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U.S. v. VimpelCom Ltd.

 
:
VimpelCom Ltd.
:
DOJ Criminal
:
February 18, 2016
:
U.S. v. VimpelCom Ltd.
:
U.S. v. VimpelCom Ltd., 1:16-cr-00137 (S.D.N.Y. 2016)
:
Although the SEC elected to charge VimpelCom for violating all three provisions of the FCPA (anti-bribery, books-and-records, and internal controls), the DOJ only charged VimpelCom with one count of conspiracy to violate the anti-bribery and books-and-records provisions, and another substantive count of violating the FCPA’s internal controls provisions. The distinction suggests that the DOJ did not believe it had sufficient evidence to meet the "beyond a reasonable doubt" standard applicable in criminal cases while the SEC believed it could meet the "more likely than not" standard applicable in civil cases.

In a separate civil action, the DOJ is seeking the forfeiture of over $800 million held by VimpelCom in Swiss bank accounts which it alleges are the proceeds of bribe payments made by VimpelCom and its subsidiary, Unitel LLC, to an Uzbek government official.
:
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.
:
VimpelCom Ltd., headquartered in the Netherlands, is 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, a class of securities on the New York Stock Exchange.

According to the DOJ, between 2006 and 2012, VimpelCom paid an Uzbek government official over $114 million in exchange for (i) access to the Uzbek telecommunications market, (ii) the acquisition of important Uzbek licenses and frequencies, and (iii) general support to allow the company to operate in the Uzbek market. The company allegedly concealed bribes by making payments to a shell company (“Shell Company”) that VimpleCom knew to be beneficially owned by the official.

In 2006, VimpelCom allegedly paid Shell Company $37.5 million to facilitate its entry into Uzbekistan by obtaining permission for VimpelCom to purchase two local Uzbek telecom companies. In subsequent years, VimpelCom is accused of paying Shell Company at least $57 million for its assistance in obtaining 3G and LTE licensing and other telecommunications assets from Uzbek authorities. Finally, VimpelCom allegedly conducted complex sham “reseller” transactions to transfer an additional $20 million in bribes to the government official through Shell Company.

As alleged by the DOJ, VimpelCom falsified its books and records in an attempt to conceal the scheme. Specifically, the DOJ claims that the company classified corrupt payments as pertaining to equity transactions, consulting services, and reseller transactions. The company also allegedly failed to implement adequate internal accounting and compliance controls, allowing various employees to continue the scheme undetected.

On February 22, 2016, the DOJ announced that it had settled an FCPA enforcement action against VimpelCom through a three-year deferred prosecution agreement. According to the DPA, VimpelCom conspired to violate the FCPA’s anti-bribery and book-and-records provision and violated the FCPA’s internal controls provision.
:
Conspiracy - Anti-Bribery, Conspiracy - Books & Records, Internal controls (Issuer)
:
Deferred-prosecution Agreement
:
Total criminal penalty of $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.
:
230,100,000
:
0
:
Issuer
:
Foreign
:
Netherlands
:
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