Telenor Executives Depart as Probe Finds Weaknessesby and
Finance chief, general council exiting after lawyer report
Shortfalls found in organizational structure, communication
Two more executives left Telenor ASA after a probe into how the phone company handled its ownership in Russia’s third-largest wireless carrier VimpelCom Ltd. uncovered "internal weaknesses."
The operator reached agreements for the resignations of Chief Financial Officer Richard Olav Aa and General Counsel Paal Wien Espen, who were both put on leave during the review by Deloitte Advokatfirma, according to a statement Friday. The departures come months after Telenor’s then Chairman Svein Aaser stepped down and former Chief Executive Officer Jon Fredrik Baksaas agreed to end a consulting agreement with the company and give up his 2015 bonus after Norwegian police joined other nations in investigating the case.
"The report states that no Telenor employees have been involved in corrupt actions,” the Oslo-based company said in the statement. “It gives Telenor partial credit for its handling of the ownership in VimpelCom, but also points to weaknesses in organizational structure, communication and leadership in this matter.”
Telenor and Swedish competitor Telia AB have both been embroiled in corruption scandals over mobile-phone businesses in Uzbekistan. VimpelCom, of which Telenor owns a third, agreed to pay $795 million to settle U.S. and Dutch bribery claims, while Telia is still expecting a fine for allegedly paying bribes to buy mobile licenses in the country.
In a statement, Aa said the Deloitte report confirmed he “correctly handled the worries regarding VimpelCom, which became known to me in 2011. Still, Deloitte questions a consideration which I made as a top executive after a board meeting in 2013. Given the circumstances, I am still of the opinion that my consideration was correct.”
Telenor shares slipped 2.7 percent to 135.9 kroner at 11:05 a.m. in Oslo, valuing the carrier at 204 billion kroner ($25.3 billion).
“For all of us in Telenor, this is a challenging day," CEO Sigve Brekke said. "To get detailed information about a very difficult and complex case unfolded in public, is hard. But we have to face up to the criticism and learn from it. We take the findings seriously and will use this case to learn and improve."
The board in November hired Deloitte to conduct a review of Telenor’s handling of its VimpelCom ownership. The company is in talks with possible bidders to sell its stake in VimpelCom, Brekke said this month. Telia is trying to sell its Eurasian units and CEO Johan Dennelind has said it’s been hardest to find a buyer for its Uzbekistan business because of the scandal.