Telecoms company VimpelCom said in a statement Tuesday it will take a provision of $900 million for an investigation by U.S. and Dutch authorities of its business in Uzbekistan and dealings with an offshore company linked to the daughter of the Uzbek president.
Amsterdam-based VimpelCom said it cooperating with the DOJ, SEC, and Dutch agencies but doesn’t know the final cost of any potential resolution.
The investigation focuses on allegations of bribery involving Gibraltar-registered Takilant.
Takilant has been tied to Gulnara Karimova, the eldest daughter of Uzbek President Islam Karimov.
In August this year, the U.S. Justice Department asked authorities in several European countries to freeze about $1 billion in assets tied to Karimova and alleged bribes from VimpelCom, MTS of Russia, and TeliaSonera of Sweden.
Karimova, 43, has been under house arrest in the Uzbek capital of Tashkent for corruption since September last year.
As many as 60 of her alleged associates have been convicted in Uzbekistan of financial fraud and sentenced to long prison terms.
Last year, prosecutors in Switzerland opened a money-laundering investigation into Karimova and Takilant.
VimpelCom is part of Norway’s Telenor. Telenor’s chairman Svein Aaser resigned last week because of the investigation.
Norway’s government owns 54 percent of Telenor.
Industry minister Monica Maeland complained that Telenor has withheld information about the investigation from her and parliament.
VimpelCom is traded on the NASDAQ Global Select Market under the symbol VIP.
In addition to Uzbekistan, it provides mobile and fixed-line telephone services in Russia, Italy, Ukraine, Kazakhstan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria, Bangladesh, Pakistan, and Zimbabwe.
* * *
Here’s VimpelCom’s full statement of November 3, 2015:
As previously disclosed, the U.S. Securities and Exchange Commission (“SEC”), the U.S. Department of Justice (“DOJ”), and the Dutch Public Prosecution Service (Openbaar Ministerie) (“OM”) are conducting investigations relating primarily to VimpelCom Ltd.’s (the “Company” or “VimpelCom”) business in Uzbekistan and prior dealings with Takilant Ltd.
As announced in February of 2015, the Company has been exploring resolution of the Company’s potential liabilities. The Company continues to cooperate with the authorities. Based on its ongoing assessment of the investigation during the third quarter of 2015, the Company will make a provision in the amount of US$900 million in its third quarter financial statements.
The discussions with the authorities are ongoing and, until concluded, there can be no certainty as to the final cost to the Company of any such resolution or the nature, likelihood or timing of a definitive resolution.
At this time, the Company will make no further comments on the ongoing discussions.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.