Digicel Group Holdings is currently cooperating with the United States Department of Justice (DOJ) on possible violations of the USA’s Foreign Corrupt Practices Act (FCPA).

This development was first reported by Bloomberg on Monday which sought a response from Digicel Group, whose spokesperson said, “We voluntarily disclosed to the US Department of Justice information related to possible violations of the US Foreign Corrupt Practices Act. We are cooperating fully with the DOJ and will continue to do so.”

Digicel Group was reported to have been providing an update to its bondholders on Friday when it revealed that it had voluntarily reported itself to the US DOJ, an agency under the executive arm of the US Government. The Bloomberg publication further noted, “The company declined to give any further details about the scope, geography or quantum of the scrutiny it is facing, and did not respond to questions during the private bondholder call. In a disclosure made to bondholders last week and seen by Bloomberg News, the company said that there were possible violations in a number of jurisdictions. Digicel also warned that the outcome of the investigations were unknown and could be material to the firm’s financial condition.”

Digicel’s spokesperson told the Jamaica Observer by email, “Digicel is committed to conducting business in adherence with laws and regulations of the jurisdictions in which we operate, supported by a rigorous ethics and compliance program. We take compliance very seriously and are continually assessing and enhancing our compliance policies and procedures to ensure we uphold the highest standards across the company.”

However, the company noted that it would not be commenting further on the matter. it did confirm that Digicel still had US$3 billion in debt, operated in 25 markets across Central America and the Caribbean and EBITDA (earnings before interest, tax, depreciation and amortisation) was up five per cent year-on-year.

The FCPA is a US Federal law that prohibits any domestic or foreign individual or company that conducts business in the USA or through interstate commerce from bribing foreign government officials in order to obtain or retain business. This law has two main provisions surrounding anti-bribery and accounting provisions. The accounting provisions require companies to keep accurate financial records which reflect all transactions and prevent the improper use of funds.

Individuals convicted under the FCPA can be fined up to US$250,000 per violation, sentenced up to five years in prison or placed on probation. Companies convicted under the FCPA can be fined up to US$2 million per violation and can be sanctioned by courts to forfeit profits gained through bribery.

The announcement pushed Digicel Intermediate Holdings’ bond price down US$3.375 below the par price of US$100. This Digicel bond which is set to mature in May 2027 has a carrying amount of US$1.26 billion. Digicel Midco’s price was relatively unchanged on the news as the November 2028 bond retains its carrying value of US$454.77 million.

Digicel Group underwent a strategic shift in January when PGIM, Inc and Contrarian Capital Management, L.L.C. , its largest creditors, became the new majority owners in the telecommunications giant. The reorganisation was set to make the reorganised Digicel owned by PGIM or its funds with a 48.4 per cent stake while Contrarian or its funds would own a 16.2 per cent stake. PGIM and Contrarian would own their interests through Digicel Holdings (Bermuda) which would be the ultimate indirect parent of Digicel MidCo. This reorganisation resulted in Digicel’s debt load being cut by US$1.7 billion to about US$3 billion and reducing annual cash interest expense by US$120 million annually.

As a result, Digicel Founder and Chairman Dennis O’Brien became a non-executive director on the newly constituted nine-member board and saw his majority interest in Digicel cut to 10 per cent. PGIM was given the right to appoint up to four members of Digicel’s new board and chose former Nokia CEO Rajeev Suri as the new board chairman. Contrarian Capital was given the right to appoint two directors to the new board. Marcelo Cataldo was chosen by these creditors as the new Digicel Group CEO with the Paraguayan taking up duties on May 1.

Digicel Limited, the parent company of several operating Digicel subsidiaries, reported revenue of US$1.77 billion in its March 2023 financial year, with the net loss rising 17 per cent to US$243.81 million. Digicel completed the sale of its Pacific operations in July 2022 to Telstra Corporation, which would have been in the beginning of that reporting period. Digicel’s Jamaican operations grew revenue three per cent to US$325.37 million or $48.79 billion Jamaican dollars in 2023, with its segment result improving 11 per cent to US$143.67 million.