WASHINGTON -- U.S. prosecutors say Swedish telecom giant Telia has agreed to pay nearly $1 billion in penalties to help settle a years-long corruption probe involving bribes paid in Uzbekistan.*
The settlement, detailed in court papers filed on September 21 at the U.S. District Court in Manhattan, was the latest chapter in a long-running saga that involves multiple international companies and the daughter of the late president of Uzbekistan, Islam Karimov.
The payments include nearly $550 million in criminal penalties -- with about half going to the United States and the remainder going to the Netherlands.
Telia has also agreed to settle a parallel civil case with the U.S. Securities and Exchange Commission, under which it will pay nearly $460 million in disgorgement of profits and interest.
Disgorgement is a remedy in securities cases aimed at discouraging future legal violations and depriving a party of ill-gotten gains.
According to the court filings by prosecutors from the U.S. Southern District of New York, Telia will enter a so-called deferred prosecution agreement under which one of its units, known as Coscom, will admit to violations under the Federal Corrupt Practices Act.
In a statement late on September 21, Telia confirmed it had reached a global settlement on the Uzbek corruption case.
On September 22, Telia said Swedish prosecutors have also decided to initiate legal proceedings against the firm for disgorgement.
Swedish prosecutors on September 22 charged three former Telia executives with corruption involving contracts in Uzbekistan.
U.S. prosecutors had charged that Telia, its Uzbek subsidiary, and a Telia executive had conspired to pay an Uzbek government official more than $330 million in bribes in exchange for help in expanding into Uzbekistan's telecommunications market, one of the largest in Central Asia. The bribes were paid between 2007 and 2010.
Karimova Implicated
In a separate press announcement, U.S. prosecutors described the Uzbek government official who received the bribes as "a close relative of a high-ranking government official and who exercised influence over Uzbek telecommunications industry regulators."
That official is widely known to be Gulnara Karimova, whose father ruled Uzbekistan for a quarter-century until his death in 2016.
Uzbek prosecutors in July announced that Karimova, who had not been seen in public for years and was widely believed to be under house arrest in the capital Tashkent, was in custody facing criminal fraud and financial charges. That July 28 statement marked the first time Uzbek authorities revealed her status.
Once an international socialite -- known for her fashion designs, syrupy pop music, and art exhibitions -- as well as a former UN ambassador in Geneva, Karimova had been seen as a potential successor to her autocratic father.
The settlement of the Telia case comes as U.S. officials continue to negotiate with Uzbek officials about some $600 million that was seized on U.S. orders, held in various banks.
U.S. officials have indicated they want to return the seized funds to Uzbekistan, but they are also reportedly insisting on transparency in how the money is subsequently disbursed. Uzbek officials, meanwhile, are said to be chafing at the idea of Washington dictating how they spend money that they see as rightfully theirs.
In August, a U.S. judge overseeing the negotiations between the Justice Department and the Uzbek government agreed to again postpone a deadline for the two sides to settle the question of the seized funds. The next deadline is November 1.
The Stockholm-based Telia is not the only international telecom company that has been ensnared in allegations over bribery in Uzbekistan. In February, Dutch-based VimpelCom, which is controlled by a Russian-owned holding company, agreed to pay $795 million to resolve U.S. and Dutch charges.
*CLARIFICATION: This article has been amended to highlight the total amount paid by Telia Telecom in penalties.
