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Telecommunications
Stockholm, Sweden
Nationality of Foreign Officials: Azerbaijan
Summary of Allegations:
On 27 May 2015, Swedish television station SVT and Swedish news agency TT reported allegations concerning TeliaSonera's conduct in Azerbaijan in 2008. TeliaSonera allegedly acquired ownership in Azercell, a phone operater, from the Azerbaijan government for USD 180 million. At that time, the value of the ownership allegedly was USD 785 million. TeliaSonera then reportedly allowed Cenay Iletisim, connected to Azerbaijan President Ilham Aliyev's family, to control the company in exchange for receipt by TeliaSonera of permits and licenses in Azerbaijan and access to the Azerbaijan telecom market. The total value of the transaction was alleged to be USD 709 million for Azercell.
Approximate Alleged Payments to Foreign Officials: Potentially up to USD 709 million
Business Advantage Allegedly Obtained: Access to the Azerbaijan telecom market
Nationality of Foreign Officials: Uzbekistan
Summary of Allegations:
On 19 September 2012, the Swedish television station Sveriges Television ("SVT") reported a story on TeliaSonera's conduct in Uzbekistan in 2007. The report alleged that TeliaSonera purchased a USD 333 million 3G license from a company owned by a 22-year old woman who had no background in telecommunications; that this young woman, Gayane Avakyan, is closely connected to the family of Uzbekistan's ruler, Islam Abduganiyevich Karimov, through Karimov's daughter Gulnara; and that part of the purchase price was paid as a bribe to the president and his family.
Radio Free Europe reported on 22 May 2013 that the improper payments described may have been as much as USD 300 million. The same story also reported that documents, purportedly with Gulnara Karimov's handwriting on them, have surfaced showing that TeliaSonera was asked to pay significant bribes in exchange for business in Uzbekistan.
According to the US Department of Justice, the company admitted in September 2017 that Telia and its Uzbek subsidiary Coscom LLC, through various managers and employees within Telia, Coscom and affiliated entities, paid approximately $331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry. The companies structured and concealed the bribes through various payments including to a shell company, Takilant Ltd., that certain Telia and Coscom management knew was beneficially owned by the foreign official. The bribes were paid on multiple occasions between approximately 2007 and 2010, so that Telia could enter the Uzbek market and Coscom could gain valuable telecom assets and continue operating in Uzbekistan. Certain Telia and Coscom management also contemplated structuring an additional bribe payment in late 2012, after Swedish media began reporting about Telia’s corrupt payments in Uzbekistan, Swedish authorities began a criminal investigation and Telia opened an internal investigation.
Approximate Alleged Payments to Foreign Officials: USD 331 million
Business Advantage Allegedly Obtained: Access to the Azerbaijan telecom market
Agencies: Netherlands: National Police Services Agency, Netherlands: Public Prosecution Service
Results:
Year Resolved: 2017
Compliance Monitor:
Ongoing: No
Details:
On 12 March 2014, TeliaSonera said that its Dutch holding companies that control its operations in Uzbekistan had been raided by authorities in a preliminary investigation into bribery. In April 2015, media reports indicated that Dutch authorities had opened an investigation into the company for allegedly paying bribes to Karimova.
On 6 July 2016, Dutch prosecutors asked judges to seize more than 300 million euros in Takilant assets, arguing that the funds were used to bribe Karimova and impose a fine of nearly 5 million euros. In addition, the prosecutors also asked the court to seize a six percent stake Takilant holds in Ucell, Telia's Uzbek subsidiary.
On 20 July 2016, Dutch court ruled that Takilant received bribes from Vimpelcom and Telia to allow their respective Uzbek subsidiaries, Unitel and Ucell, to operate in the local mobile market. The court ordered the confiscation of 123 million euros (USD 135 million) in assets from Takilant and also ordered Takilant to pay a fine of 1.58 million euros. In addition, the court ordered the confiscation of Takilant's six percent stake in Ucell.
On 15 September 2016, Telia announced that the US and Dutch authorities proposed a total settlement amount of approximately USD 1.4 billion to settle allegations in Uzbekistan.
On 21 September 2017, Telia and its Uzbek subsidiary Coscom LLC entered into a global foreign bribery resolution and agreed to pay a combined total penalty of more than USD 965 million to resolve charges arising out of the bribery scheme. As part of the global resolution, Telia agreed to pay the Public Prosecution Service of the Netherlands (Openbaar Ministrie, or OM) a criminal penalty of USD 274,000,000.
Agencies: Sweden: Prosecution Authority, Anti-Corruption Unit
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On 26 September 2012, the National Anti-corruption Unit of Sweden, operating from the office of the Prosecutor General, ordered the police to open an investigation into TeliaSonera's operations in Uzbekistan in 2007. Police removed documents from the Company's offices.
A few weeks later, on 16 October 2012, the Swedish court approved the prosecutors' request to freeze an account controlled by Takilant at Nordea Bank, which holds about USD 30 million. The court agreed to the freeze by explaining that it had grounds to suspect two Uzbek nationals, Gayane Avakyan and Alisher Ergashev, of money laundering. Attorneys for the two Uzbekis have denied the money laundering allegations.
