Telenor lifts the veil on VimpelCom

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After refusing to answer questions about bribery suspicions at mobile phone firm VimpelCom, Norwegian telecoms company Telenor has finally revealed some of the contact it’s had with the firm, in which it holds a large shareholding. Telenor now claims it tried to ensure that VimpelCom was complying with Telenor’s ethical standards, and believed it was.

Telenor's CEO, Jon Fredrik Baksaas, finally revealed more about the "differences" he claims exists between TeliaSonera's dealings in Uzbekistan and Telenor's. Critics say that TeliaSonera and VimpelCom, in which Telenor owns a large stake, gained access to the Uzbekistan market in the same way, by making large payments to a company in Gibraltar that investigators suspect were bribes. PHOTO: Telenor

Telenor’s CEO, Jon Fredrik Baksaas, finally revealed more about the “differences” he claims exist between TeliaSonera’s dealings in Uzbekistan and Telenor’s. Critics have countered that TeliaSonera and VimpelCom, in which Telenor owns a large stake, gained access to the Uzbekistan market in the same way, by making large payments to a company in Gibraltar that investigators suspect were bribes. PHOTO: Telenor

Telenor Chairman Svein Aaser and Telenor Chief Executive Jon Fredrik Baksaas released a translation of the briefing they say they gave to Norway’s government minister for business and trade Monica Mæland last week. In it, they list 11 occasions since 2006 when they contend they pressured VimpelCom’s board and management regarding issues of ethics and social responsibility.

VimpelCom is currently under investigation by the US Securities and Exchange Commission and the US Department of Justice, along with authorities in the Netherlands, where VimpelCom is headquartered, and Switzerland. The investigators want to know how VimpelCom went about acquiring its licenses to do business in Uzbekistan. As part of the licensing process, both VimpelCom and TeliaSonera of Sweden made large payments to a Gibraltar-registered company called Takilant, which has been linked to the daughter of Uzbekistan’s president. Investigators suspect the payments amounted to bribes demanded in order for TeliaSonera and VimpelCom to gain access to the market in Uzbekistan.

Telenor Chairman Svein Aaser was with Baksaas with top Telenor officials were called in for a meeting with Norway's government minister in charge of business and trade. PHOTO: Telenor

Telenor Chairman Svein Aaser was with Baksaas when the top Telenor officials were called in for a meeting last week with Norway’s government minister in charge of business and trade. The government owns 54 percent of Telenor, so it will be highly embarrassing for Norway if its major telecoms firm proves to have invested in a company that engaged in corruption. PHOTO: Telenor

Telenor now claims in its briefing that VimpelCom assured Telenor in 2012, when the alleged bribes were first reported, that “the transactions related to the mobile licensees in Uzbekistan were made in compliance with the US’ Foreign Corrupt Practices Act (FCPA).” Telenor also claims that VimpelCom, “as a result of our inquiries,” subsequently initiated an investigation into the matter.

In December 2012, Telenor’s board decided that its Ethics and Sustainability subcommittee should “ensure that Telenor’s values were reflected in the companies in which Telenor does not have operational control,” such as VimpelCom. According to the minutes of a Telenor board meeting in February 2013, there were “a number of differences” in how TeliaSonera and VimpelCom invested in Uzbekistan, even though both firms invested “through the local partner Takilant.”

Baksaas has referred to these “differences,” not least under questioning by newspaper Dagens Næringsliv (DN), but refused to elaborate on them. Now Telenor has released the board minutes claiming that “VimpelCom’s process of establishing operations in Uzbekistan was accompanied by due diligence and FCPA analysis.” Telenor further stresses that whereas TeliaSonera “has directly invested in Uzbekistan, Telenor has not: “We are a minority owner in a company, VimpelCom, that has made an investment.” Norwegian professors, however, have stated that Telenor’s minority stake does not excuse it from responsibility for VimpelCom’s business practices.

The minutes further state that “there is no indication in the board materials or protocols that the VimpelCom board was aware or made aware that Takilant’s beneficial owner had any connection to anyone associated with Uzbekistan’s president.” The minutes also note that at the time, Telenor and its Russian co-owners of VimpelCom were in the midst of litigation.

‘Did what they could’
The leader of the Telenor board’s subcommittee “concluded that at this stage, Telenor had done what is expected of a responsible investor.” Telenor also noted that since 2006, all members of the VimpelCom board that were appointed by Telenor have requested FCPA evaluations of VimpelCom transactions.

Telenor’s lengthy account of its briefing with Norway’s government minister also lists several meetings with VimpelCom’s management between 2012 and 2014, at which ethical standards, human rights, anti-corruption measures and Takilant were raised. In 2013, Telenor said that “VimpelCom initiated an audit of the processes related to Uzbekistan, using external resources, at the urging and support of Telenor-appointed board members.”

After the US, Swiss and Dutch authorities launched their investigations this past March, VimpelCom’s board appointed a “special committee” to “supervise and lead the ongoing cooperation with the US Securities and Exchange Commission (SEC).” Telenor stressed that its officials now have only a role as witnesses, subject to questioning by the investigators. Some of that has already taken place, and all board members are now subject to confidentiality clauses.

newsinenglish.no/Nina Berglund