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SFO Probes O2 UK Over Violations of Anti-Bribery Laws and Regs

Monday, September 6th, 2021 (7:41 am) - Score 1,272
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The recent £31bn merger between mobile operator O2 and broadband giant Virgin Media has forced the former to reveal that the Serious Fraud Office (SFO) is investigating it over “possible violations of anti-bribery laws and regulations,” which appears to have been triggered by a management shake-up in 2017.

The notice was first spotted by the Sunday Telegraph (paywall) and can be found tucked away deep in VMO2’s 136-page long Condensed Consolidated Financial Statement (PDF) for financial Q2 2021, which was published last month.

Rumours of such a probe have reportedly been circling ever since around the time of O2’s 2017 management shake-up, with “industry sources” telling the paper that it relates to allegations that O2 executives were involved in the payment of kickbacks with customers.

The 2017 shake-up occurred at a time when mobile operators were reshaping their sales channels, not least by reducing their reliance on third-party retailers in favour of selling direct to customers.

At the time of writing, neither O2 nor Virgin Media have commented on the matter, while the SFO has yet to issue a statement. But that’s fairly normal where such investigations are concerned.

Extract from VMO2’s Financial Statement

Legal Proceedings

From time to time, we have become involved in litigation relating to claims arising out of our operations in the normal course of business. For additional information, see note 18 to our condensed consolidated financial statements included herein.

Disclosure Requests (O2)

O2 has been addressing a request for disclosure made by governmental authorities which is related to possible violations of anti-bribery laws and regulations. O2 continues to co-operate with the governmental authorities investigating this matter which is still ongoing. Whilst it is not possible at this time to predict the full scope or duration of this matter or its eventual outcome, O2 was able to make a reasonable estimate of the outcome, and recorded an accrual during 2019, which is included in our statement of financial position as of 30 June 2021. Additional disclosures of the matters required by International Accounting Standard (IAS) 37 have not been provided as permitted by IAS 37 para 92 as the directors believe that further disclosure will be seriously prejudicial to future developments on this matter.

The same report also suggests that rival operators could be in the firing line for similar activity, but we assume the SFO may want to see if they can make something stick with O2 first, before pursuing others. At present it remains unclear how long we’ll have to wait for an outcome, particularly as this has been going on for a while already.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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