U.S. authorities mulling expansion of Uzbekistan investigation to other Eurasian markets, move could cost telco €1.6 billion in damages.
TeliaSonera faces an even bigger headache than the one it is currently experiencing in Eurasia, with U.S. authorities poised to extend their corruption investigation at its Uzbekistan business into other markets in the region, according to a report in the Swedish press on Tuesday.
The Sweden-based telco is already battling extensive problems at its Eurasia business, a business it decided to pull out of earlier this year, but the worst may still lie in front of it, Svenska Dagbladet reported.
The operator revealed that it was being investigated by the U.S. Department of Justice (DoJ) and the Securities and Exchange Commission regarding its alleged corruption at its Uzbekistan business in March 2014.
U.S. authorities are now holding talks about extending that probe into other markets in the region, the Swedish daily claimed, citing sources familiar with the situation.
Such a move could be costly for TeliaSonera. Analysts at Danske Bank believe the likelihood of a hefty fine from the U.S. is high, and now predict the telco could face compensation claims of 15 billion kronor (€1.6 billion), significantly more than its earlier SEK5 billion forecast, Svenska Dagbladet said.
The paper’s sources said the extended U.S. investigation would focus primarily on TeliaSonera’s activities in Kazakhstan and Azerbaijan, but that Nepal is also an area of interest for the DoJ.
TeliaSonera declined to comment on the possibility of markets other than Uzbekistan being drawn into the investigation.
TeliaSonera is not the only major telco linked with dodgy dealings in Uzbekistan.
Nordic neighbour Telenor has had its conduct in the market called into question as a result of its 33% stake in Russia’s Vimpelcom, which operates there. Its activities in Uzbekistan are being investigated by U.S. and Dutch authorities, and it has lost a number of top executives as a result.
Vimpelcom made a $900 million provision in relation to the Uzbekistan investigation in its third quarter results, and admitted that it has no clear idea what the final cost of the probe will be.
Russia’s MTS – which returned to the Uzbek market in late 2014 after a two-year hiatus triggered by accusations of financial irregularities and a subsequent bankruptcy filing – is also implicated in the ongoing investigation.
The telcos have all had dealings with Takilant, a Gibraltar-based company associated with Gulnara Karimova, daughter of Uzbekistan president Islam Karimov, filing – is also implicated in the ongoing investigation.