Telia disgorges $457 million to SEC, agrees to $965 million in total penalties for FCPA offenses
Thursday, September 21, 2017 at 1:28PM
Richard L. Cassin in Disgorgement, Gulnara Karimova, Siemens AG, TeliaSonera, Uzbekistan

The SEC said in an enforcement order Thursday that Sweden's Telia Company AB will disgorge $457 million to resolve FCPA violations in Uzbekistan.

Combined with $548.6 million in criminal penalties against the company reflected Thursday in court filings by the DOJ, less a $40 million offset, Telia will pay $965 million for the settlement.

The SEC resolved the case through an internal administrative order (pdf) and didn't go to court.

The order charged Telia with violating the FCPA antibribery provisions.

If the criminal plea deal with the DOJ receives federal court approval, Telia's settlement will become the biggest FCPA enforcement action ever.

Siemens' $800 milion settlement in 2008 had been the biggest FCPA case.

Telia's $457 million disgorgement is also the biggest in an FCPA case. The former top disgorgement -- also from Siemens -- was $350 million as part of the 2008 resolution.

The SEC said Telia's disgorgement obligation "shall be deemed satisfied in part by [its] forfeiture payment of up to $40,000,000 within ten (10) days of its sentencing hearing as part of [Telia's] resolution with the United States Department of Justice."

While the total settment amount is fixed by the U.S. resolution at $965 million, some of that amount will be paid to Swedish and Dutch authorities instead.

Thursday's SEC order said Telia's "disgorgement obligation shall be deemed satisfied in part by any confiscation or forfeiture payment of up to $208,500,000 made by [Telia] within five hundred forty (540) days" of the SEC order as part of any "related proceedings with the Swedish Åklagarmyndigheten or within five hundred fifty (550) days as part of Respondent’s related resolution with the Dutch Openbaar Ministerie."

And the DOJ's deferred prosecution agreement with Telia said the total criminal penalty "will be offest by up to [$274 million] for any criminal penalties paid" to the Dutch Public Prosecution Service to settle the potential prosecution in the Netherlands.

Telia Company AB is Swedish and is no longer an issuer under the FCPA. But the SEC's jurisdiction was based on the company's history.

The SEC order said,

Telia registered as a United States issuer in 2002 upon the merger between Telia and Sonera Corporation. At that time, Telia issued and maintained a class of publicly traded securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, which were traded on the NASDAQ prior to 2005. Telia was a United States issuer until September 5, 2007, when its application to deregister its shares with the Commission became effective.

The SEC order said the FCPA offenses date back to 2007, when Telia bought Coscom LLC, a company formed to provide telecom services in Uzbekistan.

After Telia bough Coscom, Telia then paid a government official $80 million to acquire mobile phone assets. 

"Government Official A used a portion of those funds to pay Telia . . . for the 26 percent ownership stake in Coscom In this way, Government Official A simply used a portion of the 3G bribe payments to 'buy' an interest in Coscom," the SEC order said.

In separate court filings two years ago, the DOJ identified Gulnara Karimova, the eldest daughter of the late Uzbek President Islam Karimov, as the government official.

In a statement Thursday afternoon, Telia said:

As part of the settlements, Telia Company will pay fines and disgorgements to the SEC, DOJ and OM [the Dutch Public Prosecution Service] in an aggregate amount of $965 million. In addition, Telia Company’s subsidiary in Uzbekistan, Coscom LLC, has entered a guilty plea with the DOJ. The total fine has been determined to be $548 million which is paid in equal parts to the DOJ and OM. In addition, the financial gain has been calculated to be $457 million and the equivalent amount will be disgorged except for $40 million which is part of the amount to be paid as a forfetuire to the DOJ. This SEC disgorgement amount will be offset by up to $208.5 million against any disgorgement obtained by the Swedish Prosecutor or Dutch authorities.

Here's our report about the DOJ's criminal action Thursday against Telia and Coscom.

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

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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