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U.S., Dutch authorities want the telecom firm to pay $1.4 billion over its entry to Uzbekistan

By Matthias Verbergt and David Gauthier-Villars 

STOCKHOLM -- U.S. and Dutch authorities are asking Swedish telecom carrier Telia Company AB to pay $1.4 billion to settle allegations it distributed hundreds of millions of dollars in bribes to secure business in Uzbekistan -- the latest move by American prosecutors to target what they say are the spoils of corrupt practices overseas.

Telia, which is partly owned by the Swedish government, has said it was cooperating with the probes and has acknowledged shortcomings. Chairwoman Marie Ehrling on Thursday said the company's entry into Uzbekistan "was done in an unethical and wrongful way, and we are prepared to take full responsibility."

Still, she said, "our initial reaction to the proposal is that the amount is very high."

Officials with the office of Dutch prosecutors and the U.S. Department of Justice declined to comment.

The proposed settlement is the latest development in one of the biggest efforts by U.S. authorities to expand their reach overseas. They have long policed U.S. companies operating abroad, under the jurisdiction of the Foreign Corrupt Practices Act. More recently, they have also targeted alleged corruption by foreign companies, entities and individuals with links to the U.S. financial system.

They have increasingly teamed up with foreign investigators to spearhead large, international probes. Last year, U.S. authorities paired up with Switzerland, in a probe of current and former officials at FIFA, the Swiss-based world soccer governing body, alleging wide-ranging corruption.

The proposed settlement would be almost twice the $795 million in civil and criminal penalties that Amsterdam-based VimpelCom Ltd. agreed to pay to U.S. and Dutch authorities in February as part of a similar case.

At the time, VimpelCom admitted to having paid more than $114 million in bribes to an Uzbekistan official. In court documents, U.S. authorities have described the Uzbek official as a "relative" of Islam Karimov, the longtime president of the former Soviet republic who died earlier this month.

People familiar with the U.S. probe have said the relative in question was Gulnara Karimova, the eldest daughter of the late Uzbek leader. Ms. Karimova, who has been out of public view for more than two years, couldn't be reached.

U.S. prosecutors have said they believe another company, Mobile Telesystems PJSC of Russia, also paid bribes to operate in Uzbekistan. A spokesman for MTS said the company continued to cooperate with the U.S. Department of Justice and the Securities and Exchange Commission in their investigations.

U.S. agencies have jurisdiction in the Uzbekistan probe because VimpelCom and MTS securities trade in the U.S. As for Telia, which delisted its securities in New York about 10 years ago, the company still has American depositary receipts registered with the SEC. Mike Koehler, a law professor and FCPA expert, said U.S. authorities have asserted jurisdiction based on those financial instruments.

Dutch prosecutors launched their own probes into VimpelCom and Telia after discovering that some of the alleged bribes had gone through a Dutch-registered entity.

The bribery accusations first surfaced in 2012, when Swiss authorities named Ms. Karimova as a suspect in a corruption probe. Since then, U.S. and European authorities have been looking into some of the ties between Ms. Karimova and the three telecommunication companies.

Swiss prosecutors, who have seized 800 million Swiss Francs ($821.96 million) as part of their probe, said the investigation was still under way. Grégoire Mangeat, a court-appointed lawyer representing Ms. Karimova in Switzerland, said he has had no contact with his client.

The corruption probes have shaken Telia's upper management, leading several executives to step down. As a result, the company, which is 37.3%-owned by the Swedish state, has decided to abandon its overseas expansion, putting up for sale all its Eurasian operations.

In recent months, Telia has sold its holdings in Ncell, a Nepalese telecom provider, and the operator of Tcell, a Tajik mobile network, as part of its plan to exit from the region.

Write to Matthias Verbergt at Matthias.Verbergt@wsj.com and David Gauthier-Villars at David.Gauthier-Villars@wsj.com

(END) Dow Jones Newswires

September 16, 2016 02:48 ET (06:48 GMT)

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