Dutch Company to Pay $795 Million to Resolve FCPA Bribery Probe in Uzbekistan
19th February 2016
Telecommunications giant, Amsterdam-based VimpelCom Limited and its wholly owned Uzbek subsidiary, Unitel LLC, agreed on Thursday, February 18, 2016, to pay $795 million in criminal fines, disgorgement and pre-judgment interest to U.S and Dutch enforcement agencies, including the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) for violating the Foreign Corrupt Practices Act (“FCPA”) by paying massive bribes - more than $114 million – to an Uzbek official to enter the Uzbekistan telecommunications market.
The DOJ also said it had filed two civil complaints seeking $850 million in forfeiture actions to obtain the corrupt proceeds from the unnamed 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 unnamed Uzbek official, as described in the complaint, was “an Uzbek government official and family member of the President of Uzbekistan.” Although U.S. officials would not identify the official, media speculation has been that the individual described could be Gulnara Karimova, the Uzbek president’s daughter.
The settlement required VimpelCom to pay a total of $795 million in criminal and regulatory penalties, which includes payment of a $230 million criminal penalty to each of the DOJ and the Dutch Public Prosecution Service of the Netherlands (“OM”) for a total criminal penalty of $460 million and $375 million in disgorgement of profits and pre-judgment interest to be divided between the SEC and OM. The total resolution amount was a staggering $835 million with a $40 million criminal forfeiture that was credited or agreed to be offset from the total.
In exchange for the settlement, VimpelCom entered into a deferred prosecution agreement in which U.S. criminal charges will be dropped in three years if the company follows the terms of the agreement. The company also plead guilty to the one-count conspiracy to violate the anti-bribery and books and records provisions of the FCPA, agreed to implement rigorous internal controls, retain a compliance monitor and cooperate fully with the ongoing investigation. The companies also received significant credit for their speedy acknowledgement of wrongdoing after being informed of the investigation and also for their extensive cooperation with the investigation.
VimpelCom was also sued in December 2015 by investors claiming that the company had misled investors for years before the extent of the bribery investigation was revealed. The company's stock price had fallen 60 percent since March 2014, when the company first disclosed to investors that U.S. and European regulators were investigating bribery allegations and violations of the FCPA in Uzbekistan.