Veon must face shareholder lawsuit over share inflation scandal

Written by on September 20, 2017 in News with 0 Comments

Jean-Yves Charlier, Chief Executive Officer of VEON REUTERS/Eric Gaillard

NEW YORK (Reuters) – A U.S. judge said Veon Ltd shareholders may pursue much of a lawsuit accusing the multinational phone company once known as VimpelCom of inflating its share price by concealing a bribery scheme in Uzbekistan and overstating its financial controls.

U.S. District Judge Andrew Carter in Manhattan ruled on Tuesday that shareholders may pursue their proposed class-action claims “in large part.”

He rejected Veon’s contentions that the investors failed to show any intent to defraud, or that any inflation in its stock price resulted from improper or inadequate disclosures.

“Plaintiffs have adequately alleged that Veon knew facts or had access to information suggesting that its public statements were not accurate,” the judge wrote.

VimpelCom admitted in February 2016 to having paid more than $114 million in bribes to a high-ranking Uzbekistan official, and agreed to pay $795 million in penalties to resolve related U.S. and Dutch probes.

Carter narrowed the potential class to exclude shareholders who sold VimpelCom shares before March 12, 2014, when the Amsterdam-based company began disclosing regulatory probes, including in connection with its Uzbekistan operations.

Veon did not immediately respond to a request for comment after business hours in Amsterdam.

A lawyer for the plaintiffs, led by Westway Alliance Corp, did not immediately respond to a similar request.

Westway sued on behalf of VimpelCom investors from Dec. 2, 2010, to Nov. 3, 2015.

Veon’s major markets include Algeria, Bangladesh, Pakistan, Russia and Ukraine, as well as Uzbekistan.

Shareholders approved the name change in March.

The case is In re Veon Ltd Securities Litigation, U.S. District Court, Southern District of New York, No. 15-08672.

(Reporting by Jonathan Stempel in New York, additional reporting by Toby Sterling in Amsterdam; editing by Marcy Nicholson)

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