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Transcript of Press Conference Call Regarding VimpelCom

February 18, 2016, 4:30 p.m.

Good day, and welcome to the VimpelCom FCPA and Kleptocracy Case Conference Call. All
participants will be in listen-only mode. Should you need assistance please signal a conference
specialist by pressing the star key followed by zero. After todays presentation there will be an
opportunity to ask questions. To ask a question you may press star then one on your touchtone phone.
To withdraw your question please press star then two. Please note this event is being recorded.
I would now like to turn the conference over to Peter Carr. Please go ahead.
Peter Carr
Hi, everybody. Thank you for joining us on this conference call today. Again, Im Peter Carr. Im with
the Office of Public Affairs with the Department of Justice. And to start the call we will have three
speakers that give some brief remarks. First will be Leslie Caldwell. Shes the Assistant Attorney
General for the Justice Departments Criminal Division. Following her will be Andrew Ceresney,
Director of the Securities and Exchange Commissions Division of Enforcement; and following Andrew
well hear from Joon H. Kim, Deputy U.S. Attorney for the Southern District of New York. Following
their remarks well open it up to questions.
While not giving opening remarks, we will have two additional individuals available for questions
during that portion of the call, and they are Alex Khu, spelled K-h-u, the Deputy Special Assistant in
charge of the U.S. Immigration Custom Enforcements Homeland Security Investigations, Washington,
D.C. Field Office; and Kareem Carter, the Assistant Special Agent in Charge of the IRS-Criminal
Now, Ill turn the time over to Assistant Attorney General Caldwell.
Leslie Caldwell
Thank you, Peter. Good afternoon, everyone. Thank you for joining the call. By now I hope everyone
has had a chance to read through the deferred prosecution agreement with VimpelCom and the plea
agreement with Unitel, and the forfeiture filings that were provided to the court today. Andrew, Joon,
and I are going to make a couple remarks about this very significant case, and then obviously well take
So, in the court documents that were made public today, VimpelCom and its Uzbek subsidiary entered
into a global resolution in which VimpelCom agreed to pay $795 million in fines, disgorgement, and
forfeiture to the Justice Department, the SEC, and the public prosecution service in the Netherlands.
VimpelCom, which is the worlds sixth largest telecom company, has agreed to that resolution, which
was accepted by the court today. Its subsidiary also pled guilty today in the Federal District Court in the
Southern District of New York, and it was sentenced as part of the plea agreement.
The charges relate to an eight-year scheme to pay more than $114 million in bribes to a high ranking
official in Uzbekistan to obtain necessary approvals to both enter and remain in the Uzbek
telecommunications market. To cover up the scheme the company did various things. They created

fake consulting agreements, fake invoices. They engaged in purportedly legitimate transactions that
were really all just designed to funnel bribes to the official. In addition, today the department filed a
civil complaint to forfeit $550 million representing bribes paid to the Uzbek government official by
VimpelCom and other companies for access to the Uzbek market and for assistance in operating in that
market. This is in addition to a civil complaint that was filed in June 2015 to forfeit more than $300
million in bribes paid to the same official.
In the earlier action to forfeit the $300 million the court has entered a default judgment as to all potential
claimants other than the Republic of Uzbekistan. Weve entered into a temporary stay to allow for
discussions about resolving that case, and our ultimate goal in both of these forfeiture cases is to work
with our foreign partners who have restrained the money to repatriate the money to victims who were
harmed by corruption in a transparent process which is designed to strengthen rule of law in Uzbekistan.
This criminal case represents one of the most significant global resolutions in the history of the Foreign
Corrupt Practices Act. It reflects the departments commitment to identifying, investigating, and
prosecuting bribery in cases where a company does not voluntarily disclose misconduct to government
authorities. VimpelCom discovered the misconduct, did an internal investigation, and chose not to selfreport that conduct.
This resolution importantly also demonstrates our commitment to working very closely, which weve
been doing more and more over the last few years, with our foreign counterparts, in investigating,
prosecuting, and uncovering the proceeds of foreign corruption. We cooperated with the SEC and a
number of foreign countries to obtain and share evidence in this case, and by doing that we were all able
to build the cases that were made public today, both in the United States and the Netherlands, and to
really hold VimpelCom accountable for this long-running scheme.
The company did receive a significant discount off the bottom of the fine range that otherwise would
have applied because of its full cooperation with the investigation, and it also received an additional
discount for its prompt acknowledgment of its criminal responsibility once it was contacted by the
government, also its willingness to resolve the matter expeditiously. It likely would have received an
even greater discount had it also chosen to self-report the conduct.
This combined action by our Fraud Section and the Asset Forfeiture and Money Laundering Sections
Kleptocracy Asset Recovery Initiative is also really important because it demonstrates the commitment
of the department to address the conduct of both bribe payers and bribe recipients, and to recover bribes
that are paid and laundered using the U.S. financial system. These two forfeiture actions together seek a
combined $850 million in corruption proceeds. Thats the largest sum weve ever sought to recover
from a single government official. Were very grateful for the assistance of our foreign partners in
restraining these assets, and we look forward to our future cooperation with those partners in this matter
and in others.
Ill now turn it over to Andrew for his remarks.
Andrew Ceresney
Thank you, Leslie. In addition to the actions filed by the Department of Justice today, the SEC filed a
settled FCPA action against VimpelCom in connection with this brazen scheme for which it gained

