Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

United States v. Telia Company AB

 
:
Telia Company AB
:
DOJ Criminal
:
September 21, 2017
:
United States v. Telia Company AB
:
United States v. Telia Company AB, No. 1:17-cr-00581-GBD (S.D.N.Y. 2017)
:
Telecommunications-Other/Multi
:
Uzbekistan
:
2007 - 2010
:
Unnamed government official in Uzbekistan
:
Telia Company AB is a multinational telecommunications company headquartered and incorporated in Sweden. It provides telecomm services throughout Europe and Asia. Prior to September 5, 2007, Telia was registered as an issuer, and traded securities under Section 12(b) of the Securities and Exchange Act of 1934 on the NASDAQ. Telia operates through a wide network of subsidiaries and joint ventures. Around 2007, Telia began operating its mobile telecommunications services in Uzbekistan through its indirect subsidiary Coscom LLC. Coscom LLC is a majority-owned subsidiary of Telia Company AB.

According to the DOJ, throughout the relevant period Telia paid approximately $330 million in bribes to an unnamed Uzbek foreign official in order to enter and operate in Uzbekistan.
In 2006, Telia began to explore expansion opportunities in the Eurasia market, and identified Uzbekistan as its target. According to the DOJ, Telia understood that to expand its operations in Uzbekistan, it would have to make corrupt payments to a foreign official who could cause government regulators to approve the expansion. Telia allegedly developed and maintained a relationship with an unnamed Uzbek foreign official who could exert influence over those government regulators. The DOJ alleges that Telia accomplished its expansion through a series of agreements with the Uzbek foreign official, or people known to be acting on behalf of the foreign official.

First, in July 2007, Telia and the foreign official entered into a cooperation agreement that broadly outlined the terms of the bribery scheme. The terms of the cooperation agreement included that the foreign official would receive a $30 million payment, as well as shares in a subsidiary company (which owned 99.97% of Coscom), with an option to sell the shares back to Telia at a substantial profit. The cooperation agreement was later formalized in a Shareholders Agreement which carried out the initial $30 million bribery scheme. Telia first made an $80 million payment to a shell company that was beneficially owned by the foreign official. Contemporaneously, a Telia subsidiary entered into a Shareholder Agreement with the shell company. Pursuant to that agreement, the shell company paid Telia $50 million for a 26% ownership interest in Coscom, and the shell company was granted a right to sell the shares back to Telia at a profit. The net effect of these transactions was a $30 million bribe payment to the foreign official, who was also given an option to sell the 26% interest back at a profit.

In another scheme to benefit the foreign official, Telia allegedly agreed to assume a $15 million third party debt owed by a company owned by the foreign official. Telia forgave the debt owed by the Swiss company in order to benefit the foreign official. In return, the foreign official allowed Coscom to obtain 4G frequencies throughout Uzbekistan.

In addition to the schemes described above, Telia paid a series of other bribes to the foreign official in order to obtain licenses, frequencies, and networks, or simply as a means to continue operating in Uzbekistan. These payments included a $2 million payment made by Coscom management; a $9.2 million bribe to the shell company to facilitate Coscom’s acquisition of a number series and network codes, and to continue its business operations; and finally a $220 million payment to the shell company after the shell company exercised its option under the Shareholder Agreement.

On September 21, 2017, the DOJ entered into a deferred prosecution agreement with Telia for violations of the FCPA’s anti-bribery provisions. According to the deferred prosecution agreement, Telia agreed to pay a monetary penalty in the amount of $548,603,972 and undertake voluntary remedial measures. Coscom LLC entered signed a plea agreement with the DOJ. It pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA. Coscom agreed to pay a $500,000 criminal fine, and $40,000,000 in criminal forfeiture. In addition, Telia entered into a separate settlement with the SEC wherein it agreed to pay $457,000,000 in disgorgement.
:
Anti-bribery (Issuer), Conspiracy - Anti-Bribery
:
Deferred-prosecution Agreement
:
$965,603,972 (Global Resolution with U.S., Dutch, and Swedish authorities); $691,603972 (U.S. Recovery).
:
965,603,971
:
0
:
Issuer
:
Foreign
:
Sweden
:
License/Permit, Other Business Advantage
:
Not stated.
:
Shell entity
:
330,000,000
:
Uzbekistan
:
No
:
No
:
Netherlands, Sweden