Issues To Consider From The Comcel Enforcement Action
Prior posts here, here, and here highlighted the recent $118.2 million Foreign Corrupt Practices Act enforcement action against Comunicaciones Celulares S.A. (“Comcel” doing business as TIGO Guatemala), a subsidiary of Millicom International Cellular, S.A, concerning bribery schemes in Guatemala.
This post continues the analysis by highlighting additional issues to consider.
Guatemala
The Comcel enforcement action is believed to be just the second FCPA enforcement action in history to concern conduct in Guatemala.
As highlighted here, a portion of the wide-ranging 2016 FCPA enforcement action against Odebrecht / Braskem concerned conduct in Guatemala – specifically payments to government officials in order to secure public works contracts.
About The Individuals Mentioned In The Comcel Enforcement Action
This prior post went in-depth into the recent $118.2 million FCPA enforcement action against Comcel (doing business as TIGO Guatemala – a mobile and fixed telecommunications service provider with its principal place of business in Guatemala).
There are two specific individuals mentioned in the DOJ charging documents: Acisclo Valladares Urruela (“Valladares” pictured) (a citizen of Guatemala and TIGO Guatemala’s Chief Corporate Affairs Officer and Head of Legal in or around and between 2008 and 2015 and again serving as Chief Corporate Affairs Officer in or around 2017) and Alvaro Estuardo Cobar Bustamante (“Cobar”) [a Guatemalan citizen and director of a Guatemalan bank] who facilitated the bribery scheme by providing Valladares with cash in order to pay bribes to Guatemalan officials and reimbursements for bribes TIGO Guatemala executives had already paid.
A Closer Look At The Comcel Enforcement Action
This previous post briefly highlighted the FCPA enforcement action against Comunicaciones Celulares S.A. (“Comcel”), a subsidiary of Millicom International Cellular, S.A. (“Millicom” – a telecommunications company incorporated and headquartered in Luxembourg with its principal place of business in Florida).
This post takes a closer look at the $118.2 million enforcement action.
In terms of background, Comcel was doing business as TIGO Guatemala and was a mobile and fixed telecommunications service provider with its principal place of business in Guatemala. During the relevant period, TIGO Guatemala was jointly owned by Millicom (55%) and a Panamanian company (“Panama Company” (45%) (Telecomunicaciones Digitales, S.A. (Cable Onda or Tigo Panama).
On or about November 12, 2021 , Millicom purchased Panama Company’s share of TIGO Guatemala for approximately $2.2 billion. Since then, TIGO Guatemala has been wholly-owned by Millicom.
Checking In On Millicom
As highlighted in this prior post, in mid-2022 Millicom (a telecom and media company headquartered in Luxembourg with shares traded on a U.S. exchange) disclosed as follows:
“[O]n April 27, 2022, we received a subpoena from DOJ requesting information concerning our business in Guatemala (“Tigo Guatemala”), including information related to the purchase in 2021 of our former joint venture partner’s interest in Tigo Guatemala and information related to any contacts with certain Guatemalan government officials. The subpoena also requested information concerning our operations in other countries in Latin America. We have notified DOJ that we intend to cooperate. At this time, we cannot predict the ultimate scope, timing or outcome of this matter.”
Millicom Under Scrutiny … Again
As highlighted in this prior post, in October 2015 Millicom, a telecom and media company headquartered in Luxembourg with shares traded on a U.S. exchange, disclosed:
“Millicom … announced that it has reported to law enforcement authorities in the United States and Sweden potential improper payments made on behalf of the company’s joint venture in Guatemala. A Special Committee of the Board of Directors made the decision in connection with an independent investigation being overseen by the Special Committee and conducted by international law firm Covington & Burling LLP, with the support of Millicom’s management team. Millicom is committed to fully cooperating with the authorities. It is not possible at this time to predict the matter’s likely duration or outcome. Millicom is committed to the highest ethical business standards and to full compliance with all applicable laws and regulations in every market in which the company operates.”
As highlighted in this prior post, in April 2018 Millicom disclosed: