Mobile TeleSystems Settles FCPA Violations
Mobile TeleSystems PJSC (MTS) paid $100 million to the SEC and its subsidiary pleaded guilty to paying $420 million in bribes to a Uzbek official tied to the former president to secure market access, generating $2.4 billion in revenue before expropriation in 2012, with a total $850 million criminal penalty imposed by the DOJ and $2.6 billion recovered across three related cases.
MTS violated the Foreign Corrupt Practices Act by making at least $420 million in illicit payments to a high-ranking Uzbek official related to the former president, disguising the bribes as acquisition costs, charitable donations, and regulatory asset purchases. The company generated over $2.4 billion in revenue from its Uzbek operations over eight years before the government expropriated its assets in 2012. MTS agreed to pay a $100 million SEC penalty for violating anti-bribery, books and records, and internal controls provisions, while its subsidiary pleaded guilty to criminal charges and paid an $850 million fine to the DOJ, with the SEC payment credited toward it, and must retain a compliance monitor for three years.
Mobile TeleSystems PJSC (MTS) agreed to pay $100 million to the SEC to resolve charges that it violated the Foreign Corrupt Practices Act by bribing a high-ranking Uzbek official connected to the former president to gain and maintain market access in Uzbekistan. Over an eight-year period, MTS made at least $420 million in illicit payments, disguised on its books as acquisition costs, option payments, regulatory asset purchases, and charitable donations, enabling it to generate more than $2.4 billion in revenue before the Uzbek government expropriated its operations in 2012. The SEC found that MTS violated the anti-bribery, books and records, and internal accounting controls provisions of the Securities Exchange Act of 1934, and required the company to retain an independent compliance monitor for at least three years. In a related criminal matter, MTS’s subsidiary pleaded guilty in federal court and agreed to pay an $850 million criminal fine and forfeiture to the U.S. Department of Justice, with the SEC’s $100 million penalty credited toward that total. This case is the third brought by U.S. authorities against companies operating in Uzbekistan’s telecom sector, and together with related international investigations, U.S. and foreign authorities have recovered $2.6 billion in total. The SEC and DOJ received substantial cooperation from law enforcement agencies in the Netherlands, Norway, Sweden, Switzerland, Latvia, the UK, France, Ireland, and other jurisdictions. The case underscores the global reach of FCPA enforcement and the severe consequences for corporations engaging in systemic bribery to secure foreign markets.
Exhibits & Attached Documents (1)
Extracted insights
- $2.60B $2.6 billion ≥$1B
- $2.40B $2.4 billion ≥$1B
- $850.00M $850 million $100M–$1B
- $420.00M $420 million $100M–$1B
- $100.00M $100 million $100M–$1B
- agency $100 million penalty to sec
- person charles e. cain
- agency chief of sec enforcement division's fcpa unit
- agency deferred prosecution agreement with u.s. department of justice
- person mobile telesystems pjsc
- person mobile telesystems pjsc subsidiary
- agency sec and department of justice
- agency Securities and Exchange Commission
- person uzbek government
- SEC announced Mobile TeleSystems PJSC will pay $100 million to resolve FCPA charges
- Mobile TeleSystems PJSC violated Foreign Corrupt Practices Act
- Mobile TeleSystems PJSC bribed Uzbek official related to former President of Uzbekistan
- Mobile TeleSystems PJSC made $420 million in illicit payments
- Mobile TeleSystems PJSC generated $2.4 billion in revenues in Uzbekistan
- Uzbek Government expropriated Mobile TeleSystems PJSC's Uzbek operations in 2012
- Mobile TeleSystems PJSC agreed to pay $100 million penalty to SEC
- Mobile TeleSystems PJSC entered into deferred prosecution agreement with U.S. Department of Justice
- Mobile TeleSystems PJSC subsidiary pleaded guilty in federal court
- Mobile TeleSystems PJSC subsidiary agreed to pay $850 million in criminal fine and forfeiture
- Mobile TeleSystems PJSC must retain independent compliance monitor for at least three years
- SEC and Department of Justice recovered $2.6 billion through actions involving Uzbek telecommunications market
- Charles E. Cain is Chief of SEC Enforcement Division's FCPA Unit
The Securities and Exchange Commission today announced that Russian telecommunications provider Mobile TeleSystems PJSC (MTS) will pay $100 million to resolve SEC charges that it violated the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan. According to the SEC’s order, MTS bribed an Uzbek official who was related to the former President of Uzbekistan and had influence over the Uzbek telecommunications regulatory authority. During the course of the scheme, MTS made at least $420 million in illicit payments for the purpose of obtaining and retaining business. The payments enabled MTS to enter the telecommunications market in Uzbekistan and operate there for eight years, during which it generated more than $2.4 billion in revenues. In 2012, the Uzbek government expropriated MTS’s Uzbek operations. As further described in the SEC’s order, the bribes were funneled to front companies controlled by the Uzbek official and were disguised