In re Telia Company AB

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 81669 / September 21, 2017 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 3898 / September 21, 2017 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-18195 
 
 
In the Matter of 
 
Telia Company AB  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-DESIST 
PROCEEDINGS, PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against Telia Company AB (“Telia” or “Respondent”). 
 
II. 
 
 In  anticipation  of  the  institution  of  these  proceedings,  Respondent  has  submitted  an  Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely  for the 
purpose  of  these  proceedings  and  any  other  proceedings  brought  by  or  on  behalf  of  the 
Commission,  or  to  which  the  Commission  is  a  party,  Respondent  admits  the  Commission’s 
jurisdiction  over it and  the  subject  matter  of  these  proceedings,  and  consents  to  the  entry  of  this 
Order   Instituting  Cease-and-Desist Proceedings,  Pursuant  to  Section  21C  of  the  Securities 
Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set 
forth below. 
  

2 
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
1. These proceedings arise out of violations of the anti-bribery and internal accounting 
controls provisions of the Foreign Corrupt Practices Act (“FCPA”) [15 U.S.C. §§ 78dd-1, 
78m(b)(2)(B)] by Telia. 
 
2. From 2007 to at least 2010, Telia paid bribes to a government official in Uzbekistan 
in order to obtain and retain business that generated more than $2.5 billion in revenues for Telia.  
During the course of the bribery scheme, Telia made at least $330 million in illicit payments.  
These bribe payments were made to the Uzbek official (“Government Official A”) to enable Telia 
to acquire a United States-based telecommunications company with operations in Uzbekistan and 
enter the telecommunications market in Uzbekistan.  The bribe payments were funneled through 
payments for sham lobbying and consulting services to a front company controlled by the official. 
 
3.  Over the course of the relevant period, Telia paid Government Official A at least 
$330 million in bribes through a series of transactions that were designed to obfuscate their true 
purpose.  Most of the transactions with Government Official A were denominated in United States 
dollars, and communications concerning Government Official A were conducted, in part, using 
electronic mail accounts on United States-based servers. 
 
4. As a result of this conduct, Telia violated Section 30A of the Exchange Act by 
agreeing to make corrupt payments to government officials in Uzbekistan to obtain business.  
Additionally, Telia violated Section 13(b)(2)(B) of the Exchange Act, as it failed to devise and 
maintain a reasonable system of internal accounting controls.  
 
Respondent 
 
 5. Telia Company AB (“Telia”) is a corporation organized under the laws of Sweden.  
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.  At all relevant times, 
Telia was a provider of telecommunications services and operated through subsidiaries and affiliates 
in Europe and Asia.  Telia manages its operations through separate business units, which are each 
overseen by an officer of Telia. 
 
 
                                                 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 
 

3 
 
Other Relevant Entities 
 
6. COSCOM LLC (“COSCOM”) is a majority-owned subsidiary of Telia and 
provides mobile telecommunications services in Uzbekistan.  COSCOM was formed in Uzbekistan 
and purchased by Telia in 2007.  COSCOM was part of Telia’s Eurasia business unit and was 
managed by local managers as well as senior members of Fintur Holdings B.V., Telia’s majority-
owned Eurasian holding company (“Fintur”).  The brand name for COSCOM is Ucell. 
 
7. Fintur Holdings B.V. (“Fintur”) is a majority-owned subsidiary of Telia and acts as 
a manager and holding company for many of the Telia’s operating companies in the Eurasia 
business unit.  Fintur was formed in the Netherlands but operates from Istanbul, Turkey.  Fintur is 
headed by an officer of Telia and a board of directors of which Telia senior officers comprise the 
majority of directors. 
 
8. TeliaSonera UTA Holding B.V. (“UTA”) is a wholly-owned subsidiary of Telia 
and acts as one of two intermediate holding companies of COSCOM.  UTA was formed in the 
Netherlands as part of the acquisition of COSCOM in 2007.  UTA has no operations and acts as one 
of two intermediate holding companies of COSCOM. 
 
9. TeliaSonera Uzbek Telecom Holding B.V. (“Uzbek Holding”) is a wholly-owned 
subsidiary of Telia and acts as one of two intermediate holding companies of COSCOM.  Uzbek 
Holding was formed in the Netherlands as part of the acquisition of COSCOM in 2007.  Uzbek 
Holding has no operations and no holdings other than COSCOM. 
 
10. Government Official A was an Uzbek government official at all relevant times.  
Government Official A was also a family member of the then President of Uzbekistan and had 
significant influence over other Uzbek government officials.  Government Official A operated 
through numerous shell companies, including Takilant Ltd. 
 
