VimpelCom faces criminal investigation over Uzbekistan operations

Dutch prosecutors have visited the headquarters of Russian operator VimpelCom, seizing documents and informing the company that a criminal investigation is being launched into its business in Uzbekistan.

In a brief statement issued this morning, VimpelCom confirmed the visit to its Amsterdam headquarters by the Dutch Public Prosecutor's Office, and revealed the U.S. Securities and Exchange Commission (SEC) is also seeking access to internal documents as part of an investigation.

"The investigations appear to be concerned with the company's operations in Uzbekistan. The company intends to fully cooperate with these investigations," VimpelCom stated.

A spokeswoman for the serious fraud, environmental crime and asset confiscation division of the Netherlands' National Public Prosecutor's Office confirmed to FierceWireless:Europe that a criminal investigation involving VimpelCom has started, but said it is too early to comment further on the probe.

The operator revealed it flagged concerns about its Uzbekistan operation in a December filing with the SEC, and warned in a disclaimer to its statement that "there can be no assurance" that the scope of the investigations won't be broadened, and ultimately impact the company's financial performance.

Rival Russian operator, MTS, took a $1.1 billion (€792 million) hit on its Uzbekistan unit in 2012, after a court revoked its operating licence and all its local assets were seized in a criminal probe into its local staff, Reuters reported.

TeliaSonera has also encountered some trouble in the country. In early 2013 allegations of corruption over the company's acquisition of its Uzbek mobile operating licence led to the resignation of CEO Lars Nyberg. The allegations appear to have sparked a broader review of TeliaSonera's Eurasian operations that subsequently saw the company sack CFO Per-Arne Blomquist and three other executives in November, amid concerns that some transactions the executives oversaw were not in line with sound business practices.

At the time, new president and CEO Johan Dennelind stressed the latter review did not cover Uzbekistan, but conceded it revealed similar patterns in "more than one" of the operator's other Eurasian markets.

VimpelCom cited strong revenue growth in Uzbekistan as a major driver of a 5 per cent annual increase in earnings before interest, depreciation and amortisation (EBITDA) at its CIS business unit in the fourth quarter of 2013. The Uzbek business delivered an 18 per cent year-on-year rise in EBITDA, and grew subscriber numbers 3 per cent to 10.5 million by end-December.

For more:
- see VimpelCom's investigation announcement
- see this Reuters article
- see VimpelCom's fourth-quarter earnings release [PDF]

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