VimpelCom Russia Head Resigns Amid Graft Probe at Former Job

Updated on
  • Kjell Johnsen, head of major markets, to replace Slobodin
  • VimpelCom shares fall most since June 27 in U.S. trading

VimpelCom Ltd.’s head of Russia has resigned after local authorities said he was wanted for questioning in connection with a corruption probe at his former employer. The stock fell the most in more than two months.

VimpelCom accepted Mikhail Slobodin’s resignation with immediate effect, the Amsterdam-based wireless carrier said in a statement Monday. Kjell Johnsen, head of major markets, will replace him as acting chief executive officer until a permanent replacement is found, VimpelCom said.

Slobodin’s contract was extended for three years last month. The departure of an executive that is credited with improving the operational and financial dynamics at VimpelCom’s largest unit is untimely for the carrier, according to Ivan Kim, an analyst at VTB Capital.

“The lack of management continuity had been an issue for VimpelCom before, and that might now resurface,” Kim said in a note.

Russia’s Investigative Committee said Monday it detained two managers who were executives of power utility T Plus’s predecessor, KES Holding, in connection with suspicious payments of over 800 million rubles ($12.3 million) and that it was seeking Slobodin, who used to head the company.

Slobodin told Bloomberg News on Monday that he was on a business trip outside of Russia.

The stock fell as much as 4.6 percent in New York, the steepest intraday decline since June 27, and was trading down 2.5 percent to $4.24 at 9:40 a.m., giving the carrier a market value of $7.4 billion.

Russia has become VimpelCom’s largest market after the carrier deconsolidated its Italian unit, merging it into a joint venture with CK Hutchison Holdings Ltd. It accounts for about half of VimpelCom’s sales, and good performance there is “crucial” for the company’s fundamentals, UralSib Capital said in a note.

VimpelCom’s business in the former Soviet Union has been dogged with corruption allegations and the carrier paid a $795 million fine to settle a bribery case in Uzbekistan this year. VimpelCom co-owner Telenor ASA suspended several executives over the Uzbek probe in 2015 and announced a strategic decision to sell its 33 percent stake in the carrier.

(Updates with shares starting in first paragraph.)
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