Telenor ‘ignored’ bribery alarms

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Whistle-blowers reportedly met deaf ears among top management at Norway’s state-controlled international telecoms firm Telenor, when they sounded alarms four years ago about suspected bribery at Telenor’s partly owned mobile phone firm VimpelCom Ltd. Today both Telenor and VimpelCom are caught up in a major corruption investigation, and the net seems to be closing around top officials involved.

Norwegian telecoms firm Telenor is among the companies that's been hit by computer attacks tied to industrial espionage. PHOTO: newinenglish.no

When Telenor employees who were working at VimpelCom sent their concerns about bribery home to top executives at Telenor’s headquarters here at Fornebu, west of Oslo, they allegedly didn’t get satisfactory answers. PHOTO: newinenglish.no

Newspaper Dagens Næringsliv (DN), which has been writing about possible corruption at VimpelCom for more than three years, reported on Friday that in the summer and autumn of 2011, at least one if not several Telenor employees working at Russian-controlled VimpelCom in Amsterdam had warned two top officials at Telenor about suspicious payments made by VimpelCom to a company called Takilant. The payments totaled USD 30 million at the time, and the Telenor employees hadn’t approved the invoices tied to them.

Jo Lunder has confirmed he was warned about possible bribery, but found the warnings unfounded after an external evaluation. PHOTO: NRK screen grab/newsinenglish.no

Jo Lunder has confirmed he was warned about possible bribery, but found the warnings unfounded after an external evaluation. PHOTO: NRK screen grab/newsinenglish.no

The Telenor whistle-blowers had already expressed concerns to top management at VimpelCom itself. Norwegian Jo Lunder, a former Telenor executive who was VimpelCom’s chief executive at the time and has since been charged with corruption in Norway, has confirmed that he was warned and that he asked for an external evaluation of the payments. Lunder, after being released from police custody this week, claims a US law firm that VimpelCom consulted cleared the payments, which Lunder ultimately allowed to be made to Takilant. It later proved to be a Gibraltar-registered firm with no employees and tied to the daughter of Uzbekistan’s dictator. VimpelCom was expanding into Uzbekistan at the time.

When Telenor’s top executives were confronted with the warnings from their own employees, on loan to VimpelCom, they allegedly told one whistleblower to simply take contact with VimpelCom bosses once again. “Telenor ignored the concerns raised,” DN quoted one “central” source as saying. “It’s of course untenable that Telenor employees who warn about serious concerns of corruption were told to go back out the door.”

Telenor's Chief Legal Counsel, Pål Wien Espen, was among top executives suspended this week pending an investigation into how they handled warnings about bribery at VimpelCom. PHOTO: Telenor

Telenor’s chief legal counsel, Pål Wien Espen, was among top executives suspended this week pending an investigation into how they handled warnings about bribery at VimpelCom. PHOTO: Telenor

Earlier this week, four top Telenor officials including Chief Financial Officer Richard Olav Aa and Chief Legal Counsel Pål Wien Espen were suspended from their positions, albeit at full pay. Telenor’s new chief executive officer, Sigve Brekke, has said that they were all involved in “handling” the warnings received, and they were suspended pending an external investigation that Telenor has now ordered from accounting and consulting firm Deloitte.

Espen had also testified at a parliamentary hearing into the corruption allegations at Telenor in January, and claimed at the time that Telenor “intends to inform as well as we can based on the knowledge we have.” Neither Espen nor Telenor’s longtime CEO at the time who also had served on VimpelCom’s board, Jon Fredrik Baksaas, mentioned the warnings from Telenor’s own employees.

Growing numbers of Members of Parliament and government ministers, past and present, are upset over what they suspect is Telenor’s practice of only selectively sharing information. “It’s one thing to be nervous or poorly prepared for a (parliamentary) hearing, and make mistakes,” Erik Skutle, an MP for the Conservative Party and member of the Parliament’s discliplinary committee that held the hearing, told DN on Friday. “But (Espen’s claims) show that Telenor was very conscious of what they would and wouldn’t tell the Parliament.”

