Accessibility links

Breaking News

VimpelCom To Set Aside Nearly $1 Billion Amid Uzbek-Related Corruption Probes

VimpelCom, the Dutch-based telecom that is majority-owned by some of Russia's wealthiest businessmen, says it will set aside nearly $1 billion in reserves to deal with a spiraling multinational corruption investigation involving its investments in Uzbekistan.

In a filing on November 3 with the U.S. Securities and Exchange Commission, the company noted the previously disclosed investigations by the commission, along with the U.S. Justice Department and the Dutch Public Prosecution Service, saying it would put $900 million toward potential liabilities.

The probes, the company said, related to its business in Uzbekistan and prior dealings with Takilant Ltd., a Gibraltar-registered shell company whose head was a confidante to the daughter of Uzbek President Islam Karimov.

"The discussions with the authorities are ongoing and, until concluded, there can be no certainty as to the final cost to the company of any such resolution or the nature, likelihood, or timing of a definitive resolution," VimpelCom said.

The announcement was the latest development in the investigation of European and Russian telecom companies and how they gained access to the lucrative Uzbek mobile-phone market.

VimpelCom's majority owner is a company controlled by Russian billionaire Mikhail Fridman. Its largest minority owner is the Norwegian telecom company Telenor, whose board chairman was forced out last week by the Norwegian government in connection with the Uzbek inquiries. The government owns 54 percent of Telenor.

Telenor announced last month it was selling its 33 percent stake in VimpelCom.

Last year, VimpelCom and two other telecom companies -- MTS and TeliaSonera -- announced they were also under investigation by U.S. and other authorities for possible violations of the Foreign Corrupt Practices Act and other laws.

MTS is Russia's largest mobile provider, while VimpelCom's Beeline brand is among Russia's top three. TeliaSonera is a Swedish-Finnish communications giant.

In 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.

Allegations that TeliaSonera paid bribes to Takilant sparked the resignation of four TeliaSonera senior executives last year and a criminal investigation by Swedish prosecutors that may return indictments early next year.

In September, TeliaSonera also announced it would try to sell all its holdings in Uzbekistan and other Central Asian markets, citing what its CEO called "unresolved issues in the Eurasia region."

The nominal head of Takilant has been identified in court documents and press reports as Gayane Avakyan, who was a close business associate and confidante of Gulnara Karimova, the daughter of President Karimov.

She is now reportedly under house arrest in Uzbekistan.

With reporting by AFP
  • 16x9 Image

    Mike Eckel

    Mike Eckel is a senior correspondent reporting on political and economic developments in Russia, Ukraine, and around the former Soviet Union, as well as news involving cybercrime and espionage. He's reported on the ground on Russia's invasion of Ukraine, the wars in Chechnya and Georgia, and the 2004 Beslan hostage crisis, as well as the annexation of Crimea in 2014.