• Global Anti-Corruption Practice

Case Detail

In re United States v. Mobile TeleSystems PJSC & KOLORIT DIZAYAN INK LLC (S.D.N.Y. 2019)
United States of America v. Gulnara Karimova & Bekhzod Akhmedov (S.D.N.Y. 2019)


Case Details
  • Case Name
  • In re United States v. Mobile TeleSystems PJSC & KOLORIT DIZAYAN INK LLC (S.D.N.Y. 2019)
    United States of America v. Gulnara Karimova & Bekhzod Akhmedov (S.D.N.Y. 2019)
  • Date Filed
  • 02/22/2019
  • Enforcement Agency
  • DOJ
  • Foreign Official
  • Gulnara Karimova, an Uzbek government official. 
  • Date of Conduct
  • 2001 to 2012
  • Nature of Business
  • Mobile TeleSystems PJSC (“MTS”) is a multinational telecommunication services provider headquartered in Moscow, Russia.  

    Gulnara Karimova was the daughter of the president of Uzbekistan during the period at issue and a government official.  Bekhzod Akhmedov was an executive in Uzdunrobita, an Uzbekistan telecommunications company that worked with MTS in Uzbekistan as its “indirect subsidiary” after MTS acquired majority shares in the company.

    Kolorit Dizayn Ink LLC (“Kolorit”) was an advertising agency in Uzbekistan owned by Karimova and was later acquired by MTS as well.

  • Influence to be Obtained
  • According to the DOJ, from 2004 to at least 2012, MTS conspired with various Uzbekistan-based shell companies (which later became MTS subsidiaries) to benefit Gulnara Karimova, a Uzbekistan government official who had influence over a Uzbek government agency responsible for regulating the Uzbekistan telecommunications market.  MTS obtained 74% of Uzdunrobita—paying a shell company affiliated with Karimova for its 33% ownership about $100 million, over six times more than it paid to acquire the remaining 41% stake, to send payments to Karimova to enter the telecommunications market.  MTS continued to pay bribes, facilitated by Akhmedov, to Karimova through false contracts with shell companies she had a beneficial interest in.

    The DOJ alleges MTS, with Akhmedov’s assistance, acquired Kolorit—an advertisement company that was also beneficially owned and controlled by Karimova.  MTS’ own Department of Strategic planning “recommended rejection” of the acquisition—as it was not related to their telecommunications work—but ultimately MTS management approved the $39.6 million purchase.  The acquisition was a scheme to funnel bribes to Karimova.  In total, MTS allegedly made over $420 million in payments for the benefit of Karimova to enter and operate in Uzbekistan’s telecommunications industry and falsified books and records to conceal the bribery scheme.

  • Enforcement
  • On February 22, 2019, the DOJ announced that it entered a deferred prosecution agreement with MTS.  Under the agreement, MTS agreed to pay $850,000,000 in criminal penalties as a result of alleged violations of the FCPA’s anti-bribery and books and records provisions. 

    On February 22, 2019, Kolorit entered a guilty plea for violating the FCPA’s anti-bribery and books and records provisions.  The DOJ held that Kolorit was to forfeit property that came out of the bribes and violations of the FCPA—Kolorit agreed to pay a $500,000 criminal fine and $40,000,000 in criminal forfeiture (both to be deducted from MTS’ total penalty).

    The DOJ unsealed charges against Karimova and Akhmedov on March 7, 2019 and the case is still ongoing.

    In a related matter, the SEC settled its enforcement action against MTS on March 7, 2019 and was required to implement an independent compliance monitor over a three-year period and to pay a $100 million civil penalty to be credited against the criminal penalty.

  • Amount of the Value
  • Over $420 million.
  • Amount of Business Related to Payment
  • Not stated.
  • Intermediary
  • Shell company.
  • Total Sanction
  • $ 850,000,000
  • Compliance Monitor
  • Yes
  • Reporting Requirements
  • Yes (3 Years)
  • Case is Pending?
  • No
  • Total Combined Monetary Sanction
  • $ 850,000,000
Defendants

Mobile TeleSystems PJSC

  • Citation
  • In re United States v. Mobile TeleSystems PJSC et al., 19-cr-00167 (S.D.N.Y. Feb. 22, 2019); United States of America v. Gulnara Karimova, et al., 19-cr-00165 (S.D.N.Y. Mar. 7, 2019).
  • Date Filed
  • 02/22/2019
  • Filed Under Seal
  • No
  • Date Case Was Unsealed
  • 02/22/2019
  • FCPA Statutory Provision
    • Anti-Bribery
    • Books-and-Records
    • Internal Controls
  • Other Statutory Provision
  • None.
  • Disposition
  • Deferred Prosecution Agreement, Deferred Prosecution Agreement
  • Defendant Jurisdictional Basis
  • Issuer
  • Defendant's Citizenship
  • Russia

Kolorit Dizayan Ink LLC

  • Citation
  • In re United States v. Mobile TeleSystems PJSC et al., 19-cr-00167 (S.D.N.Y. Feb. 22, 2019); United States of America v. Gulnara Karimova, et al., 19-cr-00165 (S.D.N.Y. Mar. 7, 2019).
  • Date Filed
  • 02/22/2019
  • Filed Under Seal
  • No
  • Date Case Was Unsealed
  • 02/22/2019
  • FCPA Statutory Provision
    • Anti-Bribery
    • Books-and-Records
  • Other Statutory Provision
  • None.
  • Disposition
  • Guilty Plea, Guilty Plea
  • Defendant Jurisdictional Basis
  • Agent of Issuer
  • Defendant's Citizenship
  • Uzbekistan

Gulnara Karimova

  • Citation
  • In re United States v. Mobile TeleSystems PJSC et al., 19-cr-00167 (S.D.N.Y. Feb. 22, 2019); United States of America v. Gulnara Karimova, et al., 19-cr-00165 (S.D.N.Y. Mar. 7, 2019).
  • Date Filed
  • 02/22/2019
  • Filed Under Seal
  • No
  • Date Case Was Unsealed
  • 02/22/2019
  • FCPA Statutory Provision
  • Other Statutory Provision
  • Conspiracy to commit money laundering.
  • Disposition
  • Pending, Pending
  • Defendant Jurisdictional Basis
  • Domestic Concern
  • Defendant's Citizenship
  • Uzbekistan

Bekhzod Akhmedov

  • Citation
  • In re United States v. Mobile TeleSystems PJSC et al., 19-cr-00167 (S.D.N.Y. Feb. 22, 2019); United States of America v. Gulnara Karimova, et al., 19-cr-00165 (S.D.N.Y. Mar. 7, 2019).
  • Date Filed
  • 02/22/2019
  • Filed Under Seal
  • No
  • Date Case Was Unsealed
  • 02/22/2019
  • FCPA Statutory Provision
  • Other Statutory Provision
  • Conspiracy to commit money laundering. 
  • Disposition
  • Pending, Pending
  • Defendant Jurisdictional Basis
  • Agent of Issuer
  • Defendant's Citizenship
  • Uzbekistan
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