11.  Takilant Ltd is a company beneficially owned and operated by Government 
Official A at all relevant times.  Takilant was formed in Gibraltar and was the entity through which 
Telia made payments to Government Official A. 
 
Background 
 
12. Telia is a telecommunications company operating through a network of subsidiaries 
and joint venture entities.  During the relevant time period, Telia was organized in part by 
geographic business units, each of which is directly supervised by a senior officer of Telia.  The 
senior officer for the Eurasia business unit reported directly to Telia’s chief executive officer. 
 
13. In 2006, Telia sought to expand into the Eurasia telecommunications market, 
including in Uzbekistan.  Telia identified COSCOM, an existing Uzbek telecommunications 
operator owned by a United States telecommunications company, as an acquisition target in 

4 
 
Uzbekistan.  Telia acquired COSCOM in 2007, and COSCOM became part of the Eurasia business 
unit of Telia, which was supervised by a then-senior officer of Telia.   
 
14. Throughout the relevant period, the telecommunication industry in Uzbekistan was 
highly regulated by the government.  Telecommunication operators in the country were regulated 
by the Communications and Information Agency of Uzbekistan (“ACI”), now called the State 
Committee for Communication, Information and Telecommunication Technologies.  ACI issued 
the licenses, frequencies, channels, and number blocks necessary for Telia to operate in that 
country.  Throughout the relevant period, private parties could not sell or purchase licenses, 
frequencies, channels, or number blocks in Uzbekistan. 
 
15. From at least 2007 to 2012, Telia maintained a relationship with Government 
Official A, who was an Uzbek government official and family member of the President of 
Uzbekistan.  Government Official A was able to exert significant influence over other Uzbek 
officials to cause them to take official action that would benefit Telia’s business in Uzbekistan. 
 
The July 2007 Agreement 
 
16. Then-senior Telia managers understood that they needed to negotiate with 
Government Official A in order to acquire and operate COSCOM within the Uzbek 
telecommunications market.  Then-senior Telia managers also understood that corrupt payments to 
Government Official A were required in order to enter and operate in the Uzbek market.  Telia 
retained the services of and communicated with United States-based consultants to facilitate the 
corrupt relationship with Government Official A and the acquisition of COSCOM.  
 
17.  Government Official A was represented in the negotiations by the country manager 
of another telecommunications company in Uzbekistan that would be their primary competitor if 
Telia entered the market.  On the recommendation of then-senior Telia managers, on June 11, 
2007, Telia’s Board approved a binding offer to acquire COSCOM, and a few other operators, 
 
at a total deal cost not exceeding USD 410 million, through a merger structure with 
a Delaware corporation (United States), subject to (a) the conditions 
precedent...and to (b) that a partnership agreement is signed with a suitable partner 
in Uzbekistan no later that simultaneously with the transaction documents in the 
...acquisition. 
 
18. Telia then-senior managers understood the terms of the deal and knew that they 
were agreeing to provide Government Official A an ownership stake in the acquired company and 
other guaranteed payout in return for Government Official A contributing regulated assets that, 
under Uzbek law, should have only been able to come from the government.  As noted in an 
internal company memo dated May 17, 2007 discussing the deal: 
 
We have made several trips to Tashkent over the 6 weeks and now have a 
preliminary hand-shake for principles of a potential partnership with [Government 
Official A’s] investment team.  We are expecting to sign a non-binding Term Sheet 

5 
 
with them within the next 10-15 days.  According to the proposed deal, our 
proposed Uzbekh partners will bring in new 1800 frequencies, 3G-frequencies as 
well as some technically value-adding assets for the company, such as number 
blocks, in exchange for 26% of the Uzbekh venture plus USD 32.5 millions. 
 
19. On July 4, 2007, Sonera Hungary Holding B.V., another wholly-owned subsidiary 
of Telia, entered into an agreement with Government Official A’s entity to acquire certain 
regulated assets and to assist with regulatory matters by providing consulting services (“July 2007 
Agreement”).  The agreement called for Government Official A to contribute assets and services 
valued at approximately $80 million in exchange for Telia giving Government Official A an equity 
interest in COSCOM’s operations valued at $50 million and additional unspecified payments from 
Telia.  The assets to be contributed by Government Official A were licenses, frequencies, and 
number blocks that Government Official A would cause other government officials to authorize on 
Telia’s behalf. 
 
20. In December 2007, Telia and Government Official A executed a series of 
agreements effectuating the promises and obligations made in the July 2007 Agreement. 
 