entry to and continued to expand in the Uzbekistan telecommunications market. As detailed in our
complaint, primarily through the use of sham contracts, VimpelCom made at least $114 million in
improper payments and obtained business that generated at least $2.5 billion in revenues from the
As part of the SEC settlement which involved charges under the Antibribery Recordkeeping and Internal
Control provisions of the FCPA, VimpelCom agreed to pay $375 million in disgorgement. After credits
for payments to the Dutch and DOJ, VimpelCom will pay a total of $167.5 million to the SEC, which is
one of the largest SEC FCPA settlements in history. In addition, as part of the SECs resolution,
VimpelCom will retain an independent monitor to review its FCPA compliance for the next three years.
The monitor will have broad authority to review VimpelComs policies and procedures, as well as its
This case is significant for several reasons. First, the significant disgorgement recovery as well as the
massive total monetary remedies, which make this one of the largest FCPA cases in history, demonstrate
how seriously we as regulators view this conduct and the significant consequences of misconduct.
Second, this case is significant not just due to the monetary release involved, but also due to the scope of
the misconduct, which involves senior executives at the company. The case highlights the very real and
continuing need for public companies to understand who theyre doing business with and why. Bribe
schemes do not happen in a vacuum. When red flags suggest that an investment partner is involved in a
deal for nefarious reasons or that payments are being made for questionable purchases, executives
cannot look the other way and proceed with the transaction notwithstanding these risks.
Third, the international coordination in this matter was outstanding, and is indicative of the increased
international cooperation we have seen generally in FCPA cases and in other types of cases. Here we
worked seamlessly with the Dutch authorities on this matter and were able to achieve a global resolution
that sends an important message to all public companies. We also received significant assistance from
no less than 14 jurisdictions, and we were also grateful for our ongoing and close working relationship
with the Department of Justice.
Finally, this case demonstrates that for all the progress we have made in terms of FCPA compliance
there is much more work to be done. There are still many companies that will break the rules in pursuit
of profits, and when they do we will be there to sanction them and demonstrate that there are significant
consequences for their misconduct.
Before turning it over to Joon, let me just thank the team from the FCPA Unit and the Enforcement
Division that worked on this case, which was supervised by Kara Brockmeyer, Chief of the SECs
FCPA Unit, and Charles Kane, the Deputy Chief of the Unit. Ill now turn it over to Joon.
Joon H. Kim
Thanks, Andrew. This is Joon Kim. Im the Deputy United States Attorney for the Southern District of
New York. VimpelCom, the worlds sixth largest telecommunications company, with securities traded
in New York, built its business in Uzbekistan on over $114 million in bribes. Those bribes were
covered up and falsely recorded in the companys books, and were then laundered through bank
accounts around the world, including through accounts in New York. If your securities are traded on

our exchanges and you use our banks to move money, then you need to play by our rules. VimpelCom
and its subsidiary, Unitel, did not, and for that they were held accountable today in a federal court in
I want to thank Assistant Attorney General Leslie Caldwell and the departments Fraud Section, and the
Asset Forfeiture and Money Laundering Section for their terrific work in this case. And I also want to
recognize and thank our partners on this and so many of our other important matters, IRS-Criminal
Investigation, HSI, and the SEC. Thanks.
Peter Carr
Alright, were now ready for questions, Austin.
We will now begin the question-and-answer session. To ask a question, you may press star then one on
your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the
keys. To withdraw your question, please press star then two. At this time, we will pause momentarily
to assemble our roster.
Our first question comes from Russell Mokhiber with the Corporate Crime Reporter. Please go ahead.
Russell, your line is live. Please go ahead with your question.
Russell Mokhiber
Yes, hello. Can you hear me?
Peter Carr
Russell Mokhiber
Hello? Okay, on the deferred prosecution agreement versus the plea agreement, I wonder why one
company entered into a deferred prosecution agreement and the other into a criminal plea.
Leslie Caldwell
This is Leslie Caldwell. The company that entered into the criminal plea was Unitel, the Uzbekistan
subsidiary of VimpelCom. Can you hear me?
Russell Mokhiber
Leslie Caldwell
That was the company that actually was primarily engaged in the actual wrongdoing in Uzbekistan,
where the bribes were paid and where there were various people lined up to help launder the money. So,
that was the reason why they pled guilty. And the parent company is the company that entered into the
deferred prosecution agreement.

