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Harry Cassin Publisher and Editor

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Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

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FCPA Blog Daily News

« Are U.S. colleges and universities complying with the FCPA? | Main | Oligarch’s divorce becomes global asset recovery case »
Monday
Nov262018

MTS reserves $840 million for FCPA settlement

Alexey Kornya, MTS president and CEORussia’s biggest mobile phone company said it reserved $840 million to resolve a possible FCPA enforcement action by the DOJ and SEC.

Moscow-based MTS said it is cooperating with an investigation by U.S. authorities into the company's former operations in Uzbekistan.

MTS said, "There can be no assurance as to the form, timing or terms of any resolution to the investigation.”

The company -- formally known as Mobile TeleSystems Public Joint Stock Company -- first disclosed the investigation in an SEC filing in March 2014, according to data provided by FCPA Tracker.

MTS shut down its operations in Uzbekistan in 2016.

Last year, Sweden's Telia paid $965 million in total penalties to resolve FCPA offenses in Uzbekistan. The penalties were paid to enforcement agencies in the United States, Sweden, and the Netherlands.

In 2016, Amsterdam-based VimpelCom reached a $795 million FCPA resolution with the DOJ and SEC. Some of the penalties went to Dutch enforcement authorities.

Telia and VimpelCom admitted bribing Gulnara Karimova, daughter of the late Uzbek president Islam Karimov. She's been under house arrest in Uzbekistan since 2014.

Starting in 2015, the DOJ filed civil forfeiture complaints against assets linked to Karimova worth more than $850 million, including bank accounts in Switzerland, Belgium, Luxembourg, and Ireland.

In 2016, MTS said the DOJ and SEC had asked for information about corrupt payments to the "unnamed Uzbek official" referred to in the civil forfeiture actions.

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Here's the full FCPA-related statement from MTS in its November 20, 2018 Q3 Financial & Operating Results:

In its Q3 2018 financial statements, MTS reserved RUB 55.8 bln as the potential liability with respect to the investigation being conducted by the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) in relation to its former operations in Uzbekistan. MTS continues to cooperate with the U.S. authorities in the ongoing investigation. 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 Group finished Q3 2018 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.

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