Telefónica Venezolana C.A. Telefónica Venezolana) has been instructed to pay $85.2 million to avoid foreign bribe allegations.
The news comes as part of a Justice Department investigation into the company and the allegations that the global telecommunications operator, based in Spain, was involved in a scheme to bribe government officials in Venezuela to receive “preferential access to U.S. dollars in a currency auction.”
The financial penalty is part of a deferred prosecution agreement (DPA) filed in the Southern District of New York that painted a target on the company under a conspiracy charge to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).
“Telefónica Venezolana engaged in a complex and criminal financial fraud scheme, in which they bribed Venezuelan government officials to obtain access to U.S. dollars,” said Executive Associate Director Katrina W. Berger of Homeland Security Investigations (HSI)
Telefónica Venezolana to pay $85.2 million
IRS Criminal Investigation (IRS-CI) and Homeland Security Investigations (HSI) are investigating the case as part of the IRS Global Illicit Financial Team in Washington, D.C. The Justice Department’s Office of International Affairs and authorities in Panama, Switzerland, and Luxembourg collaborated to achieve the resolution.
The Criminal Division’s Fraud Section and Assistant U.S. Attorney Jilan Kamal for the Southern District of New York are prosecuting the case.
In 2014, Telefónica Venezolana participated in a government-sponsored currency auction in Venezuela, which allowed it to exchange its Venezuelan bolivars for U.S. dollars.
“To ensure its success in the auction, Telefónica Venezolana recruited two suppliers to make approximately $28.9 million in corrupt payments to an intermediary, knowing that some of those funds would be paid as a “commission” to Venezuelan government officials,” said the Justice Department report.
The company hid bribes as payments to two associated companies, allowing the communications giant to exchange them. Subsequently, it received over $110 million through the currency auction, which it used to purchase equipment from the two suppliers it recruited to join the scheme. These funds reportedly represented over 65% of the funds the Venezuelan government awarded in the 2014 currency auction.
U.S. Attorney Damian Williams for the Southern District of New York said, “Intermediaries then funneled the bribe payments through U.S. correspondent bank accounts. This office will not tolerate the use and abuse of the U.S. financial system to enrich corrupt foreign officials and those who maintain their market position by appeasing them.”
As part of the deal and financial payments agreed, the company will now work with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of New York in any ongoing or future criminal investigation arising during the term of the DPA.
The report continued that the company will also “enhance their compliance program where necessary and appropriate, and to report to the government regarding remediation and implementation of their enhanced compliance program. ”
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