Episode 348 — Deep Dive into Telefónica DOJ Settlement for FCPA Violations

#1655928: Episode 348 — Deep Dive into Telefónica DOJ Settlement for FCPA Violations

Description:	Telefónica Venezolana C.A. (“Telefónica Venezolana”), the Venezuela-based subsidiary of Telefónica S.A. (Telefónica), the Spanish telecommunications company entered into a deferred prosecution agreement (“DPA”) and agreed to pay over $85.2 million to resolve DOJ FCPA charges stemming from bribery payments to Venezuelan government officials to secure preferential access to U.S. dollars in a currency auction. Telefónica Venezolana entered into a three-year DPA and the filing of a criminal information in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Telefónica Venezolana bribed Venezuelan government officials to secure access to U.S. dollars in exchange for Venezuelan bolivars. The company concealed the illicit payments by purchasing equipment at inflated prices from two suppliers who paid the bribes to the Venezuelan officials. Telefónica Venezolana is a subsidiary of the Spanish global telecom and trades Advanced Depositary Receipts on the New York Stock Exchange. Telefónica Venezolana engaged in the bribery scheme during 2014 and 2015 and paid bribes to Venezuelan officials to secure priority access in a government-sponsored currency auction to exchange Venezuelan bolivars for U.S. dollars. Telefónica Venezolana enlisted the assistance of two suppliers to make approximately $28.9 million in bribes, knowing that some of those funds would be paid as a “commission” to Venezuelan government officials. To conceal the bribes, Telefónica Venezolana covered the cost of the bribes by purchasing equipment from the two suppliers at inflated prices. As a result, Telefónica Venezolana 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 represented over 65% of the funds that the Venezuelan government awarded in the 2014 currency auction. Applying the Justice Department’s Corporate Enforcement Program factors, DOJ cited the following factors: the nature and seriousness of the offense; credit for its cooperation, which included: (i) making regular factual presentations to DOJ; (ii) voluntarily making employees based outside the United States available for interviews in the United States; (iii) production of a significant number of documents, while navigating foreign data privacy and related laws; and (iv) collecting, analyzing, and organizing voluminous evidence and information, accompanied by translations of documents. However, DOJ noted that Telefónica Venezolana failed to timely identify, collect, produce, and disclose certain records and important information, which hindered DOJ’s investigative efforts and reduced the impact of Telefónica Venezolana’s cooperation. DOJ cited Telefónica Venezolana’s remediation efforts, including: (i) disciplining certain employees involved in the relevant misconduct or who were otherwise made aware of the misconduct, including terminating employees; (ii) strengthening its anti-corruption compliance program by building and empowering an independent compliance function, appointing a Chief Compliance Officer with direct access to the Audit Committee of the Board of Directors, and investing in additional compliance resources throughout its global operations; (iii) overhauling its review and approval process for transactions with non-standard pricing, including by ensuring that the compliance function reviews all such transactions globally; (iv) reviewing, enhancing, and testing its broader internal controls for pricing and other transactions with the assistance of a forensic accounting firm; (v) strengthening processes for vetting, engaging, and monitoring third parties, including implementing additional controls concerning payments to third parties through a proprietary software tool; and (vi) establishing risk assessment and audit processes to regularly review and update the compliance program and otherwise mitigate business risks.
More info:	https://blog.volkovlaw.com/2024/12/episode-348-deep-dive-into-telefonica-doj-settlement-for-fcpa-violations/

Description:

Telefónica Venezolana C.A. (“Telefónica Venezolana”), the Venezuela-based subsidiary of Telefónica S.A. (Telefónica), the Spanish telecommunications company entered into a deferred prosecution agreement (“DPA”) and agreed to pay over $85.2 million to resolve DOJ FCPA charges stemming from bribery payments to Venezuelan government officials to secure preferential access to U.S. dollars in a currency auction.

Telefónica Venezolana entered into a three-year DPA and the filing of a criminal information in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.

Telefónica Venezolana bribed Venezuelan government officials to secure access to U.S. dollars in exchange for Venezuelan bolivars. The company concealed the illicit payments by purchasing equipment at inflated prices from two suppliers who paid the bribes to the Venezuelan officials. Telefónica Venezolana is a subsidiary of the Spanish global telecom and trades Advanced Depositary Receipts on the New York Stock Exchange.

Telefónica Venezolana engaged in the bribery scheme during 2014 and 2015 and paid bribes to Venezuelan officials to secure priority access in a government-sponsored currency auction to exchange Venezuelan bolivars for U.S. dollars. Telefónica Venezolana enlisted the assistance of two suppliers to make approximately $28.9 million in bribes, knowing that some of those funds would be paid as a “commission” to Venezuelan government officials.

To conceal the bribes, Telefónica Venezolana covered the cost of the bribes by purchasing equipment from the two suppliers at inflated prices. As a result, Telefónica Venezolana 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 represented over 65% of the funds that the Venezuelan government awarded in the 2014 currency auction.

Applying the Justice Department’s Corporate Enforcement Program factors, DOJ cited the following factors: the nature and seriousness of the offense; credit for its cooperation, which included: (i) making regular factual presentations to DOJ; (ii) voluntarily making employees based outside the United States available for interviews in the United States; (iii) production of a significant number of documents, while navigating foreign data privacy and related laws; and (iv) collecting, analyzing, and organizing voluminous evidence and information, accompanied by translations of documents. However, DOJ noted that Telefónica Venezolana failed to timely identify, collect, produce, and disclose certain records and important information, which hindered DOJ’s investigative efforts and reduced the impact of Telefónica Venezolana’s cooperation.

DOJ cited Telefónica Venezolana’s remediation efforts, including: (i) disciplining certain employees involved in the relevant misconduct or who were otherwise made aware of the misconduct, including terminating employees; (ii) strengthening its anti-corruption compliance program by building and empowering an independent compliance function, appointing a Chief Compliance Officer with direct access to the Audit Committee of the Board of Directors, and investing in additional compliance resources throughout its global operations; (iii) overhauling its review and approval process for transactions with non-standard pricing, including by ensuring that the compliance function reviews all such transactions globally; (iv) reviewing, enhancing, and testing its broader internal controls for pricing and other transactions with the assistance of a forensic accounting firm; (v) strengthening processes for vetting, engaging, and monitoring third parties, including implementing additional controls concerning payments to third parties through a proprietary software tool; and (vi) establishing risk assessment and audit processes to regularly review and update the compliance program and otherwise mitigate business risks.

More info:

https://blog.volkovlaw.com/2024/12/episode-348-deep-dive-into-telefonica-doj-settlement-for-fcpa-violations/

Date added	Dec. 9, 2024, 5:49 p.m.
Source	Volkov Law
Subjects	Compliance regulations / Ethics - Various Law / Legal / Corporate Counsel- various PodCasts / Webcast / Webinar / eSummit / Virtual Event etc. Telecommunications / ISP News Telefonica / Telefónica - Spanish Telco Operator US Foreign Corrupt Practices Act (FCPA)