The December 2007 Agreements 
 
21. In December 2007, Telia fulfilled its obligations under the July 2007 Agreement by 
providing Government Official A through Takilant with a 26 percent ownership stake in Uzbek 
Holding, the holding company of COSCOM.  The purchase price was $50 million, and Takilant 
was also given a put option to sell the interest back to Telia in 2010 for a minimum price of $85 
million (providing Takilant at least a $35 million profit).  The ownership stake was conditioned 
upon Government Official A acquiring regulatory assets for COSCOM through a Takilant wholly 
owned subsidiary, including 3G licenses, 50 1800 MHz frequencies, an internet services license, 
and number blocks. 
 
22. At the time, COSCOM did not have the necessary licenses and permission from 
ACI to operate a 3G network, Government Official A and Telia agreed that ACI would issue the 
3G licenses to a Takilant subsidiary, which then would repudiate the licenses so they would instead 
be issued to COSCOM.  This repudiation of the 3G licenses was done to circumvent the 
prohibition under Uzbek law on private parties directly buying and selling telecommunications 
licenses, and should have raised red flags at Telia.  Telia managers also knew a 3G license could be 
obtained directly from ACI and that licenses did not require up-front payment. 
 
23. Other red flags included the fact that (i) Government Official A’s company should 
not have received a 3G license from ACI since it was not a telecommunications operator; (ii) the 
timing of the award of licenses to Takilant only months in advance of Takilant repudiating the 
licenses in favor of COSCOM; (iii) the participation of the country manager of COSCOM’s 
primary competitor in the transaction; (iv) and the fact that the company should not have had to 
pay to obtain a 3G license from the government. 
 

6 
 
24. Telia’s then-senior managers, including its then-chief executive officer, approved 
the agreements with Government Official A through Takilant.  Telia paid Government Official A 
through Takilant $80 million in connection with acquiring the 3G regulated assets, and 
Government Official A used a portion of those funds to pay Telia through Takilant 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. 
 
Telia Acquires Number Blocks from Government Official A 
25. In 2008, COSCOM required additional telephone numbers to issue to its 
subscribers in order to expand its network.  As with the 3G licenses, and consistent with the 
original July 2007 agreement, Government Official A improperly influenced ACI officials to issue 
number blocks for COSCOM’s benefit and Telia paid to Government Official A through Takilant 
$9.2 million to acquire the number blocks. 
 
Telia Buys Back Part of Government Official A’s Ownership Stake  
26. As discussed above, the December 2007 transaction in which Telia sold 26 percent 
of COSCOM to Government Official A through Takilant in exchange for $50 million, also gave 
Government Official A through Takilant a put option to sell the interest back to Telia in 2010 for a 
minimum price of $85 million.  In January 2010, Government Official A caused Takilant to 
partially exercise the put option and sold Telia most of its 26 percent of COSCOM.  Telia paid 
Government Official A through Takilant $220 million for this interest, a 340 percent increase over 
the approximately $50 million Government Official A paid through Takilant to acquire the interest 
in 2007 and far more than the minimum $85 million option exercise price in December 2007.  
Telia also agreed to adjust the put option for Takilant’s remaining 6 percent interest in COSCOM 
to a minimum price of $50 million, which was later increased to $75 million.   
 
4G Market Expansion 
27. In 2010, Telia sought to expand its Uzbek operations by offering 4G services.  
Consistent with the original July 2007 agreement, Telia turned to Government Official A to obtain 
the needed licenses.  Rather than pay Government Official A directly through a sham consulting 
agreement with Takilant as had been done with the 3G licenses, Telia agreed to pay Takilant’s debt 
to a third party via a sham consulting services agreement.  Under the terms of the agreement, 
Government Official A was to assist COSCOM in acquiring certain 4G/LTE licenses/frequencies 
in the 2500-2700 MHz bandwidths. 
 
28. The structure of the 4G license transaction raised many of the same red flags 
identified as the 3G license transaction.  Telia executives knew a 4G license could be obtained 
directly from ACI and that licenses did not require upfront payment.  Moreover, the 4G license that 
COSCOM was issued was repudiated by Telia’s primary competitor in Uzbekistan and whose 
Uzbek country manager again negotiated for Government Official A.  Telia did not receive any 

7 
 
evidence of the consulting services provided by Government Official A through Takilant, though 
the frequencies repudiated by its competitor were ultimately awarded to COSCOM. 
 
29. In November 2010, Telia sought to further expand its Uzbek operations and turned 
to Government Official A to obtain 4G licenses/frequencies in the 700 MHz bandwidth.  As 
before, Takilant was engaged to provide sham consulting services and Government Official A 
exerted the same improper influence to obtain the licenses.  The sham consulting services were 
used as a guise to overcome the prohibition on private parties buying and selling regulatory assets.   
Telia paid $55 million to Government Official A through Takilant to obtain these additional 
licenses and a fiber-optic lease agreement.  As with the previous 3G license transaction and 4G 
license transaction, the same red flags existed.  In total , Telia paid to Government Official A 
through Takilant $70 million for 4G licenses and the acquisition of a fiber-optic lease agreement. 
 
