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Enforcement Action Dataset

 

Initiation Date:    03/06/2019  Information

Prosecuting Agency:    U.S. Securities and Exchange Commission

Type of Action:    SEC Administrative Proceeding

Docket or Case Number:    3-19022

Name of Prosecuting Attorneys:    Unknown

US Assisting Agencies:   

  • U.S. Department of Justice
  • Internal Revenue Service
  • U.S. Department of Homeland Security

Foreign Enforcement Action/Investigation:    Unknown

Foreign Assistance:   

  • French Law Enforcement Agency (FR)
  • U.K. Law Enforcement Agency (GB)
  • U.K. Serious Fraud Office (GB)
  • Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (NO)
  • Cayman Islands Monetary Authority (KY)
  • Swedish Prosecution Authority (SE)
  • Latvian Corruption Prevention and Combating Bureau (LV)
  • British Virgin Islands Financial Services Commission (VG)
  • Bermuda Monetary Authority (BM)
  • Central Bank of Ireland (IE)
  • Irish Law Enforcement Agency (IE)
  • Swiss Office of the Attorney General (CH)
  • Dutch Prosecution Authority (NL)
  • Paris Court of Appeals (FR)

Origin of the Proceeding:    Unknown

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Mobile TeleSystems PJSC ("MTS"), headquartered and incorporated in Russia, was a provider of telecommunications services whose publicly traded securities were registered with the SEC and traded on the New York Stock Exchange.

JV Uzdunrobita (“Uzdunrobita”) was a telecommunications operator in Uzbekistan from the 1990s until 2012. Uzdunrobita became a subsidiary of MTS in 2004.

According to the documents in this case, from 2004 to 2012, MTS offered and paid bribes to a government official in Uzbekistan in connection with its Uzbek operations in order for MTS to enter the Uzbek market, to operate as a telecommunications provider, and to receive commercial benefits to its operations. MTS' initial entry into the Uzbek market began when it purchased 74% of the shares of Uzdunrobita. Prior to that purchase, 59% of Uzdunrobita's shares had been owned by the Uzbek government official through a shell company owned by the official. According to the documents, MTS significantly overpaid for the 33% of shares it purchased from the government official compared with the 41% it purchased from another seller. In addition to this over payment, the improper payments were made through a variety of means, including sham contracts and in the form of charitable contributions at the direction of the government official. In all, MTS made at least $420 million in improper payments to the official, and those payments generated more than $2.4 billion in revenues. The improper payments were mischaracterized as legitimate expenses in MTS’s books and records. The scheme ceased in 2012, when the Uzbek government expropriated MTS’s Uzbek operations.

In an administrative proceeding initiated on March 6, 2019, the SEC issued a cease and desist order againt MTS. Under the terms of the proceeding, the SEC ordered MTS to cease and desist violations of the anti-bribery, books and records, and internal controls provisions of the FCPA, pay a civil fine of $100 million, and retain an independent monitor for a term of three years to assess and report to the SEC the status of the company's enhanced anti-corruption compliance policies and procedures.

In a related proceeding, on March 6, 2019, the DOJ filed two Informations in the Southern District of New York against MTS and Kolorit. The DOJ charged both MTS and Kolorit with conspiracy to violate the anti-bribery and books and records provisions of the FCPA and MTS alone with direct violations of the internal controls provisions of the FCPA. These Informations were filed in accordance with a deferred prosecution agreement and a plea agreement entered into by MTS and Kolorit, respectively, on February 28, 2019. Under the terms of the agreements, MTS agreed to pay a total criminal fine of $850 million and to hire an independent compliance monitor for a period of three years. The DOJ credited $100 million of the fine for the civil fine paid by MTS to the SEC in a related proceeding. The remaning $750 million included $40 million in forfeiture and a $500,000 criminal fine imposed on Kolorit.

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