Tuesday, May 31, 2016


Uzbekistan

VimpelCom Negotiating With U.S. Regulators To Settle Uzbek-Related Allegations

Most of the allegations have centered on a company linked to Gulnara Karimova (pictured), the daughter of Uzbek President Islam Karimov. (file photo)
Most of the allegations have centered on a company linked to Gulnara Karimova (pictured), the daughter of Uzbek President Islam Karimov. (file photo)
By Mike Eckel

WASHINGTON -- VimpelCom, the Dutch-headquartered telecom that operates one of Russia's largest mobile communications providers, said it was in negotiations with U.S. authorities to settle corruption allegations related to its investments in Uzbekistan.
 
The company said in a corporate filing on February 17 that under the terms of the potential settlement with U.S. and Dutch authorities, it would "acknowledge certain violations of the U.S. Foreign Corrupt Practices Act" and Dutch laws, and pay fines and financial penalties.
 
The extent of the penalties was not clear, though the company, whose shares trade on the NASDAQ stock exchange, said last year it was putting aside nearly $1 billion to deal with potential criminal liabilities.
 
Both the Justice Department and the Securities and Exchange Commission declined to comment.
 
The news was the latest development regarding a handful of telecoms that have been caught up in multinational investigations into bribery and other illegal payments tied to investments in the Central Asian nation.
 
Most of the allegations have centered on a company linked to Gulnara Karimova, the daughter of Uzbek President Islam Karimov. 
 
That company has been identified in court papers and corporate filings as Takilant Ltd. The Gibraltar-registered company's nominal head was a close business associate and confidante of Karimova, who is now reportedly under house arrest in Uzbekistan.

The corruption allegations date back several years, though it wasn't until early 2014 that VimpelCom and two other companies -- MTS and Scandinavian giant TeliaSonera -- announced they were under investigation for possible violations of the Foreign Corrupt Practices Act.
 
U.S. authorities have used the 39-year-old statute aggressively to investigate corruption around the world, such as last year's probe of world soccer's governing body, FIFA.
 
MTS is Russia's largest mobile phone operator, controlled by Russian conglomerate Sistema, whose majority shareholder is billionaire Vladimir Yevtushenkov.

VimpelCom, through its Beeline subsidiary, is Russia's third largest operator. Headquartered in the Netherlands, the company is controlled, through a series of intermediary companies, by billionaire Mikhail Fridman.

Other Investigations

The United States and Dutch authorities aren't the only entities involved in investigating Uzbek-related corruption.

Norway has gotten involved by way of VimpelCom's minority shareholder, Telenor ASA. 

The Norwegian government holds 54 percent of Telenor, and questions of whether government-owned shares have been tainted by illegal payments have sparked political debates in Oslo.

Last year, Vimpelcom’s former chief executive officer was detained by Norwegian police. 

The government also forced the resignation of Telenor's chairman in October.

The other company facing potential U.S. penalties is TeliaSonera, a Swedish-Finnish communications giant. Swedish authorities have aggressively investigated bribery allegations after reports on Swedish television, and four senior executives later resigned.

A criminal investigation by Swedish prosecutors may return indictments in that case sometime this year.

Last March, the U.S. Justice Department asked Sweden to seize $30 million in funds held in the Scandinavian bank Nordea in connection with the probe.

"The U.S. investigation has revealed that VimpelCom, MTS, and TeliaSonera paid bribes to Uzbek officials to obtain mobile telecommunications business in Uzbekistan and that funds involved in the scheme were laundered through shell companies and financial accounts around the world, including accounts held in Sweden, to conceal the true nature of these illegal payments," said the Justice Department request, which was dated March 20.

Gulnara Karimova spent years in the limelight as an aspiring pop star, fashion designer, and socialite. Her prominence sparked speculation that she might one day succeed her father, who is 78.

But she appeared to fall out of favor in 2014 as the multinational corruption investigation gathered steam, and photographs published last year purported to show her under house arrest in Uzbekistan.

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