in MTS’s books as acquisition costs, option payments, purchases of regulatory assets, and charitable donations. “The company engaged in egregious misconduct for nearly a decade, secretly funneling hundreds of millions of dollars to a corrupt official. Building business on a foundation of bribery leaves the business and American investor interests at the mercy of corrupt officials,” said Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit. MTS consented to the SEC’s order finding that it violated the anti-bribery, books and records and internal accounting control provisions of the Securities Exchange Act of 1934, and requiring it to pay a $100 million penalty. In a related matter, MTS has entered into a deferred prosecution agreement with the U.S. Department of Justice and its subsidiary has pleaded guilty in federal court, and has agreed to pay a criminal fine and forfeiture in the amount of $850 million. The Department is crediting the $100 million penalty that MTS is paying to the SEC. The company must also retain an independent compliance monitor for at least three years. This is the third case brought by the SEC and the Department of Justice involving public companies operating in the Uzbek telecommunications market. Taken as a whole, these actions have led to the recovery by U.S. and foreign authorities of $2.6 billion. The Commission greatly appreciates the cooperation and assistance of the Department of Justice Criminal Division’s Fraud and Money Laundering and Asset Recovery Sections, the Internal Revenue Service, the Department of Homeland Security, the Prosecution Authority of the Netherlands, the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM), the Swedish Prosecution Authority, the Office of the Attorney General in Switzerland, and the Corruption Prevention and Combating Bureau in Latvia. Valuable assistance was also provided by regulatory and law enforcement colleagues in the United Kingdom, France, and Ireland, including the British Virgin Islands Financial Services Commission, the Cayman Islands Monetary Authority, the Bermuda Monetary Authority, the Central Bank of Ireland, the Paris Court of Appeals, the Serious Fraud Office, and the Financial Control Authority.
The Securities and Exchange Commission today announced that Russian telecommunications provider Mobile TeleSystems PJSC (MTS) will pay $100 million to resolve SEC charges that it violated the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan. According to the SEC’s order, MTS bribed an Uzbek official who was related to the former President of Uzbekistan and had influence over the Uzbek telecommunications regulatory authority. During the course of the scheme, MTS made at least $420 million in illicit payments for the purpose of obtaining and retaining business. The payments enabled MTS to enter the telecommunications market in Uzbekistan and operate there for eight years, during which it generated more than $2.4 billion in revenues. In 2012, the Uzbek government expropriated MTS’s Uzbek operations. As further described in the SEC’s order, the bribes were funneled to front companies controlled by the Uzbek official and were disguised in MTS’s books as acquisition costs, option payments, purchases of regulatory assets, and charitable donations. “The company engaged in egregious misconduct for nearly a decade, secretly funneling hundreds of millions of dollars to a corrupt official. Building business on a foundation of bribery leaves the business and American investor interests at the mercy of corrupt officials,” said Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit. MTS consented to the SEC’s order finding that it violated the anti-bribery, books and records and internal accounting control provisions of the Securities Exchange Act of 1934, and requiring it to pay a $100 million penalty. In a related matter, MTS has entered into a deferred prosecution agreement with the U.S. Department of Justice and its subsidiary has pleaded guilty in federal court, and has agreed to pay a criminal fine and forfeiture in the amount of $850 million. The Department is crediting the $100 million penalty that MTS is paying to the SEC. The company must also retain an independent compliance monitor for at least three years. This is the third case brought by the SEC and the Department of Justice involving public companies operating in the Uzbek telecommunications market. Taken as a whole, these actions have led to the recovery by U.S. and foreign authorities of $2.6 billion. The Commission greatly appreciates the cooperation and assistance of the Department of Justice Criminal Division’s Fraud and Money Laundering and Asset Recovery Sections, the Internal Revenue Service, the Department of Homeland Security, the Prosecution Authority of the Netherlands, the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM), the Swedish Prosecution Authority, the Office of the Attorney General in Switzerland, and the Corruption Prevention and Combating Bureau in Latvia. Valuable assistance was also provided by regulatory and law enforcement colleagues in the United Kingdom, France, and Ireland, including the British Virgin Islands Financial Services Commission, the Cayman Islands Monetary Authority, the Bermuda Monetary Authority, the Central Bank of Ireland, the Paris Court of Appeals, the Serious Fraud Office, and the Financial Control Authority.