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$965 Million Penalty for Foreign Bribery One of Largest Ever

Tuesday, September 26, 2017
Sandler, Travis & Rosenberg Trade Report

An international telecommunications company and its Uzbek subsidiary have agreed to pay a combined criminal and civil penalty of more than $965 million to resolve charges arising from a scheme to pay bribes in Uzbekistan. The Department of Justice states that this global settlement is one of the largest criminal corporate bribery and corruption resolutions ever.

According to a DOJ press release, the two companies paid approximately $331 million in bribes to an Uzbek government official who had influence over the governmental body that regulated the telecom industry. The companies structured and concealed the bribes through various payments, including to a shell company that certain company management knew was beneficially owned by the foreign official. The bribes were paid so the parent company could enter the Uzbek market and its subsidiary could gain valuable telecom assets and continue operating in Uzbekistan. 

DOJ states that under a deferred prosecution agreement in connection with charges of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act the parent company agreed to pay a total criminal penalty of $274.6 million to the U.S., including a $500,000 criminal fine and $40 million in criminal forfeiture on behalf of its subsidiary. The parent company also agreed to implement rigorous internal controls and cooperate fully with the DOJ’s ongoing investigation, including its investigation of individuals.

The parent company also agreed to pay $457.2 million in disgorgement of profits and prejudgment interest to the Securities and Exchange Commission and a criminal penalty of $274 million to the Public Prosecution Service of the Netherlands. Portions of these amounts could be offset by payments made in overseas settlements or proceedings.

DOJ notes that its criminal penalty reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range for the companies’ extensive remedial measures and cooperation with the DOJ’s investigation.  However, the companies did not receive more significant mitigation credit, either in the penalty or the form of resolution, because they did not voluntarily self-disclose their misconduct.

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