Amsterdam-based VimpelCom, a global telecommunication services provider, and its wholly owned Uzbek subsidiary, Unitel, yesterday reached a combined $795 million settlement with the U.S. and Dutch prosecutors for paying bribes to a government official in Uzbekistan.
VimpelCom will pay a $230.2 million criminal penalty to the Department of Justice, $167.5 million civil penalty to the Securities and Exchange Commission, and $397.5 million to the Public Prosecution Service of the Netherlands (Openbaar Ministrie, or OM). Thus, the combined total amount of U.S. and Dutch criminal and regulatory penalties paid by VimpelCom will be more than $795 million, making it one of the largest global foreign bribery resolutions ever.
As Compliance Week previously reported, VimpelCom in November 2015 said it had set aside USD$900 million for settlements with U.S. and Dutch prosecutors in connection with the bribery investigation.
As part of the settlement, Vimplecom admitted to paying more than $114 million in bribes between 2006 and 2012 to Gulnara Karimova, the daughter of Uzbek President Islam Karimov, to enable them to enter and continue operating in the Uzbek telecommunications market. Those payments, falsely recorded in the company’s books and records, were then laundered through bank accounts and assets around the world, including through accounts in New York.
According to the Justice Department, VimpelCom also failed to implement and enforce adequate internal accounting controls, which allowed the bribe payments to occur without detection or remediation. “Moreover, when the board of directors sought an FCPA legal opinion assessing corruption risks involved in the transactions, certain VimpelCom management withheld crucial information from outside counsel performing the review that restricted the scope of FCPA opinions, rendering them worthless,” the Justice Department said.
“Rather than implement and enforce a strong anti-corruption ethic, certain VimpelCom executives sought ways to give the company plausible deniability of illegality while knowingly proceeding with corrupt business transactions.”
The Justice Department said a number of significant factors contributed to the criminal resolution. For example, the companies received “significant credit” for:
Their prompt acknowledgement of wrongdoing after being informed of the department’s investigation;
Their willingness to promptly resolve their criminal liability on an expedited basis; and
Their extensive cooperation with the department’s investigation.
“Specifically, the criminal penalty reflects a 45 percent reduction off of the bottom of the U.S. Sentencing Guidelines fine range,” the Justice Department said. The companies could have received even more mitigation credit had they voluntarily self-disclosed their misconduct after an internal investigation uncovered the wrongdoing, the Justice Department noted.
In a related action, the Justice Department said it also filed a civil complaint Feb. 18 seeking the forfeiture of more than $550 million held in Swiss bank accounts, which constitute bribe payments made by VimpelCom and two separate telecommunications companies, or funds involved in the laundering of those payments, to the Uzbek official. The forfeiture complaint follows an earlier civil complaint filed in June 2015, which seeks forfeiture of more than $300 million in bank and investment accounts held in Belgium, Luxembourg and Ireland that also constitute funds traceable to bribes, or funds involved in the laundering of the bribes, paid by VimpelCom and another telecommunications company to the same Uzbek official.
“These cases combine a landmark 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,” said Assistant Attorney General Leslie Caldwell. “The Criminal Division’s FCPA enforcement program and our Kleptocracy Initiative are two sides of the same anti-corruption coin. The FCPA resolution in this case is also one of the most significant coordinated international and multi-agency resolutions in the history of the FCPA.”
VimpelCom entered into a deferred prosecution agreement in connection with a criminal information charging the company with conspiracy to violate the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act (FCPA), and a separate count of violating the internal controls provisions of the FCPA. In addition to having to pay the $230.2 million criminal penalty, VimpelCom also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years, and cooperate fully with the Justice Department’s ongoing investigation, including its investigation of individuals.