Russell Mokhiber
What were the factors that you considered in concluding that the parent company would get a deferred
prosecution agreement and not be forced to plead guilty?
Leslie Caldwell
We considered the same kind of factors we consider in any corporate case, which is the [indiscernible]
factors which I wont bore everyone with, but you know what they are. But one of the things that led to
the deferred prosecution decision in this case was the fact that although the company did not self-report,
as soon as they were contacted by the government they immediately acknowledged their responsibility,
they immediately began cooperating. Their cooperation, as detailed in the plea document, their
cooperation was very proactive, it was very extensive. It involved production of a lot of overseas
materials that we would have had to wait for years for and may never have gotten. And their
cooperations ongoing in our ongoing investigation of individuals in other companies.
Russell Mokhiber
Thank you.
The next question comes from Nate Raymond with Reuters. Please go ahead. Nathan, your line is live.
Please go ahead.
Nate Raymond
Sorry about that. Yes, I was just wondering in the civil forfeiture complaint it mentioned that bribes
went to this foreign official not just from VimpelCom but from two other companies; TeliaSonera and
Mobile Telesystems. I was wondering, have there been any past resolutions with those? And on the flip
side, if not, is the reference to them to imply that theyre also investigation?
Andrew Ceresney
Our investigation is continuing, both as to companies that were involved in this scheme and individuals.
There have not been resolutions with them and the United States government.
The next question comes from Stephen Dockery with the Wall Street Journal. Please go ahead.
Stephen Dockery
Yes, thank you. I was wondering if you could speak to how many other individuals are under
Leslie Caldwell
I cant really comment on numbers of individuals, but I can tell you that there are several individuals
who are under investigation. This is a scheme that lasted for a long time and involved a lot of different
accounts and movement of a lot of money. So, there are a number of individuals. Many of those
individuals are located overseas, in fact, I think all of them are. But thats pretty much all I can say.
The investigations ongoing, and, as I said before, thats with the assistance and cooperation of the

Stephen Dockery
Thank you.
The next question comes from Kara Scannell with the Financial Times. Please go ahead.
Kara Scannell
Hi. Thank you. I was wondering if you could, I know weve all asked you about individuals, but how
far up is it alleged that people knew of the bribes within VimpelCom? Its controlled by Mikhail
Freedman, and Im wondering if it goes as far up as him.
Andrew Ceresney
Again, I cant comment on specific people or specific roles, but this was a pretty extensive scheme. Its
a matter of public record that a couple of folks have been arrested in other countries, and this is a
scheme that went on for several years and involved very large amounts of money. And those kinds of
schemes dont generally involve renegade salespeople and the like. They dont usually end with those
Kara Scannell
The next question comes from Mark Bocchetti with MLex. Please go ahead.
Mark Bocchetti
Yes, thank you. Ill throw this question out there for whoever would be in a position to take it. The
amount of bribe proceeds discussed here is $114 million, but the amount sought in the two forfeiture
actions is about $850 million. How do you account for the difference between 114 and 850? Thank
Leslie Caldwell
The 114 is the amount that was paid by VimpelCom. The 850 is the total amount that was paid by all
three companies.
The next question comes from Leslie Wayne with the New York Times. Please go ahead.
Leslie Wayne
Hi. Okay, Im off the speaker. Youve identified in the past that Golana Karamova, whos the daughter
of the head of Uzbekistan, is somebody that youre seeking, that you have litigation against. Is she the
official thats named in this?
Leslie Caldwell
So, we cant comment on the identities of any individuals who are not yet charged criminally. So, I
cant comment on that.

