Vodafone Group launches own investigation into allegations of tax fraud at ONO

28 Oct 2014

UK-based Vodafone Group is said to have launched an internal probe into possible tax fraud at Spanish cableco Grupo Corporativo ONO, which it acquired earlier this year for EUR7.2 billion (USD9.1 billion). According to The Telegraph, Vodafone blocked pay outs to former ONO executives while the alleged fraud is investigated by Spanish authorities, with the matter said to centre on ONO’s activities in the wholesale telecoms market; it has been claimed that a small group of staff traded international call minutes off its balance sheet via affiliate companies and allegedly without paying VAT.

Spain’s tax authorities had already been probing the claims for nine months when Vodafone agreed to acquire ONO in March 2014, with investigators said to have informed the Spanish cableco of the matter in June, prior to the completion of Vodafone’s takeover the following month. It has, however, been suggested that Vodafone was not told about the fraud investigation before finalising the acquisition, while no trace of the alleged off-balance-sheet fraud was uncovered by its due diligence process.

Now, Vodafone’s own inquiry into the allegations is being carried out by Deloitte and law firm DLA Piper, and is thought to be focused on what former ONO executives Jose Maria Castellano, Rosalia Portela and Carlos Sagasta knew about both the fraud claims and the official investigation.

A Vodafone spokesman was cited as saying of the matter: ‘As soon as Vodafone became aware of the issue we instigated a forensic audit to investigate the facts relating to the alleged fraud … As this matter remains under investigation, we cannot comment further.’ Meanwhile, Mr Castellano has branded the decision to withhold bonuses ‘absurd and unjust’, stating: ‘They have not paid me a bonus and it is false that we have had involvement in irregularities.’

Spain, Grupo Corporativo ONO, Vodafone Group