Telco graveyard Uzbekistan claims another victim with $1.4 bn Telia fine

A decade ago some ambitious TeliaSonera execs got together over bottle of aquavit and concluded the smart money was in Uzbekistan. They were wrong.

Following a lengthy investigation into the circumstances of its entry into the Uzbek telecoms market via the acquisition of Coscom, US and Dutch authorities have slapped Swedish telco Telia with a fine of $1.4 billion for alleged corruption.

“I have said on many occasions in the past that Telia Company’s entry into Uzbekistan was done in an unethical and wrongful way and we are prepared to take full responsibility,” said Telia Chairman Marie Ehrling. “We are cooperating fully with the authorities to bring clarity to the matter. With that said, our initial reaction to the proposal is that the amount is very high. We will now have to analyze the information and decide on how to proceed with the ongoing discussions with the authorities.”

Ehrling has a point. Vimpelcom was also investigated for corruption in Uzbekistan and reached a settlement with US and Dutch authorities to the tune of $835 million so she’s entitled to query why her company is getting stung for an extra half a bil.

The recipient of all this under-the-table cash is reported to have been Gulnara Karimova, eldest daughter of recently-deceased Uzbekistan dictator Islam Karimov, himself a regular contender for Dictator of the Year during his 27-year reign.

Karimova seems to be a chip off the old block, having reportedly trousered in excess of $1 billion to rig the Uzbek telecoms market, although daddy decided to put her under house arrest a few years ago regardless. No pleasing some people. The Organized Crime and Corruption Reporting Project has been all over this case from the start and has an excellent timeline of the dodgy dealings here.

It’s quite possible that Telia and Vimpelcom concluded the only way to do business in Uzbekistan was through Karimova but, presumably, nobody had a gun to their head and they could have just turned their back on the troubled, impoverished country. They didn’t, and anyone remotely associated with those deals has been fined and/or sacked. Karimov is gone, but his successor is unlikely to be a great improvement, so telcos would be well advised to give Uzbekistan a wide berth for some time.