Uzbek Bribe Scheme to Cost Swedish Telecom Nearly $1B

MANHATTAN (CN) – Swedish telecom company Telia agreed Thursday to pay nearly a $1 billion as part of a guilty plea for bribing officials in Uzbekistan.

As part of a deferred prosecution agreement filed in Manhattan, Telia and its Uzbek subsidiary Coscom admitted that their various executives, employees and affiliated entities paid more than $331 million in bribes between 2007 and 2012 to obtain telecommunications business in Uzbekistan.

The bribe taker is described only as an Uzbek government official who was a close relative of a high-ranking government official and who exercised influence over Uzbek telecommunications industry regulators. Other outlets meanwhile have reported that Telia had made $330 million in corrupt payments to Takilant, a front company for Gulnara Karimova, daughter of Islam Karimov, Uzbek president from 1989 to 2016.

Telia and Coscom structured and concealed the bribes through various payments to a shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official. 

Prosecutors note that the bribes were laundered through accounts held in various countries around the world, transmitted through financial institutions in the Southern District of New York.

In addition to facing a U.S. criminal penalty of more than $274 million, including a $500,000 criminal fine and $40 million in criminal forfeiture, Telia agreed to pay the Public Prosecution Service of the Netherlands a criminal penalty of $274 million.

Resolving civil claims by the U.S. Securities and Exchange Commission meanwhile will cost Telia more than $457 million in disgorgement of profits and prejudgment interest. 

Because the SEC agreed to credit the $40 million paid in criminal forfeiture against the civil settlement amount, the total criminal and regulatory penalties to be paid by Telia is $965,773,949.

“It is a never-ending journey as we aspire to embed this into our culture making sure that all employees understand the importance of doing the right thing all the time,” Telia President and CEO Johan Dennelind said in a statement. “The resolution and related financial sanction that we announce today is a painful reminder of what happens if we don’t.”

The company claims that it has continuously cooperated fully with and supported the investigations.

“If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws,”Acting U.S. Attorney Joon H. Kim said in a statement. “Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.” 

Acting Assistant Attorney General Kenneth Blanco meanwhile lauded what he called the government’s “unwavering commitment to robust FCPA and white-collar criminal enforcement.”

A message on Telia’s official website Thursday claimed that terms of the resolution being reported by news outlets were not complete. “Telia Company has already announced that it has taken a provision with respect to the expected financial sanctions. It is correct that we are very close to a final resolution with all authorities (SEC, DOJ and the Dutch prosecutor), but cannot comment further at this time,” the company said in a statement.

On Friday, Swedish Prosecution Authority began to prosecute a number of former Telia employees and initiated legal proceedings against the company disgorgement. The Swedish disgorgement sum was already included in the global settlement that Telia Company has reached with U.S. and Dutch authorities.

The charges and settlement were the result of a lengthy transatlantic corruption investigation into payments by telecommunication operators to a company linked to the socialite daughter of the former Uzbek president.

Assistant U.S. Attorney Edward A. Imperatore, Senior Litigation Counsel Nicola Mrazek, and Trial Attorney Ephraim Wernick are in charge of the Department of Justice’s prosecution.

Thursday’s settlement marks the first first major foreign corruption case brought during the Trump administration; Trump has been critical of the Foreign Corrupt Practices Act, having previously declared it “a horrible law and it should be changed.” 

U.S. District Judge George Daniels in New York accepted the deferred-prosecution agreement and sentenced Coscom to the terms of its plea agreement, including requirements to commit no further crimes and to implement a compliance program to detect corruption.

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