The Securities and Exchange Commission and the US Department of Justice have announced resolutions of FCPA allegations with Mobile TeleSystems PJSC (MTS), a Russian telecommunications provider. The SEC’s factual findings and the DOJ criminal information describe a series of transactions in Uzbekistan between 2004 and 2012 involving the acquisition and operation of MTS former subsidiary in Uzbekistan, Uzdunrobita LLC, along with the use of two shell companies, to transfer bribes to two former officials in the Uzbek government. One of the officials, Gulnara Karimova, is the daughter of the former president of Uzbekistan. She was indicted today on charges of conspiracy to commit money laundering. According to the government, MTS paid hundreds of millions of dollars in bribes, and profited by more than $2.4 billion from the corrupt conduct in Uzbekistan.
Pursuant to the resolution with the DOJ, the company has entered into a deferred prosecution agreement, whereby the company will pay a criminal fine and forfeiture of $850 million and must retain a compliance monitor for three years. According to the DPA, MTS did not receive credit for voluntary disclosure or for cooperation and remediation pursuant to the FCPA Corporate Enforcement Policy. The DOJ did, however, note the company’s efforts, since the time of the alleged violations, to enhance its compliance program and internal accounting controls.
In addition, MTS’s wholly owned subsidiary, Kolorit DIzayn Ink LLC, pleaded guilty to a criminal information charging it with one count of conspiracy to violate the anti-bribery, books and records, and internal controls provisions of the FCPA. According to the criminal information, MTS acquired Kolorit, an advertising agency, at an inflated price in order to benefit a foreign official.
The settlement with the SEC resolves allegations that the company violated the anti-bribery, books and records and internal accounting controls provisions of the FCPA. Without admitting or denying the SEC’s findings, MTS has agreed to cease and desist from further violations, and to pay a civil monetary penalty of $100 million. The DOJ will credit the company with payment of $100 million to the SEC pursuant to that agency’s cease-and-desist order.
MTS is the third major telecommunications company to enter into agreements with US authorities to resolve foreign bribery allegations involving Karimova in Uzbekistan. VimpelCom Limited and Telia Company AB resolved FCPA charges in 2016 and 2017, respectively.