30. As a result of the conduct described above, Respondent violated Sections 30A and 
13(b)(2)(B)  of the Securities Exchange Act of 1934[15 U.S.C. §§ 78dd-1 and 78m(b)(2)(B)]. 
   
Telia’s Remedial Efforts 
31. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent, both before and during the Commission’s investigation, 
including replacing all relevant members of its board and senior management and implementing 
a new comprehensive compliance program, and the thorough cooperation afforded the 
Commission staff. 
Undertakings 
 32. Respondent has undertaken to cooperate fully with the Commission in any and all 
investigations, litigation, or other proceedings relating to or arising from the matters described in 
this Order.  In connection with such cooperation, Respondent shall: 
  a.  produce, without service of a notice or subpoena, any and all nonprivileged 
documents and other information requested by the Commission staff subject to any restrictions 
under the law of any foreign jurisdiction; 
 
  b.  use its best efforts to cause its current or former officers, 
employees, agents, and directors to be interviewed by Commission staff at such times and 
places as the staff reasonably may direct; and 
 
  c.  use its best efforts to cause its current or former officers, 
employees, agents, and directors to appear and testify without service of a notice or 
subpoena in such investigations, depositions, hearings, or trials as may be 
requested by the Commission staff. 
In determining whether to accept the Offer, the Commission has considered these undertakings. 

8 
 
IV. 
 
 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
 
A. Respondent cease and desist from committing or causing any violations and any 
future violations of Sections 30A and 13(b)(2)(B)  of the Securities Exchange Act of 1934 [15 
U.S.C. §§ 78dd-1 and 78m(b)(2)(B)]. 
 
B. Respondent shall pay disgorgement of $457,000,000, which represents profits 
gained as a result of the conduct described herein.  Payment of disgorgement shall be made as 
follows: 
 
1. Within ten (10) days of the entry of the Order, $208,500,000 to be paid to the 
Securities and Exchange Commission for transfer to the general fund of the 
United States Treasury, subject to  Exchange Act Section 21F(g)(3);  
2. Respondent’s disgorgement obligation shall be deemed satisfied in part by 
Respondent’s forfeiture payment of up to $40,000,000 within ten (10) days of 
its sentencing hearing as part of Respondent’s resolution with the United States 
Department of Justice; 
3. Respondent’s disgorgement obligation shall be deemed satisfied in part by any 
confiscation or forfeiture payment of up to $208,500,000 made by Respondent 
within five hundred forty (540) days of the Order as part of any related 
proceedings between Respondent and the Swedish Åklagarmyndigheten or 
within five hundred fifty (550) days as part of Respondent’s related resolution 
with the Dutch Openbaar Ministerie; 
4. In the event that any confiscation or forfeiture payments made by Respondent in 
related proceedings with the Swedish Åklagarmyndigheten or Dutch Openbaar 
Ministerie are less than $208,500,000, or with the Department of Justice are less 
than $40,000,000, Respondent shall pay the remaining disgorgement amounts 
to the Securities and Exchange Commission within ten (10) days of such event 
for transfer to the general fund of the United States Treasury, subject to  
Exchange Act Section 21F(g)(3); 
5. Should any amount of the payment made in connection with Respondent’s 
resolution with the Dutch Openbaar Ministerie be returned to the Respondent or 
any affiliated entity for any reason, that amount will not be credited as an offset 
and Respondent shall pay such amount to the Securities and Exchange 
Commission within ten (10) days of such event for transfer to the general fund 
of the United States Treasury, subject to  Exchange Act Section 21F(g)(3). 
 
If timely payment is not made, additional interest shall accrue pursuant to SEC Rule of Practice 
600.  Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  

9 
 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying Telia as a 
Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 
letter and check or money order must be sent to Charles Cain, Division of Enforcement, Securities 
and Exchange Commission, 100 F St., NE, Mailstop 5631, Washington, DC 20549.   
 
 C. If at any time following the entry of the Order, the Division of Enforcement 
(“Division”) obtains information indicating that Respondent knowingly provided materially false 
or misleading information or materials to the Commission, or in a related proceeding, the Division 
may, at its sole discretion and with prior notice to the Respondent, petition the Commission to 
reopen this matter and seek an administrative cease-and-desist order against the Respondent.   
Respondent may contest by way of defense in any resulting administrative proceeding whether it 
knowingly provided materially false or misleading information, but may not:  (1) contest the 
findings in the Order; or (2) assert any defense to liability or remedy, including, but not limited to, 
any statute of limitations defense. 
 
