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Monday
Feb132017

Former Magyar Telekom exec settles with SEC before trial

A former executive of Hungary-based Magyar Telekom settled five-year- old civil allegations that he violated the FCPA.

Tamas Morvai agreed last week to pay the SEC a $60,000 penalty without admitting or denying the charges.

The agency sued Morval and two other former Magyar executives -- CEO Elek Straub and Andras Balogh -- in December 2011. All three are Hungarian citizens.

The SEC alleged they violated or aided and abetted violations of the anti-bribery, books and records, and internal controls provisions of the FCPA, knowingly circumvented internal controls and falsified books and records, and made false statements to the company's auditor.

The executives used "sham consultancy contracts with entities owned and controlled by a Greek intermediary" to pay €4.875 million ($5.2 million) which they knew or should have known would be passed on to Macedonian officials, the SEC alleged.

In late 2011, Magyar Telekom and its majority owner Deutsche Telekom paid the DOJ and SEC $95 million to settle FCPA charges based on similar allegations.

Morval would have faced trial in May. The SEC charges against Straub and Balogh are still pending.

In 2014, the SEC dropped some of the charges against Morval, Straub, and Balogh related to alleged bribes to officials in Montenegro. But the agency continued other allegations that the executives bribed officials in Macedonia.

In 2013, a federal judge in New York City denied a motion by the three defendants to dismiss the SEC complaint. They argued that the U.S. lacked personal jurisdiction over them, that the SEC's claims were barred by the the FCPA's five-year statute of limitations, and that the complaint failed to state a cause of action.

Judge Richard Sullivan denied the defendants' motion "in its entirety" and said they must stand trial on the charges.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.