The region that keeps on taking has claimed another pound of flesh from Swedish telco Telia in the form of a billion dollar fine.
Positioned as a ‘global settlement’, Telia is handing over $965 million to US and Dutch prosecutors in what it hopes will be the final resolution of the Uzbekistan corruption case that has dogged it, as well as Telenor and Veon, for years. Sweden seems to want a piece of the action and is looking for a disgorgement (repayment of illegal profits), but Telia is hoping that will be covered by this settlement too.
The figure is actually a bit of a let-off considering Telia expected to be stung for $1.4 billion this time last year. This seemed a tad harsh when Veon got away with considerably less and Telia’s lawyers seem to have earned their fees in the intervening time.
“Today’s settlement brings an end to an unfortunate chapter in Telia Company’s history,” said Telia’s President and CEO Johan Dennelind. “Since 2013 the new board and management have worked diligently and responsibly to understand what went wrong, to remedy what has been broken and to regain trust from all our stakeholders.
“We have come a long way to establish a more sustainable company with a strong focus on governance and compliance but it is a never-ending journey as we aspire to embed this into our culture making sure that all employees understand the importance of doing the right thing all the time. The resolution and related financial sanction that we announce today is a painful reminder of what happens if we don’t.”
“Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars,” said acting U.S. Attorney Joon H. Kim. “Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official.
“Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City. If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws. Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.”
While bribery was clearly an implicit cost of doing business in Uzbekistan over the period that Telia and Veon committed their naughtiness, it’s less obvious why these companies chose to maintain their interests their rather than just bailing. Presumably targets and bonuses had a part to play and, if so, this simply echoes the mistakes of companies like Barings, Enron, Lehman Bros, etc.