as “unacceptable” and saying the company will continue to “take strong measures to embed a culture of integrity across the group”.
“We have significantly strengthened our internal controls and compliance programme,” he said, noting that, following the launch of the international investigations, the company has appointed a new CEO, CFO, group general counsel, chief performance officer and group chief compliance officer.
US Assistant Attorney General Leslie Caldwell commented: “These cases combine a landmark Foreign Corrupt Practices Act (FCPA) resolution for corporate bribery with one of the largest forfeiture actions we have ever brought to recover bribe proceeds from a corrupt government official.”
