Russian telecommunications company MTS has set aside 55.8 billion rubles (U.S. $849 million) to resolve a U.S. investigation concerning potential violations of the U.S. Foreign Corrupt Practices Act.
In its third quarter 2018 financial statements, MTS said it reserved RUB 55.8 billion as the potential liability with respect to the investigation being conducted by the U.S. Securities and Exchange Commission and the U.S. Department of Justice “in relation to its former operations in Uzbekistan.” The securities filing was first found in FCPA Tracker.
“MTS continues to cooperate with the U.S. authorities in the ongoing investigation,” the company stated. “There can be no assurance as to the form, timing, or terms of any resolution to the investigation.”
MTS first reported in March 2014 in a Form 6-K that it had “received a voluntary request for documents and information regarding MTS’s business in Uzbekistan” from the SEC “regarding investigations into the activities of unaffiliated parties.”
In August 2016, MTS sold its 50 percent stake in the Uzbekistan telecommunications operator Universal Mobile Systems (UMS) to its joint venture partner. At the time, Andrei Smelkov, MTS vice president and director of the foreign subsidiaries business unit, said MTS decided to sell its stake “due to a variety of business reasons and other circumstances.”
Similar enforcement cases
MTS is just one of a handful of telecommunication companies whose operations in Uzbekistan have come under scrutiny by the U.S. government for corrupt practices, resulting in significant enforcement penalties.
In 2017, Sweden-based telecommunications company Telia reached a $956 million global settlement with U.S. and Dutch authorities after it was discovered that senior managers at Telia paid bribes to a government official in Uzbekistan—the daughter of the late Uzbek President Islam Karimov—in exchange for entering the country’s telecommunications market.
In a second example, Amsterdam-based telecommunications company VimpelCom and its wholly owned Uzbek subsidiary, Unitel, also entered resolutions with U.S. government agencies in 2016 agreeing to pay more than $795 million in total fines and penalties. According to the companies’ admissions, VimpelCom and Unitel, through various executives and employees, paid bribes to an Uzbek government official to enter and continue operating in the Uzbek telecommunications market.