Friday, June 18, 2021

Daughter of Late Uzbekistan President Karimov, Telecom Executive Charged in Bribery Scheme


U.S. prosecutors charged a daughter of the late president of Uzbekistan and the former head of the Uzbek subsidiary of a Russian telecommunications company for their alleged roles in a $1 billion bribery and money-laundering scheme.

The charges, announced by the U.S. Justice Department on Thursday, come a day after the Securities and Exchange Commission revealed a related $850 million settlement with Mobile TeleSystems PJSC and an Uzbek subsidiary. The company violated the Foreign Corrupt Practices Act as well as U.S. securities laws, financial regulators said.

MTS, which is based in Moscow and trades on the New York Stock Exchange, entered into a deferred prosecution agreement with the Justice Department and pleaded guilty to charges it paid and concealed bribes that allowed one of its subsidiaries to operate in Uzbekistan.

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Gulnara Karimova, 46, the daughter of late Uzbekistan President Islam Karimov, was charged with one count of conspiracy to commit money laundering. She previously served as an official in the Uzbek government with influence over the telecommunications industry, according to prosecutors.

Prosecutors also charged Bekhzod Akhmedov, 44, with violating provisions of the Foreign Corrupt Practices Act and conspiracy to commit money laundering. Mr. Akhmedov, a citizen of Uzbekistan, served as the general director of an MTS subsidiary that operated in Uzbekistan.

The settlement marks the end of an investigation by U.S. authorities into alleged corruption in the Uzbekistan operations of three European telecom companies that lasted at least five years. It also underscores the extent to which U.S. authorities aggressively targeted foreign companies and individuals in their enforcement of anticorruption laws.

Two other companies—Amsterdam-based VimpelCom, now known as VEON Ltd., and Stockholm-based Telia Company AB—settled similar charges with U.S. authorities related to alleged bribery in Uzbek market in 2016 and 2017, respectively.

According to the indictment, filed in the Southern District of New York, Ms. Karimova and Mr. Akhmedov agreed that Mr. Akhmedov would solicit and facilitate bribe payments from telecommunications companies seeking to enter the Uzbek market. In exchange, prosecutors said, Ms. Karimova used her influence to help companies obtain and retain business opportunities in the sector in Uzbekistan.

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Mr. Akhmedov conspired with the telecom companies and others to pay Ms. Karimova more than $865 million in bribes, prosecutors allege, and he and Ms. Karimova conspired with others to launder and conceal those funds using U.S. bank accounts.

MTS paid approximately $420 million in bribes to Ms. Karimova between 2004 and 2012, funneling the illicit payments through shell companies, prosecutors said.

An attorney for Ms. Karimova declined to comment until he could read the full indictment. A lawyer for Mr. Akhmedov didn’t respond to a request for comment.

Prosecutors agreed to credit MTS for the $100 million fine it is paying to the SEC in a related settlement announced Wednesday.

“Obtaining a resolution of the Uzbek investigations was in the company’s best interests,” Alexey Kornya, the president and chief executive of MTS, said in a statement.

Under its agreement with U.S. authorities, MTS agreed to retain an independent compliance monitor for at least three years, the SEC said in the release. The company said it would work with the monitor to ensure its compliance program is implemented to prevent and detect anticorruption violations.

“MTS’s commitment to adhering to the highest standards of business ethics will strengthen and protect the company’s position as a leader in all our markets of operation,” Mr. Kornya said in the statement.

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In speech Thursday in Washington, D.C., Deputy Attorney General Rod Rosenstein discussed the importance of prosecuting individuals as part of large, white-collar criminal cases.

“Cases against corporate entities allow us to recover fraudulent proceeds, reimburse victims and deter future wrongdoing,” he said at a conference on FCPA enforcement. “But the deterrent impact on the individual people responsible for wrongdoing is sometimes attenuated in corporate prosecutions.”


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