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Thursday, June 13, 2024

Telenor ‘wonderboy’ now under arrest

He was once the “wonderboy” of Telenor, who ended up playing a key role in Telenor’s long-troubled investment in Russian mobile phone company VimpelCom. On Thursday Jo Lunder was charged in the corruption case that’s been swirling around VimpelCom for several years.

Telenor dispatched Jo Lunder to Moscow around 15 years ago to oversee its stake in the Russian mobile phone firm VimpelCom. What followed was a lengthy legal power struggle with lawsuits on three continents until Telenor and VimpelCom's other partner, Russian oligarch Mikhail Fridman came to terms. While Lunder was a board member, VimpelCom got involved in Uzbekistan, where US and European authorities now believe VimpelCom paid bribes. Lunder became VimpelCom's CEO in 2011 but quit this spring. PHOTO: VimpelCom
Telenor sent Jo Lunder to Moscow around 15 years ago to oversee its stake in the Russian mobile phone firm VimpelCom. A lengthy legal power struggle followed, with lawsuits on three continents between Telenor and VimpelCom’s other major owner, Russian oligarch Mikhail Fridman. VimpelCom got involved in Uzbekistan, where US and European authorities now believe VimpelCom paid bribes, while Lunder was on the board. Lunder became VimpelCom’s CEO in 2011 but quit this past spring in a move VimpelCom claimed was unrelated to the ongoing corruption investigation by authorities in the US, Norway, the Netherlands and Switzerland. PHOTO: VimpelCom

Lunder’s arrest at Oslo’s main airport at Gardermoen Wednesday night, when he got off a flight from London, is the latest stunning development in the ongoing Telenor / VimpelCom drama. It’s rooted in the large amounts of money that VimpelCom paid to a Gibraltar-registered company in connection with its purchase of licenses to expand into Uzbekistan. The payments are suspected of being bribes paid to the daughter of Uzbekistan’s dictator.

Lunder, now age 53, was a member of VimpelCom’s board at the time, representing Telenor’s large ownership stake in VimpelCom when the Russian-dominated company expanded into Uzbekistan and when the payments first started being made, in 2006. Newspaper Dagens Næringsliv (DN) has charted how USD 108.5 million was paid from VimpelCom to the Gibraltar company, Takilant, between 2006 and 2011, when Lunder also became chief executive of VimpelCom. After serving as a long-time representative of Telenor’s stake i VimpelCom, Lunder took over executive control after a cease-fire in a long-running conflict between Telenor and its Russian co-owners of VimpelCom, led by oligarch Mikhail Fridman.

Lunder, a former football player who gained stature as an international businessman, also served as leader of Norwegian investment firm Ferd Industrial Holdings, from 2007-2011, while still representing Telenor at VimpelCom. After quitting VimpelCom last spring, he took on a job with shipping magnate and investor John Fredriksen based in London. VimpelCom was already under a cloud of corruption suspicions but that didn’t bother Fredriksen. Lunder has consistenly denied having anything to do with any corruption at VimpelCom, but otherwise has refused to comment on the case.

Lunder’s defense attorney, Cato Schiøtz, said he client has nothing to hide. “Lunder will gladly cooperate,” Schiøtz told DN Thursday afternoon. “It’s unknown to him that VimpelCom was allegedly involved in corruption during his time as leader.” Schiøtz said he hadn’t met Lunder before Thursday, adding that Lunder had called him “a few days ago” and asked for a meeting. That was before he was arrested late Wednesday night.

‘Suspicions of participation in corruption’
Norwegian Broadcasting (NRK) reported on Thursday that Lunder remained in police custody after his arrest and was undergoing questioning. Prosecutor Marianne Djupesland, who recently played a major role in the huge corruption case against Oslo-based Yara International, confirmed to NRK that Lunder was charged with corruption.

Djupesland, who works for the Norwegian police’s economic crimes unit Økokrim, told NRK that Lunder’s arrest had been planned for quite a while and was based on “suspicions of participation in the possible corruption at VimpelCom’s operations in Uzbekistan.”

She said she wouldn’t rule out that Økokrim would ask a court to keep holding Lunder in custody while the investigation continues. “It’s also natural that several others will be questioned,” she said, but wouldn’t name who that would be.

No comment form Telenor, new VimpelCom losses
Telenor’s new chief executive, Sigve Brekke, declined comment on Lunder’s arrest. Brekke told DN earlier this week that he simply wants to get to the bottom of the VimpelCom case and move on, “no matter what it costs.” He’s likely to be called into a new parliamentary hearing on the case, after Brekke’s predecessor who engaged Lunder, ex-Telenor CEO Jon Fredrik Baksaas, admitted he’d withheld information about the case at an earlier hearing in January. A few days before that, Telenor’s chairman who hired Brekke, was fired by the government trade minister in charge of the state’s 54 percent stake in Telenor, because he hadn’t shared information with her either.

Now the state also faces losses on its stake in Telenor, which evolved from Norway’s old state telephone utility. On Tuesday, Amsterdam-based VimpelCom announced it was setting aside a whopping USD 900 million to cover eventual costs tied to the ongoing international investigation into corruption at the company. That will mean a heavy loss not only for VimpelCom but also for Telenor in its fourth-quarter results. The sheer size of the reserves set aside deeply trouble Trade Minister Monica Mæland, who said VimpelCom must be expecting a “reaction” from international authorities, in the form of a fine or legal costs in the event of a trial.

Analysts also have reacted to the size of the set-asides. “It’s remarkable and suspicious that such a concrete amount is set aside,” analyst Aleksandr Kazbegi of the Russian investment bank Renaissance Capital told DN. He thinks a financial settlement over the bribery suspicions with US authorities is imminent: “That’s the American way of settling these things, pay a fine to avoid a lengthy court case.”

And while Telenor’s Brekke wants to get the case settled and worries about how the VimpelCom case has hurt Telenor’ reputation, Kazbegi said he thinks VimpelCom’s Russian owner, Fridman’s Alfa Gruppen, has taken its time to cut a deal with the authorities. “For Alfa, this isn’t a big deal,” he told DN. “They (the Russians) don’t worry about their reputation, only about money.” Berglund



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