US judge says VEON must face legal action over Uzbekistan scandal

By:
James Pearce
Published on:

US District Judge has ruled that shareholders in the former VimpelCom can launch a class action suit against the telco

Shareholders in VEON have been given the green light to pursue legal action against the firm formerly known as VimpelCom over a bribery scandal it was caught up in in Uzbekistan.

A US judge ruled that shareholders of the Dutch-based operator can pursue a proposed class action suit against VEON, in which it is accused of inflating its share price by hiding the bribery scheme.

Reuters reported a decision by US District Judge Andrew Carter that the case, brought in New York by company investors led by Westway Alliance Group, should be heard in court.

VEON admitted in 2016 to bribing a senior Uzbek official to enter the market, resulting in settlements of $835 million with US and Dutch authorities in 2015. The operator was accused of paying over $114 million in bribes to government officials in the country, according to the public prosecution department. In addition to using it to obtain mobile licences for 3G and LTE, the bribes was made to gain entry to the market in 2006. 

The lawsuit represents shareholders from December 2010 to November 2015, although according to reports, Judge Carter ruled those who sold shares prior to the company’s admission, made in 2014, would be excluded.

The scandal, which engulfed the entire Uzbekistani market, also led to a dispute with shareholder Telenor who ultimately sold off part of its stake in the firm. Telia was also caught up n the same corruption scandal.