Economy 17:22 16/10/2019 Armenia

Why did Beeline pay $850 million?

Author Hasmik Hakobyan

In 2015, Beeline Uzbekistan, which is part of the international VEON Group, found itself at the center of an international corruption scandal. The company had given large sums of money to the country’s officials in bribes under the cover of charity. As a result of the investigation, the then director of VEON (VimpelCom) was arrested at the Oslo airport.

He immediately began cooperating with the investigation. As a result, the company not only paid a fine of $800-850 million, but also committed to introduce the compliance institute in all countries of the group.

VEON Ltd. is one of the world's largest integrated telecom operators. The company’s shares are traded on NASDAQ and Euronext Amsterdam stock exchanges. This means that companies that are part of the group, including Beeline Armenia, must comply not only with domestic laws, including anticorruption laws, but also with the US and international laws.

Beeline Armenia introduced the institute of compliance in 2016. The program is aimed at ensuring a complete transparency of all company’s activities and maintenance of high ethical standards. Thus, Beeline became one of the first companies in Armenia to establish a compliance program.

It is no secret that the success of any company is driven by observance of the rules of business ethics. The compliance policy plays a very important role in companies around the world, since following the business ethics ensures the reduction of corruption and other risks, exclusion of fraud and accomplishment of the company’s goals.

Compliance is an internationally accepted risk management and risk prevention system that ensures the adherence of the company’s activities with international law and the legislation of the country where it operates. It maximally protects the company and its employees from corruption and litigation risks.

The use of the compliance control worldwide has a very long history. It has been in place since 1977, when the United States passed the Foreign Corrupt Practices Act (FCPA). It regulates relations with government officials. That is, the purpose of introducing the system was to address corruption issues.

Speaking to a Panorama.am correspondent, Davit Amiryan, Ethics and Compliance Officer at Beeline Armenia, commented on the incident, noting: “If financial costs could be recovered over time, re-shaping a positive image takes a long time. Besides, it is really difficult to regain the confidence and position enjoyed previously.”

In particular, the compliance employees ensure that money or valuable items are not transferred to public officials directly or indirectly or certain activities aimed at gaining illicit profit are not taken.

Davit Amiryan noted that in the beginning they faced some problems related to the Armenian mentality, when giving gifts is not considered a bribe.

"We live in a country where the easiest way to solve problems is to give gifts," he said.

The company adopted the following policy to achieve success: to educate and to teach over and over again. After the staff training, the result was obvious. The company also started to organize trainings for everyone starting from the company executives to the service personnel.

In addition, Davit Amiryan said, the senior management staff regularly visits regions to familiarize employees with the business ethics. Once a month the company organizes online trainings for its employees.

He also informed that the company has been operating a hotline since 2016, giving its employees an opportunity to voice their concerns.

“In any case when a violation is detected, our employees can call the hotline without hesitation. The call is anonymous, we ensure confidentiality,” he stressed.

Highlighting the conduct of trainings, Davit Amiryan said in fact people should be explained why they need to follow ethics.

“People don't wake up in the morning with an intention to go to work and break a law. They often take steps that they do not realize, that is, they have no idea of the consequences. They are more driven by the intention of doing something good for the company rather than harming it. So, we try to teach people how to act through trainings and courses. Beeline CEO Andrey Pyatakhin also takes part in these trainings, presenting pressing issues that may arise in the company, as well as discussing what issues we face in the wake of unconscious steps, how we overcome them and what expectations we have from our staff,” Amiryan said.

Introducing a number of violations registered in the company many years ago, he referred to the process of proving so-called "nice" numbers to customers resulting in a number of abuses.

According to him, today the process of giving “gold” numbers is under serious control.

“Previously, we saw cases when those numbers were given to some officials without proper supervision, justifications and even for free for whatever reasons. Studying the process of providing these numbers, a number of cases were revealed and we managed to have those numbers blocked. In other words, they should be provided only on commercial terms,” he said.

Davit Amiryan confesses that it was not easy to achieve because the case concerned to some senior officials, but since they had committed to acting in a transparent and honest manner, they were willing to take risks and even suffer some financial losses, but maintain the reputation of the company.

He is convinced that all this will lead to positive changes in the fight against corruption in Armenia and make the business environment attractive for investments.

According to Davit Amiryan, if you want to be considered a reliable partner in developed countries, you need to have a system of compliance control. This boosts the reputation of the company, moreover, you have a high corporate culture, he said.

"Thus, the introduction of the system is justified," he added.

To note, the Global Ethics Day has been marked in October worldwide since 2014. Companies of different countries organize special events to once again emphasize the importance of ethics for business and reaffirm their commitment to the highest standards of honesty.

"Leadership across the organization is committed to ensuring ethics and compliance underscores everything we do, and we encourage open and fair reporting and review of employee concerns," said Joshua Drew, VEON Chief Ethics and Compliance Officer. 



Source Panorama.am
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