Telia settles FCPA allegations

Sep 26, 2017
Telecoms company will pay almost $1 billion to resolve bribery claims

Sweden-based telecommunications operator Telia Company has agreed to pay more than $965 million in a global settlement with US, Swedish and Dutch authorities regarding allegations that it and a subsidiary violated an anti-corruption law.

According to the SEC, Telia entered the Uzbek telecommunications market by paying at least $330 million in bribes to a shell company – which was controlled by an unnamed Uzbek government official – under the guise of payments for lobbying and consulting services that never occurred.

The combined total payments by Telia and Coscom, its Uzbek subsidiary, to the US, Dutch and Swedish authorities will be $965,773,949. This includes a $275 million penalty to the US Department of Justice (DoJ) and $457 million in disgorgement to the SEC.

According to the DoJ, Telia entered into a deferred prosecution agreement in connection with its alleged conspiracy to violate the FCPA. In addition, the department says, Coscom pleaded guilty to a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. 

‘This resolution underscores the department’s continued and unwavering commitment to robust FCPA and white-collar criminal enforcement,’ acting Assistant Attorney General Kenneth Blanco says in a statement. ‘It also demonstrates the department’s co-operative posture with its foreign counterparts to stamp out international corruption and to reach fair, appropriate and co-ordinated resolutions.’

‘Corporate bribery is not just unfair and illegal, it [also] has terribly corrosive effects on business, government and society,’ Stephanie Avakian, co-director of the SEC’s enforcement division, says in a separate statement.

According to the SEC’s administrative filing, Telia from 2007 to at least 2010 paid bribes to an unnamed government official in Uzbekistan in order to obtain and retain business that generated more than $2.5 billion in revenues for the company. During the course of the alleged bribery scheme, Telia made at least $330 million in illicit payments to enable it to acquire a US-based telecommunications company with operations in Uzbekistan and enter that country’s telecommunications market, the SEC says.

Among other things, the agency alleges that Telia retained the services of and communicated with unnamed US-based consultants to facilitate the corrupt relationship with the Uzbek government official and the acquisition of Coscom.

In reaching a settlement with the company, the SEC considered remedial acts promptly undertaken by Telia, both before and during the commission’s investigation, including replacing all relevant members of its board and senior management and implementing a new comprehensive compliance program, as well as giving ‘thorough co-operation’ to its staff, agency officials write.

As part of its settlement with the SEC, Telia agrees to co-operate fully with the commission in any related investigation, litigation or other proceedings, including:

  • Producing any non-privileged documents and other information requested by SEC staff subject to any restrictions under the law of a foreign jurisdiction
  • Making best efforts to cause current or former officers, employees, agents and directors to be interviewed by SEC staff.

‘Today’s settlement brings an end to an unfortunate chapter in Telia Company’s history,’ Telia president and CEO Johan Dennelind says in a statement. ‘Since 2013 the new board and management have worked diligently and responsibly to understand what went wrong, to remedy what has been broken and to regain trust from all our stakeholders.

‘We have come a long way to establish a more sustainable company with a strong focus on governance and compliance but it is a never-ending journey as we aspire to embed this into our culture, making sure that all employees understand the importance of doing the right thing all the time. The resolution and related financial sanction that we announce today is a painful reminder of what happens if we don’t.’

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