Leslie Wayne
Okay, thank you.
The next question comes from Tom Schoenberg with Bloomberg News. Please go ahead.
Tom Schoenberg
Hello. Hi. Yes, I had a question for Leslie Caldwell, and its veering off of VimpelCom for a moment
here. But given your prior comments on going dark I wanted to see if you had any response to the
suggestion by Apple that the governments application to get access to Sayeed Farooks phone is an
attempt by the Justice Department to set a precedent that would make it easier for law enforcement to
get access to phones on a regular basis.
Leslie Caldwell
I think the department has issued a statement in response to Apples filing. We obviously are litigating
the matter in court, so I dont want to comment on that specifically. But the going dark problem is a
serious and ongoing problem that were working very hard to figure out ways to address, and this is just
an example of that.
The next question comes from Oywind Skille with Norwegian Broadcasting. Please go ahead.
Oywind Skille
You said the investigation continues into companies and individuals. What can you say about which
countries you cooperated with in this continuing investigation, and for me, as a Norwegian journalist
specific Norway?
Leslie Caldwell
We have cooperated with a number of countries in the investigation. Weve cooperated with the
countries that have assisted us in restraining assets, which include Belgium, Luxembourg, Ireland, and
Switzerland. Weve also worked with other countries in other aspects of the investigation, including the
UK and Norway, which you mentioned, and Sweden. So, there are a number of countries who have
been involved in various ways in the investigation.
Oywind Skille
And in the continuation of the investigation?
Leslie Caldwell
Im sorry?
Oywind Skille
And in the continuation and forward in the investigation?
Leslie Caldwell
Given the nature of the investigation, it involves a lot of documents that are in these various countries
and individuals in some of these countries, so we expect that the relationship between the law

enforcement partners will continue.

Oywind Skille
Thank you.
The next question comes from Emilia Ekeberg with Klasse Kampen. Please go ahead.
Emilia Ekeberg
Hi. My question is, the investigation of individuals, will that include members of the board of directors
in VimpelCom? Are you also looking at the board of directors, and the agreement to implement internal
controls and the compliance monitors, is that also involving the board of directors? Thank you.
Leslie Caldwell
I cant comment on what individuals were looking at. And, Andrew, if you want to take the question
about what the compliance monitor is going to be focused on.
Andrew Ceresney
Yes. Thanks, Leslie. If you take a look, the compliance monitor is focused very broadly on lots of
issues related to compliance. So, for example, the compliance monitor has to conduct an annual review
for three years and issue reports from that review, has to review the policies and procedures that are in
place relating to the FCPA as well as conduct procedures to ensure that the company is actually
complying with its requirements under the FCPA as well as internal control and books and records
requirements. And they have to issue work plans that identify what theyre going to do as monitors and
ultimately carry out that work to ensure that compliance is ongoing.
The next question comes from Christopher Matthews with the Wall Street Journal. Please go ahead.
Christopher Matthews
Yes, hi. Given how challenging and lengthy civil forfeiture can be, I wonder whether youve given any
thought to charging the bribe takers, the government officials criminally where theres evidence of
violation of U.S. law in order to use criminal forfeiture.
Leslie Caldwell
The Kleptocracy Initiative is an initiative that focuses on civil forfeiture and seizing the proceeds of
bribery and money laundering. Thats what weve chosen to do in this case. We think its very
important to separate corrupt officials from the bribes that they take and the times when they loot the
treasuries of their countries and take the money from the assets and wealth of their countries. We think
its very, very important to hit them in the pocketbook, because thats what motivates them in the first
place. Many individuals who are involved in kleptocracy have immunity from prosecution and are also
very difficult to get our hands on, so we think that this is a very effective alternative in this kind of a
The next question comes from Paul Handley with AFP. Please go ahead.

