Russian Mobile Phone Company MTS Is Cooperating in Probe by US DOJ and SEC
MTS said in its Nov. 20 quarterly financial report that it is cooperating with investigations by the U.S. Securities and Exchange Commission and the U.S. Department of Justice, and it has set aside up to $850 million as its potential liability.
November 26, 2018 at 04:49 PM
2 minute read
MTS signboard on the street, Russia, Novosibirsk, August 01, 2017
After two other major companies reached settlements, the largest mobile phone company in Russia, MobileTeleSystems, is now caught up in U.S. investigations of its operations in Uzbekistan.
MTS said in its Nov. 20 quarterly financial report that it is cooperating with investigations by the U.S. Securities and Exchange Commission and the U.S. Department of Justice, and it has set aside more than $840 million as its potential liability. The funds set aside caused the company to report a third quarter loss.
An MTS news release said, “There can be no assurance as to the form, timing or terms of any resolution to the investigation. As a result of this provision recognition, the [MTS] Group finished Q3 with net loss of RUB 37.0 bln. Excluding this one-off factor, the group would have reported net profit of RUB 18.7 bln.”
MTS closed its operations in Uzbekistan in 2016, after questions from the SEC and DOJ, as part of a broader probe into telecom operations there. MTS could not be reached Monday for comment.
In September 2017, the Swedish telecom Telia Co. reached a Foreign Corrupt Practices Act settlement of nearly $ 1 billion with DOJ over allegations of bribery in Uzbekistan. U.S. prosecutors called it “one of the largest criminal corporate bribery and corruption resolutions ever.”
Sweden also charged Telia's former general counsel for Eurasia, Olli Tuohimaa, and two other executives individually in the case.
In 2016 VimpelCom Ltd., a Netherlands-based telecom, agreed to pay $795 million in a global settlement with the SEC, DOJ and Netherlands prosecutors over alleged bribes in Uzbekistan.
All three telecoms were accused of funneling bribes to Gulnara Karimova, eldest daughter of Islam Karimov, president of Uzbekistan until his death in 2016. Gulnara Karimova has been under house arrest in Uzbekistan since 2014.
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