Case study: Bribery in the telecommunications sector

U.S. SECURITIES AND EXCHANGE COMMISSION (S.E.C.) CHARGES TELECOMMUNICATIONS COMPANIES AND ITS FORMER EXECUTIVES WITH BRIBING OFFICIALS MACEDONIA AND MONTENEGRO

Source: https://www.sec.gov/litigation/litreleases/2011/lr22213.htm

What

  • Subsidiaries in Macedonia made illegal payments of approximately $6 million under the guise of bogus consulting and marketing contracts.
  • The company paid approximately $9 million through four sham contracts to funnel money to government officials in Montenegro.

Who

A telecommunications provider, its parent company and three of its former top executives

Why

Bribing government and political party officials in Macedonia and Montenegro to win business and shut out competition in the telecommunications industry.

When

Years 2005 and 2006.

How

According to the SEC’s complaints filed in the Southern District of New York, in the wake of legislation intended to liberalize the Macedonian telecommunications market, the company entered into a secret agreement entitled the “Protocol of Cooperation” with senior Macedonian government officials to delay or preclude the issuance of a license to a new competitor and mitigate other adverse effects of the new law. To win their support, the company paid €4.875 million to a third-party intermediary under a series of sham contracts with the intention that the intermediary would forward money to the government officials. The company also promised a Macedonian political party the opportunity to designate the beneficiary of a business venture in exchange for the party’s support.

The SEC further alleges that in Montenegro, the company used intermediaries to pay bribes to government officials in return for their support of the company’s acquisition of the state-owned telecommunications company on terms favorable to the company. At least two Montenegrin government officials involved in the acquisition received payments made through the bogus contracts. A family member of a top Montenegrin government official also received payments.

The outcome

Criminal charges have been settled by the agreement to pay 95 Million USD by the company and its parent.

Downloads

More details on the violations, involved parties (defendants and other relevant individuals and entities), the factual allegations, violations, claims for relief are available within the complaint versus the companies and the complaint versus the executives.

 

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