Russia’s biggest mobile phone company will pay $850 million in penalties to the DOJ and SEC to resolve FCPA violations, the SEC and the company said Wednesday.
MTS agreed to the SEC’s order finding that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA and will pay a $100 million penalty to the SEC.
MTS and a subsidiary also entered into a deferred prosecution agreement with the DOJ. The subsidiary pleaded guilty in federal court.
The DOJ hadn’t released the criminal charging or settlement documents as of publication time.
According to the SEC release, MTS agreed to pay a criminal fine and forfeiture totaling $850 million. The DOJ will credit the $100 million SEC penalty.
The SEC settled the case through an internal administrative order (pdf) and didn’t go to court.
According to the SEC, MTS paid $420 million in bribes to an Uzbek official related to the former President of Uzbekistan to secure business.
The bribes allowed MTS to enter the telecommunications market in Uzbekistan and operate there for eight years, during which it generated more than $2.4 billion in revenues, the SEC said.
MTS said in a statement Wednesday that the SEC and DOJ agreements “mark the closure of the investigations into the Company’s acquisition and operation of its former subsidiary in Uzbekistan during the period from 2004 to mid-2012.”
The DOJ also “recognized MTS’ ongoing enhancements to its compliance program and internal accounting controls,” the company said.
MTS’ settlement with the SEC includes the requirement to retain a monitor for at least 36 months.
The company — formally known as Mobile TeleSystems Public Joint Stock Company — first disclosed the investigation in an SEC filing in March 2014, according to data provided by FCPA Tracker.
MTS shut down its operations in Uzbekistan in 2016.
MTS has “systematically and pro-actively developed its current anti-corruption compliance framework in line with international best practices within a dedicated compliance division since 2012,” the company said.
This is the third case brought by the SEC and the DOJ involving public companies operating in the Uzbek telecommunications market. Altogether the three actions have led to $2.6 billion recovered by U.S. and foreign authorities.
In 2016, MTS said the DOJ and SEC had asked for information about corrupt payments to the “unnamed Uzbek official” referred to in the civil forfeiture actions.
Last year, Sweden’s Telia paid $965 million in total penalties to resolve FCPA offenses in Uzbekistan. The penalties were paid to enforcement agencies in the United States, Sweden, and the Netherlands.
In 2016, Amsterdam-based VimpelCom reached a $795 million FCPA resolution with the DOJ and SEC. Some of the penalties went to Dutch enforcement authorities.
Telia and VimpelCom admitted bribing Gulnara Karimova, daughter of the late Uzbek president Islam Karimov. She’s been under house arrest in Uzbekistan since 2014.
Starting in 2015, the DOJ filed civil forfeiture complaints against assets linked to Karimova worth more than $850 million, including bank accounts in Switzerland, Belgium, Luxembourg, and Ireland.
The FCPA Blog | March 6, 2019