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Uzbekistan

New Documents Suggest Fresh Evidence Of TeliaSonera Ties To Karimova

TeliaSonera CEO Lars Nyberg (shown in January) stepped down February 1 as the company, whose two largest stakeholders are the Swedish and Finnish governments, came under increasing scrutiny for its activities in Uzbekistan.
TeliaSonera CEO Lars Nyberg (shown in January) stepped down February 1 as the company, whose two largest stakeholders are the Swedish and Finnish governments, came under increasing scrutiny for its activities in Uzbekistan.

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By Daisy Sindelar and Farruh Yusupov
Documents leaked to Swedish investigative journalists and reviewed by RFE/RL appear to offer fresh evidence of a link between Swedish telecom giant TeliaSonera and Gulnara Karimova, the daughter of the president of Uzbekistan.

The documents, part of a program set to be aired on May 22 on Sweden's SVT public broadcaster, show TeliaSonera being asked to pay hefty bribes in exchange for protection from government agencies and an infusion of new clients.

They also appear to show Karimova personally dictating the terms of the negotiations through a series of scribbles, complaints, and queries handwritten on the documents, which were obtained by SVT's "Uppdrag Granskning" ("Mission: Investigation") program and shared with RFE/RL.

"Mission: Investigation" has already produced a series of damning reports on TeliaSonera, which is under investigation for allegedly paying upward of $300 million in bribes to a Karimova associate to gain access to the Uzbek telecom market in 2007.

A group of alleged Karimova associates is currently being targeted in dual Swiss and Swedish probes for bribery and money-laundering, while Swedish prosecutors have opened an "aggravated bribery" case against a number of TeliaSonera employees.

TeliaSonera CEO Lars Nyberg stepped down February 1 as the company, whose two largest stakeholders are the Swedish and Finnish governments, came under increasing scrutiny for its activities in Uzbekistan.

The new documents, however, suggest that TeliaSonera continued to agree to pay bribes as recently as the summer of 2012.

Parcel Of Documents

The documents, a series of Russian-language memoranda and executive summaries dotted with handwritten comments and attached notes, appear to have been written in part by a Karimova associate familiar with TeliaSonera's business dealings in Uzbekistan, and reviewed in pen by Karimova herself.

The documents appear to have been reviewed in pen by Gulnara Karimova herself.
The documents appear to have been reviewed in pen by Gulnara Karimova herself.

The parcel of original documents was passed to "Mission: Investigation" by an unnamed courier acting on the behalf of a source, "Alexander," who had contacted the Swedish journalists by e-mail and appeared to be well-acquainted with specific aspects of TeliaSonera's dealings in Uzbekistan.

The authenticity of the documents cannot be independently verified. But much of their content, including previously unpublished employee lists and the holdings of some Swiss bank accounts, have been cross-checked by "Mission: Investigation" and RFE/RL's Uzbek Service and found to be accurate.

A Cyrillic forensic graphologist provided with verified samples of Karimova's handwriting told RFE/RL the script on the documents is 75-percent likely to be Karimova's. (A Swedish graphologist contacted by "Mission: Investigation" was unable to draw a definite conclusion, but had no expertise in Cyrillic.)

WATCH: An excerpt from SVT's "Mission: Investigation" program on Karimova
Swedish Probe Shows Ties Between TeliaSonera, Karimovai
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May 22, 2013
A Swedish television documentary is offering fresh evidence of a criminal link between Swedish-based telecom giant TeliaSonera and Gulnara Karimova, the daughter of Uzbekistan's autocratic leader, Islam Karimov. The program reveals documents apparently showing TeliaSonera being asked to pay hefty bribes in exchange for protection from government agencies and an infusion of new clients. This is a short excerpt from the documentary series, "Mission: Investigation," to be aired on the evening of May 22.

One of the documents, a point-by-point summary of business negotiations with TeliaSonera during the summer of 2012, appears to have been drafted by a Karimova aide for her review.

Among other things, the document notes TeliaSonera's "confirmation" that it will pay a one-off fee of $5 million in exchange for 2 million new mobile-phone subscribers.

The confirmation of the agreement, dated July 31, 2012, is potentially significant, coming just weeks after Uzbek authorities revoked the operating license of a rival company, Russia's MTS, leaving 9 million Uzbek subscribers without wireless service.

'Escort' Through Regulatory Bodies

"Mission: Investigation" has already reported that a former MTS executive, Bekzod Akhmedov, served as Karimova's middleman in some negotiations with TeliaSonera while still employed by the Russian telecom company. Akhmedov is now a suspect in the Swiss and Swedish investigations.
Gulnara Karimova (right) with Halit Ergenc, star of the Turkish soap opera "Magnificent Century," at the Style.uz festival in Tashkent in autumn 2012.Gulnara Karimova (right) with Halit Ergenc, star of the Turkish soap opera "Magnificent Century," at the Style.uz festival in Tashkent in autumn 2012.
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Gulnara Karimova (right) with Halit Ergenc, star of the Turkish soap opera "Magnificent Century," at the Style.uz festival in Tashkent in autumn 2012.
Gulnara Karimova (right) with Halit Ergenc, star of the Turkish soap opera "Magnificent Century," at the Style.uz festival in Tashkent in autumn 2012.

The same document also outlines a demand for a massive $15 million payment by TeliaSonera for an "escort" through five state regulatory bodies: the state tax inspectorate, customs officials, the antimonopoly committee, the state communications inspectorate, and the Interior Ministry.

The document notes that it is possible to arrange payment on a per-agency basis, as well, warning that such an alternative "will be more expensive."

TeliaSonera's Uzbek interlocutors specifically offer the option of lowering the fee in exchange for protection from just two of the five bodies.

An apparent attempt by TeliaSonera to talk down the price, summarized in the Uzbek document, is summarily dismissed with an emphatic handwritten "X" by the writer, believed to be Karimova. Farther down the document, the writer warns associates to bide their time on a contract stipulation on converting funds, saying, "Don't press this for a while!"

'Extremely Painful'

TeliaSonera has repeatedly denied any connection to Karimova, who has no official ties to Uzbekistan's telecom industry but has been characterized by U.S. diplomats as a "robber baron" who strong-arms funds from Uzbek businesses to feed a family fortune estimated in the billions.

A Swedish telecom executive with intimate knowledge of TeliaSonera's eastern expansion told "Mission: Investigation" that the new documents could be damaging for the company, which has recently sought to address concerns about its conduct by publishing new operating guidelines and serving as the sponsor of last week's Eurovision Song Contest.

"If the information in these documents is true, it indicates that there has been direct dialogue with Gulnara," said the source, who asked not to be named, citing "executive-level" firings and threats at TeliaSonera in connection with the case. He added that fresh evidence linking the company to Karimova could be "extremely painful" for TeliaSonera.

The headquarters of TeliaSonera in Stockholm
The headquarters of TeliaSonera in Stockholm
The documents also show TeliaSonera being asked by its Uzbek partners to sponsor a number of local cultural initiatives, including Style.uz, a weeklong art and fashion festival held annually in the Uzbek capital, Tashkent. The handwritten comments include an order to arrange such payments separately and "under no circumstances attach FF's name to anything" -- an apparent reference to Karimova's massive Fund Forum charity, which she has used to bolster her legitimacy and potential presidential prospects among Uzbeks.

TeliaSonera's Uzbek subsidiary, Ucell, was listed as an official sponsor of Style.uz in 2011 and 2012, and the company has confirmed it participates in cultural and charity sponsorships.

'Charitable' Payments

The document includes a caveat that the sponsorship payments should include travel and appearance fees for a regional celebrity. (Halit Ergenc, a soap opera star from the Turkish mega-hit “Magnificent Century,” eventually appeared alongside Karimova at Style.uz in the fall of 2012.)

Insiders say such deals are routinely used as a way to tap foreign investors for additional funds. John Davy, who served as Ucell's chief financial officer in 2008, says Uzbek authorities sometimes interrupted phone services as a way of pressing TeliaSonera for sponsorships and other impromptu payments.

