TeliaSonera AB (TLSN) Chief Executive Officer Lars Nyberg resigned today after a law firm hired to investigate graft accusations said the carrier should have been more careful when it bought an Uzbeki phone license in 2007.
The company named Chief Financial Officer Per-Arne Blomquist acting CEO. Swedish prosecutors opened an investigation last year into whether TeliaSonera knew, or should have known, when it bought the license from Takilant Ltd. that the money went to President Islam Karimov’s family. Law firm Mannheimer Swartling faulted the lack of adequate internal controls against corruption, while saying it found no evidence of bribery or money laundering.
“The criticism in the report is very serious and reflects the fact that we haven’t followed our own guidelines,” TeliaSonera Chairman Anders Narvinger said at a press conference today. It’s “quite clear that the local partner should have been investigated more thoroughly.”
TeliaSonera, which is almost 40 percent owned by Sweden’s government, has denied it broke any laws. The country’s largest telephone operator is in the middle of a management overhaul that will see Narvinger step down on April 3. Nyberg was hired in July 2007 to replace Anders Igel due to slumping profits.
The Swedish state “has been too far away from this company for a pretty long time and we’ve now changed that,” Financial Markets Minister Peter Norman told reporters after meeting Narvinger this afternoon. “We’re now close to the company and we will continue to be that,” he said, adding that he didn’t exclude appointing a representative to the board, which the government currently doesn’t have.
Shares in the Stockholm-based operator fell 2.2 percent at 4:12 p.m. to 44.89 kronor.
Narvinger said the company doesn’t see any changes in the carrier’s business in Uzbekistan and that he regretted Nyberg’s decision to resign.
Nyberg said that when the board received the Mannheimer Swartling report yesterday, he was told that there would be significant changes to the composition of the board.
“To continue as chief executive I need a functioning board and their explicit support,” he said in a statement. “I was informed that as a result of the pending changes to the board they were not prepared to express that support.”
TeliaSonera bought Uzbeki mobile operator Ucell, a small company with half a million subscribers. At the time of purchase, it agreed to buy a third-generation operating license and frequencies from Takilant for $30 million, as well as the Gibraltar-based company’s 26 percent stake in Ucell, as a “prerequisite” for entering the market, according to TeliaSonera’s website.
The 2007 deal was signed with Takilant’s only registered director, Gayane Avakyan, TeliaSonera said, adding it believed a group of unknown businessmen were supporting Avakyan. There was speculation the president’s daughter, Gulnara Karimova, may have been part of that group, according to the website report.
“If one carries out business in a corrupt country, one should quite simply be more thorough than TeliaSonera has been,” said Bioern Riese, a Mannheimer Swartling lawyer, adding the Swedish company didn’t follow its own guidelines completely in the deal.
Nyberg said the money was paid to an account owned by Takilant, which owned the assets. Takilant existed for years before the deal and still exists, he said.
A Swedish district court agreed this month to freeze as much as 1.8 billion kronor ($286 million) of Takilant’s money, saying there is reason to believe it had accepted bribes in return for the operating permit. The court gave prosecutors until Feb. 8 to bring charges against Takilant’s representatives.
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