Russian telecom giant to pay huge US fine to settle corruption case in Uzbekistan

Russia’s largest mobile operator MTS has agreed to pay $850 million in fines to resolve US federal charges over alleged bribing of a government official in Uzbekistan to gain access to the country’s telecommunications market.

MTS, or Mobile TeleSystems, which has a secondary listing on the New York Stock Exchange, said it managed to reach a voluntary settlement with the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ).

“The agreement puts an end to the investigation around the former MTS subsidiary in Uzbekistan carried out from 2004 to 2012,” the company said in a statement. “The penalty will be paid from the funds that were reserved by MTS in the third quarter of 2018.”

The SEC confirmed the information, saying that apart from the criminal and civil fines, the company also agreed to an independent compliance monitor for at least three years. According to the agency, MTS carried out illicit payments of at least $420 million to unnamed front companies controlled by the Uzbek official.

“The company engaged in egregious misconduct for nearly a decade, secretly funneling hundreds of millions of dollars to a corrupt official,” Charles Cain, chief of the SEC unit that investigates violations of the Foreign Corrupt Practices Act unit, said in a statement.

The agreement clinched between the US authorities and MTS, which stopped its operations in Uzbekistan two years ago, was in the company’s best interests, according to CEO Alexey Kornya.

“The resolution and settlement allow MTS to focus fully on the implementation of MTS’ business strategy to be a first-in-class digital telecom company,” Kornya said in a statement.

In late 2016, VimpelCom, the second-largest telecom operator in Russia, agreed to pay $795 million to reach a settlement with the US Department of Justice and Dutch regulators over the same case. VimpelCom and its Uzbek subsidiary Unitel pleaded guilty to bribing a senior official to win business in the country.

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