Telefónica Venezolana Settles U.S. Bribery Probe with $85 Million Payment

In a significant development regarding corporate accountability, Telefónica Venezolana has agreed to pay more than $85 million to settle a U.S. Justice Department investigation into accusations of bribing Venezuelan officials. This settlement, announced yesterday, aims at resolving the allegations that the Venezuelan subsidiary of Spain’s Telefónica, a major global telecommunications player, sought preferential access to U.S. dollars through shady means.

“Telefónica Venezolana, a subsidiary and agent of a U.S. 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, the U.S. Attorney for the Southern District of New York, in a statement obtained by the Department of Justice. The Southern District of New York charged the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), engaging in a deferred prosecution agreement (DPA) in light of the charges.

According to the

U.S. Department of Justice

, the case reveals that in 2014, Telefónica Venezolana manipulated a government-sponsored currency auction in Venezuela to exchange Venezuelan bolivars for dollars. This was done by making about $28.9 million in corrupt payments through intermediaries, who then bribed officials, ensuring the company’s success in the auction.

In a collaborative statement, officials from the DOJ, IRS Criminal Investigations, and Homeland Security Investigations expressed their commitment to combating corruption. “Telefónica Venezolana bribed Venezuelan government officials to participate in a government auction through which it exchanged Venezuelan bolivars for U.S. dollars,” highlighted Principal Deputy Assistant Attorney General Nicole M. Argentieri, summarizing the company’s unlawful actions. The company, it appears, camouflaged these illicit payments by inflating prices for equipment purchased from accomplice suppliers, who were in on the scheme.

As part of their agreement with U.S. authorities, Telefónica Venezolana and its parent company Telefónica have pledged to continue cooperating with ongoing investigations and to bolster their compliance operations. Evidently, the company failed to promptly disclose essential records and information which hampered the Department’s initial investigative efforts, reducing the effectiveness of their cooperation, a factor considered during the agreement’s negotiations.

The cooperative efforts of the IRS Global Illicit Financial Team in Washington, D.C., and the contributions from international partners in Panama, Switzerland, and Luxembourg were instrumental in advancing this case. The prosecution is being directed by Assistant U.S. Attorney Jilan J. Kamal, Senior Litigation Counsel Nicola Mrazek, and Trial Attorney Abdus Samad Pardesi from the Criminal Division’s Fraud Section.

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