WATCH: Former TeliaSonera Executive Describes Bribery In Uzbekistan
Former TeliaSonera Executive Describes Bribery In Uzbekistani
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May 23, 2013
A Swedish television documentary is offering fresh evidence of a criminal link between Swedish-based telecom giant TeliaSonera and Gulnara Karimova, the daughter of Uzbekistan's autocratic leader, Islam Karimov. The program reveals documents apparently showing TeliaSonera being asked to pay hefty bribes in exchange for protection from government agencies and an infusion of new clients. In this excerpt from the documentary series, "Mission: Investigation," former TeliaSonera executive John Davy describes the cost of doing business in Uzbekistan. (Editor's note: Davy was fired by TeliaSonera after serving less than a year. For more background on Davy, please see RFE/RL's accompanying story <strong><a href="http://www.rferl.org/content/sweden-teliasonera-uzbekistan-karimova/24993135.html" target="_blank">here</a></strong>)

"Once in a while...down goes the switch and all of a sudden we lose a hundred base stations," Davy told "Mission: Investigate." "We would have thousands of subscribers screaming about why they don't have their service. So after two or three days we have to make a $100,000 payment to a charitable organization, at the choice of whomever."

BACKGROUND: Who's Who In Uzbekistan's Money-Laundering Scandal?

Such payments, Davy said, went into the books as donations to cultural entities. But "everybody knew what they were for," he added. (Davy was briefly imprisoned for fraud in the early 2000s but was confirmed by a TeliaSonera insider to have worked for Ucell in 2008.)

Other documents make direct reference to Karimova's close associate and the woman at the heart of the TeliaSonera investigation, Gayane Avakyan. Avakyan, still in her 20s, made headlines last year as the head of Takilant, the Gibraltar-based shell company that orchestrated TeliaSonera's entry into the Uzbek market in return for the $230 million payment now under investigation.

Avakyan is one of the four Uzbek suspects named in the European money-laundering cases. Hundreds of millions of dollars in Takilant assets and other holdings have been frozen in bank accounts in both Sweden and Switzerland.

One of the documents procured by "Mission: Investigation" -- dated August 8, 2012 -- notes that Avakyan is in the process of reregistering several Swiss bank accounts and queries whether any funds should be moved to other "structures" in the meantime. The handwritten notes that RFE/RL believes come from Karimova say "not to touch" the bank where the accounts are but complain that the three-week registration period is "unrealistically long," adding, "At such a speed we'll lose everything!"

'Zero Tolerance For Corruption

Karimova, who rarely speaks to the press, has not responded to multiple interview requests from either SVT or RFE/RL.

But in a May 20 interview with "Mission: Investigation," TeliaSonera again denied that it had held any business negotiations with Karimova.

Acting CEO Per-Arne Blomquist, who served as the company's chief financial officer for five years before assuming Nyberg's vacated post, acknowledged that TeliaSonera was involved in sponsoring Fund Forum initiatives. But he dismissed any suggestion of an unseemly link to Karimova, saying that in countries such as Uzbekistan "there is often a link between leading decision-makers and these kinds of organizations."

Blomquist went on to say that TeliaSonera's business dealings in Uzbekistan were limited to its partners at Takilant. He acknowledged that Takilant had approached his company in the summer of 2012 regarding a variety of "consulting services," but says TeliaSonera ultimately rejected most of the proposals, including the $15 million protection package.

"TeliaSonera as a company is not involved with anything that I would call bribery culture, and that includes Uzbekistan," Blomquist said. "We have zero tolerance for corruption, and if we discover anything to do with this issue, we deal with it."

Daisy Sindelar

This forum has been closed.
Comment Sorting
Comments
     
by: Via RFE/RL web team from: Prague
May 28, 2013 17:10
Dear Mr Allnutt [Luke Allnutt, editor in chief of RFE/RL's English-language website]

We are media advisers to TeliaSonera.