 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 
 
 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 81669 / September 21, 2017 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 3898 / September 21, 2017 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-18195 

 

 

In the Matter of 

 

Telia Company AB  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-DESIST 

PROCEEDINGS, PURSUANT TO SECTION 

21C OF THE SECURITIES EXCHANGE ACT 

OF 1934, MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST ORDER  

   

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against Telia Company AB (“Telia” or “Respondent”). 

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, Respondent admits the Commission’s 

jurisdiction over it and the subject matter of these proceedings, and consents to the entry of this 

Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 21C of the Securities 

Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set 

forth below. 

  



2 

 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

1. These proceedings arise out of violations of the anti-bribery and internal accounting 

controls provisions of the Foreign Corrupt Practices Act (“FCPA”) [15 U.S.C. §§ 78dd-1, 

78m(b)(2)(B)] by Telia. 

 

2. From 2007 to at least 2010, Telia paid bribes to a government official in Uzbekistan 

in order to obtain and retain business that generated more than $2.5 billion in revenues for Telia.  

During the course of the bribery scheme, Telia made at least $330 million in illicit payments.  

These bribe payments were made to the Uzbek official (“Government Official A”) to enable Telia 

to acquire a United States-based telecommunications company with operations in Uzbekistan and 

enter the telecommunications market in Uzbekistan.  The bribe payments were funneled through 

payments for sham lobbying and consulting services to a front company controlled by the official. 

 

3.  Over the course of the relevant period, Telia paid Government Official A at least 

$330 million in bribes through a series of transactions that were designed to obfuscate their true 

purpose.  Most of the transactions with Government Official A were denominated in United States 

dollars, and communications concerning Government Official A were conducted, in part, using 

electronic mail accounts on United States-based servers. 

 

4. As a result of this conduct, Telia violated Section 30A of the Exchange Act by 

agreeing to make corrupt payments to government officials in Uzbekistan to obtain business.  

Additionally, Telia violated Section 13(b)(2)(B) of the Exchange Act, as it failed to devise and 

maintain a reasonable system of internal accounting controls.  

 

Respondent 

 

 5. Telia Company AB (“Telia”) is a corporation organized under the laws of Sweden.  

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.  At all relevant times, 

Telia was a provider of telecommunications services and operated through subsidiaries and affiliates 

in Europe and Asia.  Telia manages its operations through separate business units, which are each 

overseen by an officer of Telia. 

 

 

                                                 
1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 

 



3 

 

Other Relevant Entities 

 

6. COSCOM LLC (“COSCOM”) is a majority-owned subsidiary of Telia and 

provides mobile telecommunications services in Uzbekistan.  COSCOM was formed in Uzbekistan 

and purchased by Telia in 2007.  COSCOM was part of Telia’s Eurasia business unit and was 

managed by local managers as well as senior members of Fintur Holdings B.V., Telia’s majority-

owned Eurasian holding company (“Fintur”).  The brand name for COSCOM is Ucell. 

 

7. Fintur Holdings B.V. (“Fintur”) is a majority-owned subsidiary of Telia and acts as 

a manager and holding company for many of the Telia’s operating companies in the Eurasia 

business unit.  Fintur was formed in the Netherlands but operates from Istanbul, Turkey.  Fintur is 

headed by an officer of Telia and a board of directors of which Telia senior officers comprise the 

majority of directors. 

 

8. TeliaSonera UTA Holding B.V. (“UTA”) is a wholly-owned subsidiary of Telia 

and acts as one of two intermediate holding companies of COSCOM.  UTA was formed in the 

Netherlands as part of the acquisition of COSCOM in 2007.  UTA has no operations and acts as one 

of two intermediate holding companies of COSCOM. 

 

9. TeliaSonera Uzbek Telecom Holding B.V. (“Uzbek Holding”) is a wholly-owned 

subsidiary of Telia and acts as one of two intermediate holding companies of COSCOM.  Uzbek 

Holding was formed in the Netherlands as part of the acquisition of COSCOM in 2007.  Uzbek 

Holding has no operations and no holdings other than COSCOM. 

 

10. Government Official A was an Uzbek government official at all relevant times.  

Government Official A was also a family member of the then President of Uzbekistan and had 

significant influence over other Uzbek government officials.  Government Official A operated 

through numerous shell companies, including Takilant Ltd. 

 

11.  Takilant Ltd is a company beneficially owned and operated by Government 

Official A at all relevant times.  Takilant was formed in Gibraltar and was the entity through which 

Telia made payments to Government Official A. 

