Telenor admits to withholding info

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UPDATED: “They need to learn the difference between right and wrong,” thundered the head of the Norwegian Parliament’s disciplinary committee on Tuesday. “They” referred to newly retired Telenor chief executive Jon Fredrik Baksaas and other top Telenor officials, after Baksaas admitted they’d withheld information about corruption suspicions at Telenor’s partly owned mobile phone company VimpelCom.

Telenor's newly retired CEO Jon Fredrik Baksaas, shown here speaking at a Telenor event, now has a lot of explaining to do regarding his silence over the VimpelCom corruption case. PHOTO: Telenor

Telenor’s newly retired CEO Jon Fredrik Baksaas, shown here speaking at a Telenor event, now has a lot of explaining to do regarding his silence over the VimpelCom corruption case. PHOTO: Telenor

Newspaper Dagens Næringsliv (DN), citing an exclusive interview with Baksaas, reported in its Tuesday morning edition that Baksaas now says “I’m sorry.” He regrets not passing on more information about the corruption case at VimpelCom when he and Telenor’s chairman, Svein Aaser, were called in to testify before the parliamentary committee in January. The state still owns 54 percent of Telenor’s shares, and thus ranks as Telenor’s largest single shareholder.

“This is an extremely serious case that has become even more serious,” Martin Kolberg, the leader of the parliament’s committee dealing with control and constitutional issues, told DN. “This will go into Norwegian parliamentary history in a negative manner, because I don’t think there are any other examples where leading figures with major responsibility for society (like Telenor’s top officials) haven’t spoken truthfully in the Parliament when they’ve been questioned.”

New hearing will be held
Kolberg confirmed later in the day on Tuesday that the committee had voted unanimously to hold another hearing. It will concentrate mostly on how the government has handled the Telenor/VimpelCom corruption suspicions, Kolberg told Norwegian Broadcasting (NRK). “But we must also go once again into Telenor’s handling of the possible corruption during establishment of operations in Uzbekistan,” he said.

Kolberg contends that “Baksaas and the Telenor system have used taxpayers’ resources to cover up the truth.” He and his committee met on Tuesday to discuss a recent rash of developments in the Telenor-VimpelCom case and he had expected non-partisan support. Several members of the committee already had gone on national radio Tuesday morning, also expressing harsh criticism of Baksaas, Aaser and Telenor in general.

Aaser was fired on Friday by the government minister in charge of business and trade, Monica Mæland, after he and Telenor’s new CEO, Sigve Brekke, had revealed that Telenor’s leadership hadn’t shared all the information about the corruption case that they had. Telenor has had some of its top executives on VimpelCom’s board for years, also when VimpelCom agreed to pay millions of dollars into the bank accounts of Gibraltar company Takilant, which has been tied to the daughter of Uzbekistan’s dictator. VimpelCom made the payments in connection with gaining licenses to expand into Uzbekistan, and criminal investigators in the US, Norway and the Netherlands suspect they amounted to bribes.

Baksaas on the board
Baksaas himself sat on VimpelCom’s board from 2009-2014, a period when VimpelCom reportedly paid out USD 87.5 million to Takilant. DN reported that the money was sent to bank accounts in Lithuania, Hong Kong and Switzerland beginning with a payment of USD 19 million in 2006, when Telenor’s former trusted executive, Jo Lunder, was Telenor’s representative on VimpelCom’s board. Lunder, who later became VimpelCom’s CEO but resigned last year, played a major role in Telenor’s VimpelCom investment, which was also highly troubled because of long-running ownership arguments with Telenor’s Russian partners led by Mikhail Fridman.

There were several other Norwegian members of the VimpelCom board who represented Telenor’s large stake in the company, and DN listed all of them on Tuesday. They included Kjell Morten Johnsen, Ole Bjørn Sjulstad, Arve Johansen, Henrik Torgersen, Fritjof Rusten, Jan Edvard Thygesen and, most recently, Trond Westlie, Morten Karlsen Sørby, Nils Katla and Gunnar Holt. Baksaas, Johnsen and Sjulstad served the longest, with each having terms totaling six years. Board members are ultimately legally responsible for how their companies operate. It remains unclear whether any of the board members from Telenor raised any objections over the payments made to Takilant.

