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From Securities Regulation Daily, February 18, 2016

VimpelCom targeted in one of biggest-ever FCPA cases

By Mark S. Nelson, J.D.

The SEC announced a settled court case involving VimpelCom Ltd., the world’s sixth largest telecommunications company, for the firm’s role in the payment of bribes to Uzbekistan government officials in violation of the FCPA. The Department of Justice also announced a deferred prosecution agreement with VimpelCom and a plea deal with the firm’s subsidiary, Unitel LLC (SEC v. VimpelCom Ltd., February 18, 2016; U.S. v. VimpelCom Ltd.U.S. v. Unitel LLC).

Global reach. The SEC and the DOJ accused VimpelCom of bribing an Uzbek government official who is related to Uzbekistan’s president in order to smooth the firm’s entry into the Uzbek telecommunications market. According to the SEC’s complaint, VimpelCom channeled $114 million to Uzbek officials via sham contracts and charities that masqueraded as legitimate organizations. The SEC said VimpelCom ran afoul of the FCPA’s anti-bribery, books and records, and internal controls provisions.

VimpelCom is a Bermuda company with its current headquarters in Amsterdam, the Netherlands, although it once was based in Moscow, Russia. SEC Enforcement Director Andrew Ceresney praised the “outstanding” cooperation from international authorities and said there was still more work to be done on the FCPA front. VimpelCom has operations in Europe, Asia, and Africa, but the bribery investigation involved the work of regulators in 14 countries spanning continental Europe, Scandinavia, the Caribbean, the Middle East, and the southwest Pacific islands.

Significant FCPA case. In a late afternoon call with reporters, Assistant Attorney General Leslie Caldwell said the case against VimpelCom was one of the biggest in FCPA history. She noted that despite the scheme’s eight year duration and VimpelCom’s lack of self-reporting, the firm still received a “discount” on the fines it will pay because it acted promptly once contacted by government officials. Caldwell said the discount could have been larger if VimpelCom had self-reported the violations.

VimpelCom admitted key facts in a document related to the deferred prosecution agreement it reached with the DOJ. Meanwhile, Unitel agreed to plead guilty to one count of conspiracy to violate the FCPA’s anti-bribery provisions.

VimpelCom will pay a total of $795 million to U.S. and foreign regulators, with $167.5 million going to the SEC, and an additional $230.1 million to the DOJ. VimpelCom also reached a deal to pay Dutch authorities the equivalent of $397.5 million. A separate civil forfeiture action by the DOJ under its kleptocracy enforcement initiative seeks to recover $550 million in bribe proceeds held in a Swiss bank account in addition to the $300 million the department previously sought from the Uzbek official involved in the case. All told, VimpelCom paid $850 million in bribes to the Uzbek official.

Attorneys: Paul Gizzi for the SEC. Andrew Weissmann for the DOJ.

Companies: VimpelCom Ltd.; Unitel LLC

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