Russian-owned telecommunications giant VimpelCom is to shell out $835 million in fines after admitting to securing its foothold on the market in Uzbekistan through bribery.
The U.S. Department of Justice said in a statement on February 18 that it is also seeking the forfeiture of $850 million of bribes payments allegedly made by VimpelCom another Russian-owned company, MTS, and now being held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland.
U.S. government officials have described these as historic turning points.
“These cases combine a landmark [Foreign Corrupt Practices Act] resolution for corporate bribery with one of the largest forfeiture actions we have ever brought to recover bribe proceeds from a corrupt government official,” said Assistant Attorney General Caldwell.
The lion’s share of the fines — $795 million — will be paid to the U.S. and Dutch corruption-busting bodies that have been investigating the activities in Uzbekistan of VimpelCom and other telecoms companies.
VimpelCom officially admitted earlier this week to engaging in corrupt practices in Uzbekistan.
VimpelCom admitted it had “through various executives and employees, paid bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry,” the Justice Department said.
That individual is widely held to be Gulnara Karimova, the eldest daughter of Uzbekistan’s President Islam Karimov.
Tashkent is also seeking the return of those frozen funds, arguing that it is a victim of bribery.
VimpelCom was one of the companies named, alongside Russia’s MTS, in a lawsuit filed last year by the U.S. Department of Justice, which accused the companies of making illicit payments to earn a perch inside Uzbekistan’s telecommunications sector.
The Justice Department said that the unnamed official at the heart of the investigation received over $114 million in bribes from VimpelCom.
“Those payments, falsely recorded in the company’s books and records, were then laundered through bank accounts and assets around the world, including through accounts in New York,” U.S. Attorney Preet Bharara of the Southern District of New York said, according to the Department of Justice statement.
VimpelCom is majority owned by Russian billionaire Mikhail Fridman, and Norway’s state-owned Telenor owns a minority stake that it is trying to sell.