Paul Handley
Hi. Just to clarify, the $850 million is completely separate from the settlements announced today, is that
Leslie Caldwell
Paul Handley
And secondly, how soon do you think might we hear about any criminal cases coming up against any of
the people that could be involved?
Leslie Caldwell
The $850 million is a civil forfeiture of the money from the recipient of the bribes. Its contained in
accounts which that recipient is the beneficial owner of, even though they were laundered extensively
through intermediary accounts. So, thats an effort to seize the money from that individual. The other
money thats being paid by the company is the companys penalty and the companys disgorgement of
its profits from the profits that it made as a result of the bribery scheme.
As to the timing of individuals, I cant really predict what that timing will be because this is a very
complicated case, and a lot of the facts are located overseas and a lot of the individuals are located
overseas, which complicates things considerably. But we are working forward on that front.
Our next question comes from Nate Raymond with Reuters. Please go ahead.
Nate Raymond
Yes, hi. I just wanted to circle back, regarding the decision to not name the government official, I was
just wondering, in a case like this, especially where the bribing is so extensive, is there not an argument
to be made that, especially if theyre out of reach of prosecutors, that for the other government its worth
putting out there in the public domain who was taking the bribes?
Andrew Ceresney
Theres a policy in the criminal division which is, its in the criminal division in the US Attorneys
Manual, that criminal prosecutors are not allowed to name individuals who are not criminally charged in
criminal filings. And the idea behind that is you dont want to smear someone who you never prosecute.
And Im not saying that that person will never be prosecuted, but until a person is actually named in a
charging document its department policy that they not be identified.
The next question comes from Adam Klasfeld with Courthouse News. Please go ahead.
Adam Klasfeld
Hi. Just a question about something that Leslie Caldwell said about the money going to be used to
repatriate the victims who were harmed by the corruption. How practically can that work in a country
like Uzbekistan where corruption is so endemic? How does it get to the victims and not the corrupt

Leslie Caldwell
Were very conscious of that issue, and we obviously dont want to just put the money back into the
pockets of the people who weve seized it from and fought to get it from. So, the Kleptocracy Initiative
is a relatively new initiative, but there is at least one prior model that may serve as a model in this case.
Im not saying its going to, because were a long way from that decision, but there was a case involving
Kazakhstan where we worked with NGOs and international organizations to identify an entity that could
administer the funds in Kazakhstan in a way that was not corrupt and in a way that was transparent, and
subject to audit. And while, as I said, were a long way from that point, something like that could
theoretically be done in this case as well.
Adam Klasfeld
Just a quick followup, if I can then. What was the name of that case, so I can research that?
Leslie Caldwell
It washold on one second. Peter, you may have to follow up with exact name, but it was $116 million
that was returned to the people of Kazakshtan through an agreement between Switzerland and
Kazakhstan, and the US, through a consortium of the World Bank and two NGOs, and a non-profit
foundation called Bota, B-O-T-A, was created to administer the program. And they focused on health,
education, and social welfare, and that program was just wrapped up last year.
Adam Klasfeld
Thank you very much.
The next question is a followup from Mark Bocchetti with MLex. Please go ahead.
Mark Bocchetti
Yes, thank you. Looking at the bottom of the SEC press release, I saw a long list of countries and
agencies that were helpful with the investigation, and it certainly makes the point that it was
international; however, I dont see any mention of Russian authorities there, and I think its widely
known, I think another reporter mentioned it, that the owners of the company actually are Russian. Has
there been any cooperation in this case with Russian authorities? Has the department requested any
cooperation with the Russian authorities? And given the fact that Russia is a signatory to the antibribery convention; do you expect that Russia will carry out an investigation of whether any Russian
individuals were involved in the bribery scheme? Thank you.
Leslie Caldwell
Other than saying what countries we have worked actively with, we dont comment on other
investigative steps that weve taken and whether they were successful or unsuccessful. So, I cant really
comment on anything relating to what Russia will, or has, or plans to do in this matter.
The next question comes from Luc Olinga with AFP. Please go ahead.

Luc Olinga
Yes, my question has been answered. Thank you.
Our last question comes from Dylan Tokar with Just Anti-Corruption. Please go ahead.
Dylan Tokar
Hi. Are you there?
Leslie Caldwell
Dylan Tokar
I was hoping, Leslie or Andrew, you could clarify on the imposition of the monitor and specifically
which agency will be handling that. Based on my understanding of the settlement it appears that the
monitor is being imposed through the SEC complaint in the Southern District. Was there any specific
factors that led to a decision to have the SEC handle the appointment of the monitor?
Leslie Caldwell
Andrew, Ill defer to you on that.
Andrew Ceresney
Yes. So, I think the monitor was appointed in both the SEC and the DOJ papers, and the monitor will
report to both the SEC and the DOJ. That obviously reflects the fact that both have achieved resolutions
with the company here.
Dylan Tokar
Okay, thank you. Great.
This concludes our question-and-answer session. I would like to turn the conference back over to Peter
Carr for any closing remarks.
Peter Carr
Alright, thank you all again for joining the call. We are awaiting the court documents to be filed on
Pacer, and as soon as they are filed we will have them up on our website linked to the press release
there. They will also be on the FCPA portion of the Criminal Divisions website. Should anybody need
the court documents otherwise prior to that, you can reach out to me individually. And again, thank you
so much for the call, and if you have any additional questions please reach out to me as well. Thank you
so much. Bye-bye.
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