Apology not accepted
With Aaser fired and Baksaas deciding to apologize over his lack of openness around the bribery allegations, it could appear they’re taking the fall. But the head of the parliamentary committee asking questions about the VimpelCom case, Kolberg of the Labour Party, is refusing to simply accept Baksaas’ apology and implicates others in “the Telenor system.” He’s furious, as is Trade Minister Mæland of the Conservatives, so Telenor now faces a stunning lack of confidence that has little to do with party politics.

“This is conscious action by top qualified people who should have learned the difference between right and wrong,” Kolberg told DN, referring to Baksaas and his management team during Baksaas’ many years at Telenor, when it evolved from being a state-owned phone company into an international telecoms firms spanning the globe. Kolberg claimed that he and other members of his parliamentary committee already had “clearly marked how he (Baksaas) has tried to write himself around what has been reality.” He accused Baksaas of creating a “cover story” to explain his and Telenor’s way out of the suspected corruption at VimpelCom.

Baksaas’ self-defense
Baksaas, who retired last summer at age 60 but remains a “special adviser” to Telenor’s board, denied he had spun a “cover story” and blamed his lack of full disclosure at January’s committee hearing on “the large international investigation” still underway into VimpelCom. “In hindsight I can see that I should have handled this differently,” Baksaas told DN. But he claims he felt bound by the confidentiality of information tied to VimpelCom and the investigation.

“When we went into the hearing, the investigation hadn’t progressed far enough so that we could see what the (withheld) information could mean,” Baksaas claimed to DN. “Nor could we see that this was information we could share, since the investigators in several countries viewed it as confidential material.”

Asked who was familiar with the material (which also Minister Mæland, Kolberg and his committee members are now withholding after finally obtaiing it), Baksaas replied “me as chief executive, and the board was also informed.” That’s what got Aaser, long one of Norway’s top business leaders, into trouble, because he as board chairman didn’t share the information with the state as largest shareholder.

Jon Fredrik Baksaas has long been a leading figure in Norway and international business, and it was just a few months ago that he appeared with UN Secretary General Ban Ki-moon at a conference in Oslo. Now he's in big trouble over his role in handling corruption suspicions at Telenor's partly owned VimpelCom. PHOTO: Utenriksdepartementet/Espen Røst

Jon Fredrik Baksaas has long been a leading figure in Norway and international business, and it was just a few months ago that he appeared with UN Secretary General Ban Ki-moon at a conference in Oslo. Now he’s in trouble over how he and his management team handled corruption suspicions at Telenor’s partly owned VimpelCom. PHOTO: Utenriksdepartementet/Espen Røst

As for the serious nature of the bribery suspicions themselves, Baksaas claimed he didn’t become concerned until 2012, when Swedish television aired a program documenting close ties between the company accepting payment for mobile phone liceneses in Uzbekistan, Takilant, and the daughter of Uzbekistan’s longtime dictator, Islam Karimov. Takilant served as “partner” both for Sweden’s telecoms firm TeliaSonera and Telenor, and TeliaSonera has also been under investigation for paying bribes. DN itself also has published lengthy articles about the corruption suspicions at VimpelCom.

Baksaas claimed that VimpelCom’s expansion into Uzbekistan was “a small operation among very many in VimpelCom,” and noted that Telenor was also caught in long and bitter ownership conflicts with its Russian co-owners of VimpelCom.

On Tuesday, however, Baksaas admitted that “the red flags were there the whole time for the nominated board members” of VimpelCom.” He said he though it was “sad” that Telenor is now caught up in “a difficult case for VimpelCom.” He noted that Telenor is now conducting an internal evaluation of whether the operations complied with anti-corruption regulations. “And then as now we will claim that it is the companies’ administrations’ responsibility that transactions are carried out in compliance with anti-corruption regulations,” Baksaas said.

newsinenglish.no/Nina Berglund

  • frenk

    Why has this company not been privatized?