Telecoms company VimpelCom said in an earnings release Wednesday that it has discussed terms of prospective settlements with the SEC, DOJ, and Dutch prosecutors and would would acknowledge “certain violations” of the Foreign Corrupt Practices Act and Dutch laws and pay fines and disgorgements to settle the offenses.
In November last year, Amsterdam-based VimpelCom reserved $900 million for settlements with U.S. and Dutch authorities. Prosecutors are investigating VimpelCom’s business in Uzbekistan and dealings with an offshore company linked to the daughter of the Uzbek president.
VimpelCom said Wednesday U.S. and Dutch authorities need to approve the settlements before they become final.
The investigation focuses on allegations of huge payments to Gibraltar-registered Takilant in exchange for access to the Uzbek telecoms market.
Takilant has been tied to Gulnara Karimova, the eldest daughter of Uzbek President Islam Karimov.
In August 2015, the DOJ 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 2014.
As many as 60 of her alleged associates have been convicted in Uzbekistan of financial fraud and sentenced to long prison terms.
Karimova and Takilant are the targets of a money laundering probe by prosecutors in Switzerland.
VimpelCom is part of Norway’s Telenor. Norway’s government owns 54 percent of Telenor.
Telenor’s chairman Svein Aaser resigned in October 2015 because of the investigation. Norway’s industry minister Monica Maeland complained that Telenor had withheld information about the investigation from her and parliament.
VimpelCom trades on the NASDAQ Global Select Market under the symbol VIP.
In addition to Uzbekistan, VimpelCom provides mobile and fixed-line telephone services in Russia, Italy, Ukraine, Kazakhstan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria, Bangladesh, Pakistan, and Zimbabwe.
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Here is VimpelCom’s full FCPA disclosure from its 4Q ’15 results reported on February 17, 2016:
As previously disclosed, VimpelCom Ltd. (the “Company”) has engaged in discussions with the U.S. Department of Justice (the “DOJ”), the U.S. Securities and Exchange Commission (the “SEC”) and the Dutch Public Prosecution Service (Openbaar Ministerie) (“OM”) toward the resolution of the Company’s potential liabilities in the ongoing investigations relating primarily to the Company’s business in Uzbekistan and prior dealings with Takilant Ltd. These discussions have resulted in prospective settlements with the SEC, DOJ and OM. These prospective settlements remain subject to the approval of the pertinent authorities, and will not become final or announced until that time.
Based on the terms of the prospective settlements with the SEC, DOJ and OM, the Company and certain subsidiaries would, among other things, acknowledge certain violations of the U.S. Foreign Corrupt Practices Act and relevant Dutch laws and pay fines and disgorgements to the SEC, DOJ and OM, with those financial penalties within the previously disclosed provision for that purpose.
At this time, the Company will make no further comments on the prospective settlements, and reiterates that there can be no assurance that they will become effective in accordance with the terms described above.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.