Telefónica Venezolana was accused of participating in a currency auction sponsored by the local government, allowing it to exchange its Venezuelan bolivars for US dollars, a common practice in the country to manage the exchange rate amid economic instability and high inflation.
“Telefónica Venezolana, a subsidiary and agent of a US 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 Damian Williams, US attorney for the Southern District of New York. “Intermediaries then funnelled the bribe payments through US correspondent bank accounts.
“This office will not tolerate the use and abuse of the US financial system to enrich corrupt foreign officials and those who maintain their market position by appeasing them.”
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Stable access to US dollars at government-regulated rates was essential for companies like Telefónica Venezolana to sustain operations amid Venezuela’s hyperinflation and volatile currency market.
Two suppliers recruited by Telefónica Venezolana officials were found to have made $28.9 million in corrupt payments to Venezuelan government officials through an intermediary to ensure stable access to foreign currency, which were hidden under the guise of purchasing equipment from suppliers at inflated prices.
Telefónica Venezolana entered into a deferred prosecution agreement (DPA) in connection with the criminal investigation. Under the terms, both Telefónica Venezolana and its parent company have agreed to cooperate with the investigation.
Both Telefónica Venezolana and Telefónica have agreed to enhance their anti-corruption compliance programmes and will report to the government regarding the remediation and implementation of their enhanced compliance program.
Telefónica Venezolana has also agreed to discipline certain employees, with several already dismissed as well as strengthen its anti-corruption compliance program by appointing a chief compliance officer with direct access to the Audit Committee of the Board of Directors.
The far-reaching investigation involved support from a myriad of agencies including the Internal Revenue Service (IRS), Homeland Security Investigations (HSI), and the Justice Department’s Office of International Affairs, with authorities in Panama, Switzerland, and Luxembourg having assisted in the case.
“Telefónica Venezolana chose to support a corrupt regime to circumvent the difficulties of conducting legal business in Venezuela,” said Nicole Argentieri, principal deputy assistant attorney general and head of the Justice Department’s Criminal Division. “This resolution is yet another example of the Justice Department’s commitment to fight corruption and hold companies accountable for their criminal conduct.”
Capacity has contacted Telefónica for comment.
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