 

Background 

 

12. Telia is a telecommunications company operating through a network of subsidiaries 

and joint venture entities.  During the relevant time period, Telia was organized in part by 

geographic business units, each of which is directly supervised by a senior officer of Telia.  The 

senior officer for the Eurasia business unit reported directly to Telia’s chief executive officer. 

 

13. In 2006, Telia sought to expand into the Eurasia telecommunications market, 

including in Uzbekistan.  Telia identified COSCOM, an existing Uzbek telecommunications 

operator owned by a United States telecommunications company, as an acquisition target in 



4 

 

Uzbekistan.  Telia acquired COSCOM in 2007, and COSCOM became part of the Eurasia business 

unit of Telia, which was supervised by a then-senior officer of Telia.   

 

14. Throughout the relevant period, the telecommunication industry in Uzbekistan was 

highly regulated by the government.  Telecommunication operators in the country were regulated 

by the Communications and Information Agency of Uzbekistan (“ACI”), now called the State 

Committee for Communication, Information and Telecommunication Technologies.  ACI issued 

the licenses, frequencies, channels, and number blocks necessary for Telia to operate in that 

country.  Throughout the relevant period, private parties could not sell or purchase licenses, 

frequencies, channels, or number blocks in Uzbekistan. 

 

15. From at least 2007 to 2012, Telia maintained a relationship with Government 

Official A, who was an Uzbek government official and family member of the President of 

Uzbekistan.  Government Official A was able to exert significant influence over other Uzbek 

officials to cause them to take official action that would benefit Telia’s business in Uzbekistan. 

 

The July 2007 Agreement 

 

16. Then-senior Telia managers understood that they needed to negotiate with 

Government Official A in order to acquire and operate COSCOM within the Uzbek 

telecommunications market.  Then-senior Telia managers also understood that corrupt payments to 

Government Official A were required in order to enter and operate in the Uzbek market.  Telia 

retained the services of and communicated with United States-based consultants to facilitate the 

corrupt relationship with Government Official A and the acquisition of COSCOM.  

 

17.  Government Official A was represented in the negotiations by the country manager 

of another telecommunications company in Uzbekistan that would be their primary competitor if 

Telia entered the market.  On the recommendation of then-senior Telia managers, on June 11, 

2007, Telia’s Board approved a binding offer to acquire COSCOM, and a few other operators, 

 
at a total deal cost not exceeding USD 410 million, through a merger structure with 

a Delaware corporation (United States), subject to (a) the conditions 

precedent…and to (b) that a partnership agreement is signed with a suitable partner 

in Uzbekistan no later that simultaneously with the transaction documents in the 

…acquisition. 

 

18. Telia then-senior managers understood the terms of the deal and knew that they 

were agreeing to provide Government Official A an ownership stake in the acquired company and 

other guaranteed payout in return for Government Official A contributing regulated assets that, 

under Uzbek law, should have only been able to come from the government.  As noted in an 

internal company memo dated May 17, 2007 discussing the deal: 

 

We have made several trips to Tashkent over the 6 weeks and now have a 

preliminary hand-shake for principles of a potential partnership with [Government 

Official A’s] investment team.  We are expecting to sign a non-binding Term Sheet 



5 

 

with them within the next 10-15 days.  According to the proposed deal, our 

proposed Uzbekh partners will bring in new 1800 frequencies, 3G-frequencies as 

well as some technically value-adding assets for the company, such as number 

blocks, in exchange for 26% of the Uzbekh venture plus USD 32.5 millions. 

 

19. On July 4, 2007, Sonera Hungary Holding B.V., another wholly-owned subsidiary 

of Telia, entered into an agreement with Government Official A’s entity to acquire certain 

regulated assets and to assist with regulatory matters by providing consulting services (“July 2007 

Agreement”).  The agreement called for Government Official A to contribute assets and services 

valued at approximately $80 million in exchange for Telia giving Government Official A an equity 

interest in COSCOM’s operations valued at $50 million and additional unspecified payments from 

Telia.  The assets to be contributed by Government Official A were licenses, frequencies, and 

number blocks that Government Official A would cause other government officials to authorize on 

Telia’s behalf. 

 

20. In December 2007, Telia and Government Official A executed a series of 

agreements effectuating the promises and obligations made in the July 2007 Agreement. 

 

The December 2007 Agreements 
 

21. In December 2007, Telia fulfilled its obligations under the July 2007 Agreement by 

providing Government Official A through Takilant with a 26 percent ownership stake in Uzbek 

Holding, the holding company of COSCOM.  The purchase price was $50 million, and Takilant 

was also given a put option to sell the interest back to Telia in 2010 for a minimum price of $85 

million (providing Takilant at least a $35 million profit).  The ownership stake was conditioned 

upon Government Official A acquiring regulatory assets for COSCOM through a Takilant wholly 

owned subsidiary, including 3G licenses, 50 1800 MHz frequencies, an internet services license, 

and number blocks. 