Telenor's Chief Financial Officer Richard Aa was also suspended. PHOTO: Telenor

Telenor’s Chief Financial Officer Richard Aa was also suspended. PHOTO: Telenor

Skutle says he thinks Espen has misled the Parliament by deliberately failing to reveal all information they had “and answering competely or partially incorrectly to direct question,” Skutle told DN. “This suggests a degree of haughtiness on Telenor’s part that is a bit frightening, to put it mildly.”

Baksaas, who retired as CEO last summer, has since apologized that he didn’t divulge all the information he had at the hearing, but defended himself on the grounds his silence was out of consideration for the corruption investigation going on in four countries. Baksaas has also resigned under pressure from ongoing advisory roles he maintained at Telenor.

Espen told DN that he was not the recipient of warnings sent by email to the top Telenor executives but otherwise couldn’t comment, nor on the MP’s claims he may have misled Parliament. He did say that he was looking forward to clarify his position to the investigators from Deloitte.

Aa, the suspended chief financial officer, wouldn’t say whether it was he who received the warnings from concerned Telenor employees in 2011. In response to DN’s questions he referred only to a press release issued by Telenor on Wednesday that that he had “contributed to handling concerns related to VimpelCom’s investment in Uzbekistan in a correct manner.”

Trade Minister Trond Giske ran into trouble over his failure to reduce executive pay and over the employment of one of his old friends as head of state-owned Entra Eiendom, at a salary that tops industry standards. PHOTO: newsinenglish.no

Former Trade Minister Trond Giske says he also had trouble dealing with Telenor, claiming they “weren’t so willing” to share information. PHOTO: newsinenglish.no

Skutle’s impression that Telenor deliberately withheld information, and allegedly failed to act on warnings about possible bribery payments, is shared by former Trade Minister Trond Giske, who had several run-ins with Telenor executives when he was in charge of monitoring the state’s 54 precent stake in Telenor. Giske was the government minister in charge of business and trade in the former Labour Party-led government from 2009 to 2013, when VimpelCom’s questionable payments were made and corruption allegations first arose.

“There was an attitude at the top of Telenor that they weren’t so willing to share things (information) with their owners,” Giske told DN earlier this week. “It seemed like they thought they were so big and successful, and that governments and trade ministers come and go, and it wasn’t so risky (to not disclose problems or information). They would rather be left in peace.”

As trade minister, Giske was responsible for the state’s investments in some of Norway’s biggest companies. He told DN that Telenor’s attitude, also under its former chairman, Harald Norvik, was different from that at other companies. “I can’t remember any other companies behaving (like Telenor),” Giske said. “I had a completely different dialogue with, for example, Hydro, which played with open cards and kept us well-informed.”

Giske, now a Member of Parliament, and his Labour Party colleagues seem as frustrated and angry with Telenor and its VimpelCom stake as Skutle of the Conservatives and Norway’s current Conservatives-led government. Giske’s successor as trade minister, Monica Mæland, has already fired Telenor’s chairman, Svein Aaser, and vented her frustration with Baksaas and Telenor’s management for failing to reveal information about who knew what at Telenor, and when.

“It’s unheard of to not share what you know with your owner when you’re asked direct questions,” Giske told DN, referring to what allegedly happened at last January’s hearing. “Now all the facts really have to be laid on the table. They can’t avoid revealing relevant information.”

Telenor itself had little comment on Giske’s allegations, wouldn’t comment on the allegations against Espen and Aa and said that current CEO Brekke was not available for further comment.

“Telenor wants a tight and good dialogue with our largest owners,” insisted Telenor information chief and spokesman Glenn Mandelid in an emailed reply to DN. “It’s unfortunate that Giske in his time didn’t experience that as such.”

newsinenglish.no/Nina Berglund