A Russian telecommunications services company Mobile TeleSystems PJSC ("Mobile") agreed to settle SEC charges that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Foreign Corrupt Practices Act ("FCPA").
Mobile was the third international telecommunications company to enter into a settlement with the SEC and DOJ for paying bribes to Ukrainian government officials. Mobile entered into a deferred prosecution agreement with DOJ, in which it agreed to pay a total criminal penalty of $850 million to the United States, including a $500,000 criminal fine and $40 million in criminal forfeiture that Mobile agreed to pay on behalf of KolorIt. Mobile also agreed to the imposition of an independent compliance monitor for a term of three years and to implement rigorous internal controls and cooperate fully with SDNY and DOJ's ongoing investigation, including as to investigation of several individuals.
In related proceedings, Mobile reached a civil settlement with the SEC. Under the terms of the agreement with the SEC, Mobile agreed to pay a $100 million civil penalty, which SDNY and DOJ agreed to credit toward the financial penalties imposed as part of their agreement with Mobile.
According to the SEC Order, Mobile offered and paid bribes to a government official in Uzbekistan with respect to its Uzbek operations. The illegal payments allegedly allowed Mobile to be a telecommunications provider in the Uzbek market and to receive benefits under its operations. The SEC alleged that the Uzbek government "expropriated" Mobile's Uzbek operations, and that Mobile made over $420 million in illicit payments that produced over $2.4 billion in total revenues. According to the SEC, the illicit payments were made through a multitude of means, "including equity transactions with the government official, sham contracts, and in the form of charitable contributions or sponsorships at the direction of the government official."
This is the third action brought by the SEC and the DOJ concerning public companies operating in the Uzbek telecommunications market. The investigation has thus far yielded a combined total of over $2.6 billion in global fines and disgorgement, including over $1.3 billion in criminal penalties to the United States.
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