 

22. At the time, COSCOM did not have the necessary licenses and permission from 

ACI to operate a 3G network, Government Official A and Telia agreed that ACI would issue the 

3G licenses to a Takilant subsidiary, which then would repudiate the licenses so they would instead 

be issued to COSCOM.  This repudiation of the 3G licenses was done to circumvent the 

prohibition under Uzbek law on private parties directly buying and selling telecommunications 

licenses, and should have raised red flags at Telia.  Telia managers also knew a 3G license could be 

obtained directly from ACI and that licenses did not require up-front payment. 

 

23. Other red flags included the fact that (i) Government Official A’s company should 

not have received a 3G license from ACI since it was not a telecommunications operator; (ii) the 

timing of the award of licenses to Takilant only months in advance of Takilant repudiating the 

licenses in favor of COSCOM; (iii) the participation of the country manager of COSCOM’s 

primary competitor in the transaction; (iv) and the fact that the company should not have had to 

pay to obtain a 3G license from the government. 

 



6 

 

24. Telia’s then-senior managers, including its then-chief executive officer, approved 

the agreements with Government Official A through Takilant.  Telia paid Government Official A 

through Takilant $80 million in connection with acquiring the 3G regulated assets, and 

Government Official A used a portion of those funds to pay Telia through Takilant 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. 

 

Telia Acquires Number Blocks from Government Official A 

25. In 2008, COSCOM required additional telephone numbers to issue to its 

subscribers in order to expand its network.  As with the 3G licenses, and consistent with the 

original July 2007 agreement, Government Official A improperly influenced ACI officials to issue 

number blocks for COSCOM’s benefit and Telia paid to Government Official A through Takilant 

$9.2 million to acquire the number blocks. 

 

Telia Buys Back Part of Government Official A’s Ownership Stake  

26. As discussed above, the December 2007 transaction in which Telia sold 26 percent 

of COSCOM to Government Official A through Takilant in exchange for $50 million, also gave 

Government Official A through Takilant a put option to sell the interest back to Telia in 2010 for a 

minimum price of $85 million.  In January 2010, Government Official A caused Takilant to 

partially exercise the put option and sold Telia most of its 26 percent of COSCOM.  Telia paid 

Government Official A through Takilant $220 million for this interest, a 340 percent increase over 

the approximately $50 million Government Official A paid through Takilant to acquire the interest 

in 2007 and far more than the minimum $85 million option exercise price in December 2007.  

Telia also agreed to adjust the put option for Takilant’s remaining 6 percent interest in COSCOM 

to a minimum price of $50 million, which was later increased to $75 million.   

 

4G Market Expansion 

27. In 2010, Telia sought to expand its Uzbek operations by offering 4G services.  

Consistent with the original July 2007 agreement, Telia turned to Government Official A to obtain 

the needed licenses.  Rather than pay Government Official A directly through a sham consulting 

agreement with Takilant as had been done with the 3G licenses, Telia agreed to pay Takilant’s debt 

to a third party via a sham consulting services agreement.  Under the terms of the agreement, 

Government Official A was to assist COSCOM in acquiring certain 4G/LTE licenses/frequencies 

in the 2500-2700 MHz bandwidths. 

 

28. The structure of the 4G license transaction raised many of the same red flags 

identified as the 3G license transaction.  Telia executives knew a 4G license could be obtained 

directly from ACI and that licenses did not require upfront payment.  Moreover, the 4G license that 

COSCOM was issued was repudiated by Telia’s primary competitor in Uzbekistan and whose 

Uzbek country manager again negotiated for Government Official A.  Telia did not receive any 



7 

 

evidence of the consulting services provided by Government Official A through Takilant, though 

the frequencies repudiated by its competitor were ultimately awarded to COSCOM. 

 

29. In November 2010, Telia sought to further expand its Uzbek operations and turned 

to Government Official A to obtain 4G licenses/frequencies in the 700 MHz bandwidth.  As 

before, Takilant was engaged to provide sham consulting services and Government Official A 

exerted the same improper influence to obtain the licenses.  The sham consulting services were 

used as a guise to overcome the prohibition on private parties buying and selling regulatory assets.   

Telia paid $55 million to Government Official A through Takilant to obtain these additional 

licenses and a fiber-optic lease agreement.  As with the previous 3G license transaction and 4G 

license transaction, the same red flags existed.  In total , Telia paid to Government Official A 

through Takilant $70 million for 4G licenses and the acquisition of a fiber-optic lease agreement. 

