MTS agreed a hefty settlement fee to close the book on a US corruption investigation which found the operator bribed an official in Uzbekistan to secure its entry into the market.
In a statement, the US Securities and Exchange Commission (SEC) said the company has agreed to pay a criminal fine and forfeiture totalling $850 million to the US Department of Justice (DoJ). The figure includes a $100 million payment to resolve SEC charges that it violated the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan.
The SEC said MTS bribed an Uzbek official who was related to the country’s former president, with the operator making illicit payments of $420 million “for the purpose of obtaining and retaining business”.
Those payments enabled MTS to enter the country’s telecoms market and operate there for eight years, said the SEC, during which it “generated $2.4 billion in revenue”.
MTS sold its majority stake in Uzbek operator Universal Mobile Systems (UMS) in 2016 after coming under fire from the DoJ and SEC. The bribery allegations came to light as part of broader investigation that had been running since 2004.
“The company engaged in egregious misconduct for nearly a decade, secretly funnelling hundreds of millions of dollars to a corrupt official,” Charles Cain, chief of the SEC enforcement division’s FCPA unit said. “Building business on a foundation of bribery leaves the business and American investor interests at the mercy of corrupt officials.”
MTS will also be put under an independent compliance monitor for at least three years as part of the SEC agreement.
The company said in its Q3 2018 results it had set aside $850 million to cover any possible fines from the case.Subscribe to our daily newsletter Back