Telenor suspensions deepen suspense

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Telenor’s decision to “relieve” four top executives of their responsibilities at the company is tied to ongoing investigations over how Telenor reacted to warnings of corruption at its partly owned mobile phone firm VimpelCom Ltd. Questions keep flying, meanwhile, over a US law firm’s external evaluation of the warnings that not even state investigators have been allowed to read.

The suspensions of Telenor’s chief financial officer, Richard Olav Aa, its general counsel, Pål Wien Espen, and managers Fridtjof Rusten and Ole Bjørn Sjulstad literally have deepened the suspense at Telenor. Aa and Espen are both executive vice presidents at Telenor who had just been promoted to their top posts by Telenor’s new chief executive, Sigve Brekke. Rusten and Sjulstad have both been among Telenor’s representatives on VimpelCom’s board, during periods when VimpelCom paid out millions of US dollars to a company that’s been linked to the daughter of Uzbekistan’s dicator. The payments, for alleged “consulting” services, were made while VimpelCom was expanding into Uzbekistan and needed to obtain 4G operating licenses in the country. Investigators suspect they were bribes.

All four Norwegian men claim they have “contributed to handling concerns related to VimpelCom’s investment in Uzbekistan in a correct manner.” Brekke stresses that the suspensions, with full pay and benefits continuing, are not tied to any suspicions against Aa, Espen, Rusten or Sjulstad. “These are four highly trusted colleagues,” Brekke claimed on Norwegian Broadcasting (NRK)’s nightly national newscast Dagsrevyen Wednesday, as the suspensions were announced, adding that he had no reason to believe they have been involved in the alleged corruption.

Didn’t want to ‘blind’ external investigation
Brekke noted, however, that Telenor has asked accounting and consulting firm Deloitte to conduct an external investigation of how the corruption suspicions and allegations have been handled by Telenor. All four of the Telenor officials now suspended have handled some of the warnings that were made as far back as 2011, Brekke confirmed. “To be completely sure that (Deloitte’s) review won’t be blinded, we wanted to relieve these four colleagues (of their duties),” Brekke said.

Newspaper Aftenposten reported on Thursday that Aa and Espen had received the warnings and concerns about possible corruption via email four years ago from other still-unidentified Telenor employees who’d been dispatched to work at VimpelCom. The warnings issued in August and September of 2011 concerned payments of USD 30 million to a company called Takilant, which later proved to be a so-called “postbox” company registered in Gibraltar with no employees and believed to be controlled by Gulnara Karimova, daughter of the man who still rules Uzbekistan, formerly part of the Soviet Union.

Similar warnings were made both verbally and via email to Jo Lunder, Telenor’s former “wonderboy” who was involved in Telenor’s investment in VimpelCom from the start and eventually became VimpelCom’s chief executive officer (CEO). Lunder has been charged with corruption in the case but seems determined not to be the fall guy. On Wednesday, just after he’d been released from six days in police custody, Lunder and his defense attorney Cato Schiøtz launched efforts to clear his name. While Schiøtz blasted prosecutors, Lunder claimed he’d done “all” he could to address the corruption concerns that already were arising back in 2011. He said he initially halted the payments until they were cleared by US experts called in to evaluate them. Lunder claimed he’d even been skeptical about expanding into Uzbekistan back in 2006, when he sat on VimpelCom’s board. Uzbekistan has long ranked as one of the most corrupt and least transparent countries in the world.

Unanswered questions
Lunder refused to answer questions, however, as to why he relied so heavily on the evaluation that he ordered and received, within the course of a few weeks, from a US law firm billed as having special expertise regarding corruption issues. The law firm, Akin Gulp, was reportedly ordered to “snu hver stein” (literally, look under all stones) and investigate whether there was any basis for the corruption suspicions tied to the payments. Lunder claims his advisers reported that the law firm’s evaluation contained no reason for concern over the payments and that he also receive “unison positive feedback” from others.

Newspaper Dagens Næringsliv (DN) reported Thursday, however, that even though Lunder ordered the report, he didn’t read it himself. Nor, reportedly, have Telenor officials, Norwegian prosecutors, other investigators in the US and the Netherlands or the Norwegian judges who freed Lunder from custody. “We haven’t had access to it,” confirmed lead Norwegian prosecutor Marianne Djupesland, “because it’s been deemed confidential under lawyer/client privilege.” She said Lunder has refused to comment in detail on it because of its confidentiality. Nor would he reveal to reporters at Wednesday’s press conference why the law firm’s report convinced him that he could approve the payments to Takilant with good conscience. US investigators have later determined, however, that Takilant received USD 30 million for producing two “consulting” reports on the Uzbekistan telephone market that were larged copied and pasted from online sources. As one of DN commentators wryly noted on Thursday, “that’s very good hourly pay.”

‘No documentation … this was a bluff’
The law firm has also refused to release its own report, citing lawyer/client privilege. Schiøtz conceded at Wednesday’s press conference that legitimate questions have been raised around the report that satisfied Lunder, but contended there’s “no documentation that this process was a bluff meant to make something legitimate. If so, that would have been at odds with Lunder’s instructions.”

DN reported that Lunder has claimed he couldn’t release the report because VimpelCom’s board didn’t want it released. Telenor, which has had at least three representatives on VimpelCom’s board since 2007, didn’t respond to DN’s questions about how the board handled the report.

Schiøtz has also claimed that Lunder was muzzled as CEO, and ordered to follow a policy of “no comment” that also allegedly was demanded by VimpelCom’s board. By this time, VimpelCom was controlled by Russian oligarch Mikhail Fridman after a lengthy ownership battle between his firm, Alfa, and Telenor.

Lunder also noted at Wednesday’s press conference that the size of the disputed payments to Takilant was “small” in relation to VimpelCom’s overall revenues and the value of the business Lunder felt obligated to run. The payments totalled just over USD 100 million over several years, and Lunder suggested that he felt at the time that he had more important matters to attend to.

They’ve ended up costing him his reputation and, perhaps, the career he’s spent years building up. DN commentator Eva Grinde wrote Thursday that Lunder still has a problem clarifying his position on critical issues, for example how he’d worried about doing business in Uzbekistan “yet didn’t take time to find out what VimpelCom was paying (Takilant) for, and why?” Now more heads are rolling at Telenor and the international investigation continues, also after VimpelCom set aside USD 900 million to help cover any fines or other punitive action lodged by US and other authorities. Berglund