We refer to RFE/RL’s publication of Swedish Television’s interview with John Davy, former CFO of Ucell, TeliaSonera’s subsidiary in Uzbekistan at http://www.rferl.org/media/video/24995052.html

We would like to point out that viewers of this interview are not given information about Mr Davy’s past that is important in this context.

Can we please ask you to issue a clarification based on the following:

John Davy was found guilty of fraud by a New Zealand court in 2002 and sentenced to eight months in jail. He was appointed Ucell’s Chief Financial Officer in May 2008 and his employment was terminated in February 2009 on account of incorrect and false financial reporting. Ucell was not aware of his criminal past before and during his employment. Ucell’s swift action to terminate Mr Davy’s employment is an example of the company’s zero tolerance of corrupt practices.

The original article about Swedish Television’s latest programme on TeliaSonera http://www.rferl.org/content/sweden-teliasonera-uzbekistan-karimova/24993135.html
contains a reference to Mr Davy’s conviction for fraud but does not refer to his dismissal from Ucell. Can we please suggest that the article is updated accordingly both in English and across other language services.

Could you please confirm receipt of this message.

Thank you for your assistance

Regards


John Lough
Vice President
BGR Gabara Limited
In Response

by: RFE/RL Central Newsroom from: Prague
May 29, 2013 18:48
[The following is a response by RFE/RL editors.]
Dear Mr. Lough:
We have amended the video to refer visitors to the accompanying story, which provides context about Mr. Davy's employment past.
In the early 2000s, John Davy served 13 weeks of an eight-month prison sentence in New Zealand after he was found guilty of using fake credentials on his CV. This conviction, as you note, took place years before TeliaSonera hired him in 2008.
Several high-placed sources within TeliaSonera have confirmed Davy's employment details in interviews with Sweden's SVT public television. The sources are unanimous in describing his 2009 dismissal as being the result of budget mismanagement -- not criminal activity, as your letter suggests. If TeliaSonera is able to provide evidence of any illegal conduct by Davy during his tenure as Ucell CFO, we would be happy to return to the story as needed. As it stands, the nature of his dismissal has no bearing on his characterization of Ucell business practices during his time in Tashkent.
In Response

by: Frank from: London
June 27, 2013 17:22
In bringing up private issues about Mr Davy's past, Teliasonera and its media advisors, appear to be trying to shut Mr Davy up. His allegations about Teliasonera's subsidiary, Ucell, paying 'donations' to 'charities' belonging to Gulnara Karimova have a ring of truth about them that is partly corroborated by similar behaviour described in the Wikileaks telegrams from the U.S. Embassy in Tashkent in relation to interference with Skytel's base stations by the Uzbek authorities to extort money in, coincidentally, the same manner Mr Davy describes.

In bringing up Mr Davy's past in this manner, Teliasonera only discredit themselves. Mr Blomquist's denials of knowingly bribing Gulnara Karimova do not sit well with his knowledgeable accounting background and his understanding that Gulnara's wealth could not possibly be derived from her 'legitimate' businesses combined with the fact he knew payments were made to various 'charities' run by her. Business dummies do not get to be chief executives of companies like Teliasonera. Mr Blomquist is no busineess dummy. Sales of unheard of perfume brands, of never widely displayed fashion clothes and jewellery and of never-heard-of pop music do not make one a billionaire as Mr Blomquist knows perfectly well. The money can only have come from corrupt payments, fraud, embezzlement, theft and manipulation of the business environment in ways that are illegal in most countries as he well knows. That there was a disconnection between his business accounting knowledge and the source of Ms Karimova's wealth is hard to believe. Just my view.

Teliasonera's hiring of Mannheimer Swartling to come to the conclusion that corruption could not be ruled out in the case of the $330m payment to Gulnara's employee, Ms Avakian, just makes me laugh. Couldn't Teliasonera set Mannheimer Swartling a more demanding task like explain why it was on this one occasion NOT a corrupt payment? The Board of Teliasonera are beginning to make fools of themselves, in my view. It is surely Teliasonera who is being economical with the truth.

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