Telefónica Venezolana, the Venezuelan subsidiary of Telefónica, has reached an agreement by which it will pay a fine of 85.26 million dollars (80 million euros) to resolve an investigation into a scheme of bribery of officials of the Government of Venezuela to receive preferential access to US dollars in a currency auction, as reported by the US Department of Justice. The case dates back to 2014, when the group was chaired by César Alierta, while its current president, José María Álvarez-Pallete, was CEO. “Telefónica Venezolana chose to support a corrupt regime to avoid the difficulties of doing legal business in Venezuela,” says a prosecutor.
The Venezuelan subsidiary signed a deferred prosecution agreement (DPA) this Friday in relation to a criminal information filed today in the Southern District of New York that accuses the company of conspiracy to violate the anti-bribery provisions of the Corrupt Practices Act in the Foreigner (FCPA).
Telefónica indicated in a document registered with the National Securities Market Commission (CNMV) in 2015 that it was “carrying out an internal investigation into possible violations of anti-corruption laws,” without specifying where. The supervisor requested more information from the company, but it limited itself to saying that at the same time it ruled out that “any possible sanction” in these cases would “materially” affect the group’s financial situation.
According to case documents, Telefónica Venezolana participated in a government-sponsored currency auction in Venezuela in 2014 that allowed it to exchange its Venezuelan bolivars for US dollars. To ensure its success in the auction, Telefónica Venezolana recruited two suppliers to make corrupt payments worth approximately $28.9 million to an intermediary, knowing that part of those funds would be paid as a “commission” to officials of the Venezuelan government.
To conceal the bribe payments, Telefónica Venezolana covered the cost of the bribes by purchasing equipment from the two suppliers at inflated prices. As a result of its corrupt payments, Telefónica Venezolana was allowed to exchange and subsequently received more than $110 million through the foreign currency auction, which it used to purchase equipment from the two suppliers it recruited to join the scheme. These funds represented more than 65% of the funds that the Venezuelan government awarded in the 2014 currency auction.
Venezuela for Telefónica’s financiers. , and the constant loss of value of the Venezuelan bolivar, along with the barriers to the repatriation of dividends, hit the accounts of the group chaired by César Alierta again and again. The constant devaluations of the Venezuelan bolivar hit the group’s accounts again and again, which in 2014
As part of the settlement, Telefónica Venezolana and its parent company, Telefónica, have agreed, among other things, to continue cooperating with the Fraud Section of the Criminal Division and the United States Attorney’s Office for the Southern District of New York in any investigation. ongoing or future criminal offense that arises during the validity of the case. In addition, Telefónica Venezolana and Telefónica have agreed to improve their compliance program where necessary and appropriate, and to report to the Government on the remediation and implementation of their enhanced compliance program.
The Department of Justice reached this resolution with Telefónica Venezolana based on a number of factors, including, but not limited to, the nature and severity of the violation. The sanction has been less thanks to the fact that Telefónica Venezolana has cooperated with the Department of Justice investigation, although it resisted doing so at first. “In the initial phases of the investigation, Telefónica Venezolana failed to identify, collect, present and disclose certain important records and information in a timely manner, which affected the Department’s investigative efforts and reduced the impact of Telefónica Venezolana’s cooperation,” they explain. the American authorities.
Telefónica Venezolana also adopted timely corrective measures, including the imposition of disciplinary measures on certain employees involved in the bribery or who had knowledge of it, including the dismissal of employees. The company has also strengthened its anti-corruption compliance program and reviewed its approval process for transactions with non-standard prices, in addition to improving other internal controls and third-party investigation, contracting and monitoring processes.
On the contrary, he has argued that the Telefónica group is a repeat offender, because its Brazilian subsidiary already received a sanction from the Securities and Exchange Commission (SEC) in 2019 for paying for tickets to matches at the 2014 World Cup and the Confederations Cup. from 2013 to 127 officials and other authorities of the Brazilian public administration.
All in all, the criminal penalty of $85.26 million reflects a 20% reduction of the fifth percentile above the low end of the fine range of the otherwise applicable guidelines, according to the Department of Justice.
“Telefónica Venezolana chose to support a corrupt regime to avoid the difficulties of doing legal business in Venezuela. This resolution is another example of the Justice Department’s commitment to fighting corruption and holding companies accountable for their criminal conduct, said Principal Deputy Attorney General Nicole M. Argentieri, Chief of the Justice Department’s Criminal Division. Justice, through a statement.
“Telefónica Venezolana, a subsidiary and agent of a U.S. issuer, agreed to line the pockets of corrupt Venezuelan officials to gain access to U.S. currency and maintain its position in the Venezuelan telecommunications market,” said U.S. Attorney Damian Williams for the Southern District of New York. York. “The intermediaries channeled bribe payments through correspondent bank accounts in the United States. “This office will not tolerate the use and abuse of the American financial system to enrich corrupt foreign officials and those who maintain their market position by appeasing them,” he added.
