Global Telecommunications Company And Its Subsidiary To Pay More Than $965 Million In Penalties In Massive Bribery Scheme Involving Uzbek Official
Third Largest-Ever Global FCPA Resolution
Joon H. Kim, the Acting United States Attorney for the Southern District of New York (“SDNY”), Kenneth A. Blanco, the Acting Assistant Attorney General for the Criminal Division of the Department of Justice (“DOJ”), Don Fort, Chief of the Criminal Investigation Division, Internal Revenue Service (“IRS-CI”), and Patrick J. Lechleitner, Special Agent in Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”) Washington, D.C., Field Office, announced today the filing of criminal charges against Telia Company AB (“Telia”), a multinational telecommunications company headquartered in Sweden, whose securities traded publicly in New York from 2002 until 2007, and its Uzbek subsidiary, Coscom LLC (“Coscom”), for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) by paying more than $331 million in bribes to a government official in Uzbekistan.
Mr. Kim also announced that in connection with the filed charges, Coscom pled guilty today before United States District Judge George B. Daniels, and SDNY and DOJ entered into a deferred prosecution agreement (“DPA”) with Telia. Pursuant to the DPA, Telia admitted to participating in the charged conspiracy. Telia will pay a total criminal penalty of $274,603,972 to the United States, which includes a $500,000 criminal fine and $40 million in criminal forfeiture that Telia agreed to pay on behalf of Coscom. Telia also agreed to implement rigorous internal controls and cooperate fully with the Government’s ongoing investigation, including its investigation of individuals.
In related proceedings, Telia reached a settlement with the U.S. Securities and Exchange Commission (“SEC”) and the Public Prosecution Service of the Netherlands (“PPS”). Under the terms of its civil resolution with the SEC, Telia agreed to pay $457,169,977 in disgorgement of profits and prejudgment interest. Finally, Telia agreed to pay the PPS a criminal penalty of $274 million, which, together with the criminal penalty paid to the United States, yieldstotal criminal penalties of $548,603,972. 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.
Acting U.S. Attorney Joon H. Kim said: “Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars. Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official. Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City. 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. Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.”
Acting Assistant Attorney General Kenneth A. Blanco said: “This resolution underscores the Department’s continued and unwavering commitment to robust FCPA and white-collar criminal enforcement. It also demonstrates the Department’s cooperative posture with its foreign counterparts to stamp out international corruption and to reach fair, appropriate and coordinated resolutions. Foreign and domestic companies that pay bribes put honest companies at a disadvantage and distort the free and fair market and the rule of law. Today’s resolution reflects the significant efforts of law enforcement, the Criminal Division and the U.S. Attorney’s Office for the Southern District of New York to bring such companies to justice, and to maintain a competitive and level playing field for companies to do business, create jobs and thrive.”
IRS-CI Chief Don Fort said: “Today marks the second resolution of proceedings against corporate entities who have engaged in a global bribery scheme of government officials. It also further demonstrates the dedication we have to identifying illegal financial transactions being used for bribery in the international community. It is important that the global economy remain on a fair playing field and IRS-CI will remain committed in our efforts to dismantle these kinds of corrupt financial schemes.”
HSI Special Agent in Charge Patrick J. Lechleitner said: “Today’s resolution marks a win against a foreign corruption scheme where millions of dollars in bribery funds were paid to Uzbekistan officials and laundered through the U.S. financial system. HSI, working hand in hand with our partners at IRS Criminal Investigation, leveled the playing field for publicly traded companies by exposing these corrupt practices and helped the U.S. government collect nearly $275 million in criminal penalties.”
According to the allegations contained in the criminal Informations, which was filed today in Manhattan federal court, the statement of facts set forth in the DPA, and other publicly available information:
Between approximately 2007 and 2012, Telia and Coscom, through various executives, employees, and affiliated entities, paid more than $331 million in bribes to illegally obtain telecommunications business in Uzbekistan. The bribes were paid to an Uzbek government official who was a close relative of a high-ranking government official and who exercised influence over Uzbek telecommunications industry regulators. 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. The bribes were paid on multiple occasions over a period of approximately five years so that Telia could enter the Uzbek market and Coscom could gain valuable telecom assets and continue operating in Uzbekistan.
Under the direction and control of the Uzbek government official, more than $331 million in bribery proceeds were laundered through accounts held in various countries around the world. The illicit funds were transmitted through financial institutions in the Southern District of New York before they were deposited into accounts in those countries.
This resolution, reached in coordination with the SEC and authorities in the Netherlands, marks the second such resolution by a major international telecommunciations provider for bribery in Uzbekistan. On February 18, 2016, Amsterdam-based VimpelCom Limited and its Uzbek subsidiary, Unitel LLC, also entered into resolutions with the United States and admitted to a conspiracy to make more than $114 million in bribery payments to the same Uzbek government official between 2006 and 2012. The investigation has thus far yielded a combined total of more than $1.76 billion in global fines and disgorgement, including more than $500 million in criminal penalties to the United States. In related actions, the United States has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg, and Ireland, which constitute bribe payments made by VimpelCom, Telia, and a third telecommunications company to the Uzbek official, or funds involved in the laundering of those corrupt payments.
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Coscom was charged with, and pled guilty to, one count of conspiring to violate the anti-bribery provisions of the FCPA. Telia was charged in a one-count Information with conspiracy to violate the anti-bribery provisions of the FCPA.
Mr. Kim thanked the Fraud Section of the DOJ’s Criminal Division for their collaboration, and praised the efforts of IRS-CI, the IRS Global Illicit Financial Team, and HSI in the investigation. He also thanked the SEC’s Division of Enforcement for its significant assistance and cooperation in the investigation. Mr. Kim also thanked law enforcement colleagues within the PPS, the Swedish Prosecution Authority, and the Office of the Attorney General in Switzerland, as well as law enforcement colleagues in Austria, Belgium, Cyprus, France, Ireland, the Isle of Man, Latvia, Luxembourg, Norway, Switzerland, the Isle of Man, and the United Kingdom. Mr. Kim also thanked the Department of Justice’s Office of International Affairs for its significant assistance in this matter. The SEC referred the matter to the DOJ and also provided extensive cooperation and assistance.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the FCPA Unit of the Fraud Section of DOJ’s Criminal Division. Assistant U.S. Attorney Edward A. Imperatore, Senior Litigation Counsel Nicola Mrazek, and Trial Attorney Ephraim Wernick are in charge of the prosecution. MLARS Trial Attorney Michael Khoo is prosecuting the forfeiture case with substantial assistance from the Fraud Section and former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington.