Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

U.S. v. Unitel LLC

 
:
Unitel LLC
:
DOJ Criminal
:
February 18, 2016
:
U.S. v. Unitel LLC
:
U.S. v. Unitel LLC, No. 16 Crim. 137 (S.D.N.Y. 2016)
:
Unitel LLC pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA. In separate enforcement actions against Unitel’s parent company, VimpelCom Ltd., the DOJ and SEC alleged that VimpelCom violated multiple provisions of the FCPA as a result of an alleged bribery scheme involving Unitel.
:
Telecommunications-Mobile
:
Uzbekistan
:
2006; 2007; 2008; 2009; 2010; 2011; 2012
:
Unnamed Uzbek government official and close relative of a high-ranking Uzbek government official, with significant influence over Uzbek telecommunication authorities.
:
Unitel LLC, headquartered in Uzbekistan, is a subsidiary of VimpelCom Ltd., a global provider of telecommunications services. VimpelCom is the sixth largest telecommunications company in the world, operating in Europe, Asia, and Africa. It maintains a class of publicly traded securities on NASDAQ and, until 2013, maintained another class of securities on the New York Stock Exchange. Unitel conducted VimpelCom’s mobile telecommunications business in Uzbekistan.

According to the plea agreement, between 2006 and 2012, VimpelCom and Unitel conspired to pay an Uzbek government official over $114 million in exchange for (1) access to the Uzbek telecommunications market, (2) acquisition of important Uzbek licenses and frequencies, and (3) general support to allow the company to operate in the Uzbek market. The company allegedly concealed bribes by making payments to a shell company (the “Shell Company”) that VimpelCom and Unitel knew to be beneficially owned by the official. The various transactions, as described by the DOJ, are summarized below.

Before entering the Uzbek market, VimpelCom paid $60 million to purchase a local telecommunications company called Buztel to allegedly curry favor with the foreign official who indirectly owned a partial stake in Buztel. According to the DOJ, VimpelCom elected to purchase Buztel notwithstanding the fact that Buztel was not necessary for Vimpelcom to enter the Uzbek market.

In 2006, VimpelCom and Unitel allegedly conspired to pay the Shell Company $37.5 million to facilitate VimpelCom’s entry into Uzbekistan by permitting the Shell Company to purchase an indirect ownership interest in Unitel for $20 million and later, in 2009, allowing the Shell Company to re-sell its shares to VimpelCom for $57.5 million.

Again, in 2006, the DOJ claimed that VimpelCom and Unitel entered into contract with the Shell Company to obtain 3G frequencies. According to the DOJ, VimpelCom management caused a $25 million bribe to be paid to the foreign official via the Shell Company to allow Unitel to acquire the 3G frequencies.

In 2008 and later 2011, VimpelCom and Unitel entered into allegedly fake consulting contracts with the Shell Company, resulting in the payment of approximately $32 million.

Finally, from 2011 to 2012, VimpelCom and Unitel allegedly transferred approximately $20 million in bribe payments to the foreign official through a series of reseller transactions aimed at concealing the improper payments.

On February 18, 2016, the DOJ announced that it had reached a settlement over the FCPA enforcement against VimpelCom and its wholly owned subsidiary Unitel. According to the plea agreement with Unitel, Unitel agreed to plead guilty to one count of conspiracy to violate the FCPA’s anti-bribery provisions. Unitel was not required to pay a criminal fine on account of VimpelCom’s parallel settlements with the DOJ, SEC, and Dutch Prosecutor’s office where the company agreed to collectively pay $795 million in sanctions.
:
Conspiracy - Anti-Bribery
:
Plea
:
Unitel was not required to pay a fine in light of the DPA and fines imposed on VimpelCom.

The criminal penalty on VimpelCom totaled $230.1 million; entry of 3-year Deferred Prosecution Agreement; retain independent compliance monitor for 3 years; implement rigorous internal controls; and continue to cooperate with ongoing investigation.

The DOJ’s sanction on VimpelCom was coupled with a $167.5 million disgorgement in a parallel SEC action and $397.5 million in aggregate penalties in a settlement with Dutch authorities.
:
Not stated.
:
0
:
Agent of Issuer
:
Foreign
:
Uzbekistan
:
Contract Procurement/Retention, License/Permit, Other Business Advantage
:
2,500,000,000
:
Cash, Wire/check
:
Shell entity
:
114,500,000
:
Uzbekistan
:
Belgium, Ireland, Luxembourg, Switzerland
:
No
:
No
:
Netherlands