Telia Says U.S., Dutch Propose $1.4 Billion Uzbek Settlementby
Could be largest fine ever under U.S. foreign corruption act
‘Amount is very high,’ Telia weighing options, chairman says
Telia AB said U.S. and Dutch authorities have proposed a $1.4 billion fine to settle allegations the Swedish carrier paid bribes to win business in 2007 when it entered the former Soviet republic of Uzbekistan.
The proposal didn’t go into much detail, Telia said in a statement on Thursday. The company will analyze the offer and decide how to respond as it continues discussions with authorities, it said. On a conference call, Telia executives said they haven’t changed the company’s dividend policy, though they wouldn’t rule out cutting the payout in the future.
Telia’s entry into Uzbekistan "was done in an unethical and wrongful way and we are prepared to take full responsibility,” Chairman Marie Ehrling said in the statement. "With that said, our initial reaction to the proposal is that the amount is very high."
A $1.4 billion fine, equal to about 14 percent of annual revenue, would dwarf the largest previous fine levied for violations of the U.S. Foreign Corrupt Practices Act. Telia has been awaiting the outcome of the multi-year probe into its dealings in Uzbekistan led by the U.S., but also involving Dutch, Swedish and Swiss authorities. The U.S. investigation is among the factors slowing down talks for the Swedish carrier to sell its wireless business in other former Soviet countries, people familiar with the matter have said.
The former Swedish phone monopoly has turned its focus to northern European markets to capitalize on higher demand for wireless web-browsing and video services, while exiting former Soviet countries and Asia. The company, still part-owned by the Swedish state, made an adjusted profit of 11.4 billion kronor. The company paid out 3 kronor per share in dividends last year, or about $1.5 billion.
VimpelCom Ltd. and Mobile TeleSystems PJSC have also come under scrutiny from U.S., Dutch, Swedish and Swiss authorities over their dealings in Uzbekistan. VimpelCom in February agreed to pay $795 million to settle graft claims there. That was one of the largest levied for violations of the FCPA, which bans bribing officials to win business. The biggest, $800 million, was paid by Siemens AG, which pleaded guilty to violating U.S. anti-corruption laws in 2008.
No company or person has been charged as part of the U.S. and European investigations into Uzbekistan. Some of the allegations focused on a company linked to Gulnara Karimova, the daughter of former President Islam Karimov, according to court documents and people familiar with the matter.
The stock fell 1.2 percent to 36.94 kronor at 9:23 a.m. in Stockholm trading . It has dropped 12 percent this year, giving the carrier a market value of about 160 billion kronor
MTS said last month it would exit its Uzbek operations.