A Russian telecommunications company and its Uzbek subsidiary have agreed to pay $850 million in penalties to resolve charges arising out of a scheme to bribe government officials in Uzbekistan for assistance in entering and maintaining business operations in that country.
A Department of Justice press release states that these two entities, through various managers and employees, paid approximately $420 million in bribes between 2004 and 2012 to an Uzbek official who had influence over the governmental body that regulated the telecom industry. The companies admittedly structured and concealed the bribes through payments to shell companies that management knew were beneficially owned by the Uzbek official. In addition, the bribes were disguised in the Russian company’s books as acquisition costs, option payments, purchases of regulatory assets, and charitable donations.
According to the DOJ, the companies did not voluntarily disclose the violations and their level of cooperation and remediation was lacking and not proactive. On the other hand, because the Uzbek government expropriated the companies’ telecom assets in Uzbekistan, they realized no pecuniary gain as a result of the misconduct.
Under a deferred prosecution agreement with the DOJ, the Uzbek subsidiary pleaded guilty to one charge of conspiracy to violate the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act. The penalty includes a $500,000 criminal fine and $40 million in criminal forfeiture that the Russian parent company agreed to pay on behalf of the subsidiary. The parent company also agreed to the imposition of an independent compliance monitor for three years, to implement rigorous internal controls, and to cooperate fully with the DOJ’s ongoing investigation. In a related settlement with the Securities and Exchange Commission, the company agreed to pay a $100 million civil penalty, which will be credited by the DOJ under the DPA.
The DOJ notes that this is the third resolution by a major international telecom provider for bribery in Uzbekistan resulting in a combined total of more than $2.6 billion in global fines and disgorgement, including over $1.3 billion in criminal penalties to the U.S. The DOJ has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg, and Ireland that constitute the bribes made in these cases or funds involved in the laundering them.
For more information on the FCPA, including implementing an effective compliance program, please contact Kristine Pirnia at (202) 730-4964.