Home News Brazil sees fraud in Vivendi takeover of phone company: report

Brazil sees fraud in Vivendi takeover of phone company: report

Published on June 09, 2010

Brazil's securities regulator is poised to fine French group Vivendi up to 1.6 billion dollars after concluding it fraudulently took over a Brazilian telephone company this year, a report said Tuesday.

The financial newspaper Valor, without divulging its sources, said that the regulator found Vivendi made a “fraudulent” transaction when it announced it had taken control of the firm GVT in April, after a five-month share-buying operation.

Vivendi initially took control by buying a 53-percent stake for 2.2 billion dollars, then expanded its stake to virtually all of the Brazilian company for a total four billion dollars.

Valor also said Vivendi was found to have allegedly exploited loopholes in Brazilian law to see through the acquisition, and failed to properly inform investors.

Brazil’s regulator, the CVM, would not confirm the report to AFP.

A spokeswoman said CVM had not issued any statement beyond a March announcement that Vivendi was being investigated for possible irregularities in the GVT deal.

“While that investigation is open, we cannot comment further,” she said.

She added that Valor “must have gotten its information from elsewhere.”

According to the Valor report, Vivendi issued incomplete information on a derivatives swap operation to give the false impression to GVT shareholders it had won a takeover battle for GVT against Spanish giant Telefonica, which was making a rival bid.

If the fraud is confirmed, the regulator can fine Vivendi 50 percent of the transaction’s value, plus penalties for other improprieties said to be connected to the deal, to a total of 1.6 billion dollars.