On 28 March 2013, the Wall Street Journal reported that Swedish prosecutors gave notice to TeliaSonera that the Company might be liable for fines and forfeiture depending on the outcome of the investigation of the Company's former employees. A source told the Wall Street Journal that this notice is required under Swedish law and that it does not mean that prosecutors have initiated a new investigation of the Company. The Company again said that the allegations are not true. The Wall Street Journal reported on 18 April 2013 that the Company has hired an outside law firm to investigate the allegations and review the Company's transactions in Eurasia.
In April 2015, media reports indicated that Swedish authorities froze more than 193 million Euros in assets, of which USD 30 million was frozen at the request of the United States as part of its investigations into VimpelCom, MTS and TeliaSonera.
For the Azerbaijan transaction, in 2014 the company presented authorities with the results of an internal investigation that included the company's dealings in Azerbaijan.
On 3 May 2016, Telia Company announced that Swedish prosecutors have closed down the investigation into allegations in Azerbaijan. However, the investigation into allegations in Uzbekistan continues and Telia Company continues to cooperate with the prosecutors and police in the matter.
On 22 September 2017, the former chief executive of Swedish telecom operator Telia Company, Lars Nyberg, head of Eurasia Tero Kivisaari, and a third still unnamed high-ranking Telia official, were charged with bribery over a deal to buy a 3G telecoms network licence in Uzbekistan. All three deny the charges.
On September 6 2018, Lars Nyberg and two other former executives of Telia were on trial in Sweden for the bribe.
On 19 February 2019, a judge at Stockholm District Court acquitted Telia’s former executive Lars Nyberg for his role in the Uzbekistan bribery, as the bribery recipient – the daughter of Uzbekistan’s President was not considered as an official capable of advancing Telia's interests.
Agencies: Switzerland: Office of the Attorney General
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
According to media reports, Swiss authorities initiated an investigation into claims of bribery related to TeliaSonera and VimpelCom in 2012. On 19 August 2015, the Switzerland's Office of the Attorney General announced it has confiscated more than 800 million Swiss francs (USD 826 million) in the investigation.
On 24 August 2015, Swiss authorities have agreed to the August 2015 request by the U.S. authorities to freeze funds with suspected links to Gulnara Karimova and the investigation.
The investigation is ongoing.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Criminal Fine, Deferred Prosecution Agreement, Disgorgement
Year Resolved: 2017
Compliance Monitor:
Ongoing: No
Details:
On 17 March 2014, TeliaSonera said that it had received requests from the U.S. Department of Justice ("DOJ") and the U.S. Securities and Exchange Commission ("SEC"), which are investigating TeliaSonera's purchase of a 3G license in Uzbekistan in 2007.
In April 2015, media reports indicated that Swedish authorities froze more than 193 million Euros in assets, of which USD 30 million was frozen at the request of the United States as part of its investigations into VimpelCom, MTS and TeliaSonera.
According to media reports in August 2015, the U.S. authorities asked European counterparts to seize about USD 1 billion in assets related to the investigation in effort to target what prosecutors believe are the spoils of alleged corrupt activities overseas. On 24 August 2015, Swiss authorities agreed to the U.S. request to freeze funds.
On 15 September 2016, Telia Company ("Telia") (formerly TeliaSonera) announced that the US and Dutch authorities proposed a total settlement amount of approximately USD 1.4 billion to settle allegations in Uzbekistan.
In its quarterly report released on 21 October 2016, Telia noted a provision of USD 1.45 billion (SEK 12.5 billion) recorded in the quarter for settlement proposed by the US and Dutch authorities.
On 21 September 2017, Telia agreed to pay over USD 965 million in criminal penalties to resolve FCPA offenses. DOJ filed a criminal information charging Telia with one count of conspiracy to violate the FCPA, and a three-year deferred prosecution agreement (DPA). The SEC filed a cease-and-desist order charging Telia with violations of the Securities and Exchange Act, for agreeing to make corrupt payments to Uzbek government officials to obtain business and failing to maintain adequate internal accounting controls.
Of the total penalty, USD 500 million is a criminal fine. Telia will also pay USD 40 million as forfeiture on behalf of its Uzbek subsidiary, Coscom LLC, as part of the subsidiary’s guilty plea. The total criminal penalty is to be offset by up to $274 million for any criminal penalties paid to the Dutch Public Prosecution Service to settle the potential prosecution in the Netherlands.
The U.S. Securities and Exchange Commission (SEC) and the Public Prosecution Service of the Netherlands (Openbaar Ministrie, or OM) announced separate settlements with Telia in connection with related proceedings. Under the terms of its resolution with the SEC, Telia agreed to a total of over USD 457 million in disgorgement of profits and prejudgment interest, and the SEC agreed to credit any disgorged profits that Telia pays to the Swedish Prosecution Authority (SPA) or OM, up to half of the total. The combined total amount of criminal and regulatory penalties paid by Telia and Coscom to the U.S., Dutch, and Swedish authorities is USD 965.8 million.