Russia's top mobile phone operator MTS has agreed to pay 850 million U.S. dollars to settle U.S. bribery investigations into a former subsidiary in Uzbekistan, a U.S. regulator and the company said.
MTS quit the Uzbek market in 2016 after coming under scrutiny from the U.S. Department of Justice and the Securities and Exchange Commission (SEC) as part of a broader investigation into telecom firms' operations in Uzbekistan.
The SEC said on Wednesday that MTS had agreed to pay a criminal fine and forfeiture in the amount of $850 million after the regulator found that it had bribed Uzbek authorities to win and retain business in the country.
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 reportedly 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.
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.
The mobile operator, part of the Sistema, conglomerate, said in November it had set aside around $850 million to cover the possible fallout from the case.
MTS' Moscow-listed shares were down 1.18 percent in early trade, underperforming the broader index.