 

30. As a result of the conduct described above, Respondent violated Sections 30A and 

13(b)(2)(B)  of the Securities Exchange Act of 1934[15 U.S.C. §§ 78dd-1 and 78m(b)(2)(B)]. 

   

Telia’s Remedial Efforts 

31. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Respondent, both before and during the Commission’s investigation, 

including replacing all relevant members of its board and senior management and implementing 

a new comprehensive compliance program, and the thorough cooperation afforded the 

Commission staff. 

Undertakings 

 32. Respondent has undertaken to cooperate fully with the Commission in any and all 

investigations, litigation, or other proceedings relating to or arising from the matters described in 

this Order.  In connection with such cooperation, Respondent shall: 

  a.  produce, without service of a notice or subpoena, any and all nonprivileged 

documents and other information requested by the Commission staff subject to any restrictions 

under the law of any foreign jurisdiction; 

 

  b.  use its best efforts to cause its current or former officers, 

employees, agents, and directors to be interviewed by Commission staff at such times and 

places as the staff reasonably may direct; and 

 

  c.  use its best efforts to cause its current or former officers, 

employees, agents, and directors to appear and testify without service of a notice or 

subpoena in such investigations, depositions, hearings, or trials as may be 

requested by the Commission staff. 

In determining whether to accept the Offer, the Commission has considered these undertakings. 



8 

 

IV. 

 

 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 

 

A. Respondent cease and desist from committing or causing any violations and any 

future violations of Sections 30A and 13(b)(2)(B)  of the Securities Exchange Act of 1934 [15 

U.S.C. §§ 78dd-1 and 78m(b)(2)(B)]. 

 

B. Respondent shall pay disgorgement of $457,000,000, which represents profits 

gained as a result of the conduct described herein.  Payment of disgorgement shall be made as 

follows: 

 

1. Within ten (10) days of the entry of the Order, $208,500,000 to be paid to the 

Securities and Exchange Commission for transfer to the general fund of the 

United States Treasury, subject to  Exchange Act Section 21F(g)(3);  

2. Respondent’s disgorgement obligation shall be deemed satisfied in part by 

Respondent’s forfeiture payment of up to $40,000,000 within ten (10) days of 

its sentencing hearing as part of Respondent’s resolution with the United States 

Department of Justice; 

3. Respondent’s disgorgement obligation shall be deemed satisfied in part by any 

confiscation or forfeiture payment of up to $208,500,000 made by Respondent 

within five hundred forty (540) days of the Order as part of any related 

proceedings between Respondent and the Swedish Åklagarmyndigheten or 

within five hundred fifty (550) days as part of Respondent’s related resolution 

with the Dutch Openbaar Ministerie; 

4. In the event that any confiscation or forfeiture payments made by Respondent in 

related proceedings with the Swedish Åklagarmyndigheten or Dutch Openbaar 

Ministerie are less than $208,500,000, or with the Department of Justice are less 

than $40,000,000, Respondent shall pay the remaining disgorgement amounts 

to the Securities and Exchange Commission within ten (10) days of such event 

for transfer to the general fund of the United States Treasury, subject to  

Exchange Act Section 21F(g)(3); 

5. Should any amount of the payment made in connection with Respondent’s 

resolution with the Dutch Openbaar Ministerie be returned to the Respondent or 

any affiliated entity for any reason, that amount will not be credited as an offset 

and Respondent shall pay such amount to the Securities and Exchange 

Commission within ten (10) days of such event for transfer to the general fund 

of the United States Treasury, subject to  Exchange Act Section 21F(g)(3). 

 

If timely payment is not made, additional interest shall accrue pursuant to SEC Rule of Practice 

600.  Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  



9 

 

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying Telia as a 

Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 

letter and check or money order must be sent to Charles Cain, Division of Enforcement, Securities 

and Exchange Commission, 100 F St., NE, Mailstop 5631, Washington, DC 20549.   

 

 C. If at any time following the entry of the Order, the Division of Enforcement 

(“Division”) obtains information indicating that Respondent knowingly provided materially false 

or misleading information or materials to the Commission, or in a related proceeding, the Division 

may, at its sole discretion and with prior notice to the Respondent, petition the Commission to 

reopen this matter and seek an administrative cease-and-desist order against the Respondent.   

Respondent may contest by way of defense in any resulting administrative proceeding whether it 

knowingly provided materially false or misleading information, but may not:  (1) contest the 

findings in the Order; or (2) assert any defense to liability or remedy, including, but not limited to, 

any statute of limitations defense. 

 

 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary