Brazil's securities regulator could fine French media company Vivendi as much as 3 billion reais ($1.7 billion) for allegedly committing fraud in its take-over of Brazilian phone company GVT, newspaper Folha de S. Paulo said on Sunday, without noting how it obtained the information.
The regulator, known as CVM, found that Vivendi had purchased less than the minimum 40 percent stake in GVT when it announced it won control of the Brazilian company last November, Folha reported. Vivendi may have the option of reaching a settlement with the CVM, the newspaper reported.
The fine could be the largest ever imposed by the Brazilian securities regulator, according to Folha, which did not give a timetable for an announcement. According to Folha, CVM argued that Vivendi probably misled Telefonica and other investors by signalling that it had won control of GVT before it actually had. Vivendi paid 7.7 billion reais for GVT, the fixed-line and data services carrier that is Brazil's fastest-growing telecommunications company. "Any talk of a fine is a conjecture," Simon Gillham, Vivendi's executive vice president of global communications, told Reuters in a phone interview from Paris. "Vivendi prides itself on its standards of corporate governance."
Vivendi abided by the Brazilian laws throughout the process that led to the purchase of GVT, Gillham said, adding that the company has not been notified of any decision by CVM. The French company met all legal and regulatory standards during the acquisition process, he said.