The exact sum, $965 million, is less than Telia feared in September 2016, when president and CEO Johan Dennelind warned investors that the fine could be as much as $1.4 billion.
“Today’s settlement brings an end to an unfortunate chapter in Telia Company’s history,” said Dennelind, who was appointed in 2013 to help clear up the mess left by previous management.
“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,” he added.
Telia has negotiated the settlement with the US Securities and Exchange Commission (SEC) and Department of Justice (DOJ) as well as Dutch and Swedish authorities. The company was charged under the US Foreign Corrupt Practices Act of using bribery to win business in Uzbekistan.
“Corporate bribery is not just unfair and illegal, it has terribly corrosive effects on business, government, and society,” said Stephanie Avakian, co-director of the SEC’s enforcement division. “As this global settlement demonstrates, the SEC continues to work closely with our counterparts at home and abroad to expose and pursue such corruption.”
The scandal dates back to July 2007, when what was then TeliaSonera acquired Uzbekistan operator Coscom, which trades as Ucell. TeliaSonera “did not conduct a sufficiently in-depth analysis into the identity of our local partner in Uzbekistan before we invested in the country or into how this partner came to own the assets that were later obtained by TeliaSonera”, said then CEO Lars Nyberg in his 2013 resignation statement.
A Swedish TV report in September 2012 alleged that TeliaSonera paid the bribes for its Uzbekistan licences through Gayane Avakyan, an Uzbek woman in her late 20s described as having “close ties” to Gulnara Karimova, the daughter of Islam Karimov, who had been president of Uzbekistan since 1991.
Karimov died on 2 September 2016. Karimova is believed to be under house arrest in Uzbekistan.
Telia Company’s subsidiary in Uzbekistan has entered a guilty plea with the DOJ, Telia said last night.
Marie Ehrling, chair of the board of Telia Company, said: “Our ambition throughout the entire process has been to be as transparent as possible and to establish a trustful co-operation with the authorities in question. We have accounted for our solid sustainability work and the major cultural changes that have taken place within the company during the last few years which have been important factors enabling us to have a constructive dialogue and for the outcome of the settlement.”
The fine will be shared between the SEC and the DOJ in the US and Dutch and Swedish public prosecution services, respectively Openbaar Ministerie and Åklagarmyndigheten. The SEC said it had the cooperation of a number of agencies worldwide, from Hong Kong to Bermuda.
Dennelind said: “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.”
