TAKING STOCK: VimpelCom

Dear Mr. Berko:

I bought 100 shares of VimpelCom at $10 in early 2014, and almost two years later, it's $4.25. I was told that VimpelCom's fall in price was related to management's buying favors from government officials. I figured that this is a foreign company and that I shouldn't be surprised. It happens with corporations in Russia, Mexico and South America but seldom in the United States. My pastor, who thinks I'm naive, says, "The sins of greed and bribery hold hands with all executives in the corporate world, especially in the U.S." I find it hard to believe about Americans. American executives earn generous salaries and bonuses and give large sums of money to charities. Their names are in the public eye, so how could this possibly be true?

-JT, Durham, N.C.

Dear JT:

I should send this letter to Annie's Mailbox, where you could find a better-qualified answer to your naive question. You're in la-la land with a serious reality problem, probably exacerbated by your smoking joints over the past several dozen years. It's hard to believe that you find this hard to believe. But because another reader recently asked about VimpelCom, I'll answer the question.

In "All the King's Men," Robert Penn Warren wrote, "Man is conceived in sin and born in corruption and he passeth from the stink of the didie to the stench of the shroud." If you can't accept this Calvinistic theology, please read the morning paper or watch the evening news. Congress is a glittering example of corruption, as are the legislatures in our 50 states. Observe the consuming avarice of Wall Street, the naked cupidity of America's banks and the grasping greed of corporate America. Americans are masters at this. Corruption and bribery may seem worse in Russia, Malaysia, Nicaragua and Mexico, but they're not. Americans are more sophisticated at graft and paying kickbacks and bribes. America has more lawyers per capita than any country except Greece to smooth the process. We have about 1.3 million lawyers, which is one lawyer for every 245 of us. France only has 46,000 lawyers, which is one lawyer for every 1,435 citizens. Los Angeles alone has more than that-54,000 lawyers.

News of a bribery scandal involving VimpelCom (VIP-$4.20) broke in February 2014. I'm not surprised that Gulnara Karimova, the lovely daughter of the president of Uzbekistan, is accused of accepting huge payments from several telecom companies looking to secure wireless licenses and related advantages in Uzbekistan. Law enforcement officials say Karimova was caught with her fingers in the chak chak jar, being the "bag person" for her daddy, President Islam Karimov, who's smooth as licorice.

I recommended Vimpel, which rhymes with simple, two years ago at $10, not knowing that European authorities and our Justice Department were investigating corporate bribes. VIP's management is accused of paying hundreds of millions of dollars to Karimova for favors to be secured from Uzbekistan. Now U.S. authorities are seeking to seize billions in assets in their probe of VIP and TeliaSonera, the dominant mobile company in Sweden. Unfortunately, there are not enough lawyers in Sweden or Uzbekistan to ensure that bribery transactions flow smoothly. Still, those alleged payments to Karimova pale in comparison with payments made to members of Congress by foreign nationals, influential citizens and lobbyists, all seeking influence. And those payments pale in comparison with payments made by Union Carbide, Wal-Mart, Johnson & Johnson, Ralph Lauren, Deere, News Corp., GlaxoSmithKline, Hewlett-Packard, Avon Products, Koch Industries et al. (the list is quite long), all of which were seeking special treatment. How do you think the executives at the above companies and those at Bank of New York Mellon, Goldman Sachs, Bank of America, JPMorgan Chase, Merrill Lynch, HSBC, Citigroup, General Motors, Quicken Loans et al. were able to stay out of prison? The answer is: their lawyers.

Meanwhile, consider owning another 100 shares. This $15 billion-revenue company trades at 10 times expected 2016 earnings, and Merrill Lynch recently put a "buy" recommendation on VIP. The consensus on the Street suggests a high target price of $10 in 18 months.

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Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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Published: Thu, Oct 29, 2015