The latest news from our regional teams about financial crime, corruption, sanctions and other integrity issues. This bulletin covers recent enforcements and investigations in Sweden, the Czech Republic, Turkey, UK, Nigeria, Zambia, South Africa and Tajikistan.


Sweden/United States: $966 million bribery settlement for Swedish telecoms provider

On 21 September, Telia, a Swedish telecoms company, and its Uzbek subsidiary, Coscom, were fined USD 965,773,949 by American, Swedish and Dutch authorities, to settle charges of bribery related to the two companies’ operations in Uzbekistan. As part of the settlement, Telia has admitted to paying bribes totalling USD 331 million between 2007 and 2010 to a representative of the Uzbek government, widely reported to be Gulnara Karimova, daughter of the former Uzbek President, in order to enter the Uzbek market and acquire Uzbek telecoms assets.

Telia’s settlement marks the second such penalty for a major telecommunications provider for bribery in Uzbekistan, In February 2016, VimpelCom, a Netherlands-headquartered provider, was fined USD 835 million for paying more than USD 114 million to Karimova, for telecoms licences.

Czech Republic: Former Finance Minister and likely future PM, Andrej Babiš, stripped of immunity, facing fraud charges

On 6 September, following a request by Czech police, the Czech parliament voted to remove the parliamentary immunity of Andrej Babiš, the former Finance Minister, leader of the Action of Dissatisfied Citizens (ANO) party, and one of the country’s wealthiest businessmen. Babiš, who owned the Agrofert chemical, food, and media conglomerate until 2017, is under investigation by Czech authorities and the EU’s anti-fraud office for fraudulently acquiring a EUR 2 million subsidy intended for small businesses, for an eco-farm and resort south of Prague.

Babiš’s anti-establishment ANO party is expected to win the Czech legislative elections in October, making him the likely next prime minister. He has dismissed the allegations as politically motivated, although he himself voted for the motion to remove his immunity in an effort to clear his name. Babiš was previously dismissed as Finance Minister in May 2017 due to suspicions that he had avoided paying taxes whilst CEO of Agrofert.

Middle East & North Africa

Turkey/Iran: Halkbank principals charged with sanctions breaches

This month, US authorities charged eight people over alleged breaches of US sanctions on Iran. The defendants included several current and former executives of Türkiye Halk Bankası A.Ş. (Halkbank), a Turkish state-owned bank. The US authorities claimed that senior executives at Halkbank conspired with Reza Zarrab, a dual Turkish-Iranian national arrested in 2016, to conduct millions of dollars’ worth of illegal transactions on behalf of the Iranian government through US banks. The transactions were linked to the Turkish government’s purchase of natural gas and oil from Iran between 2010 and 2015 with gold, facilitated through Halkbank accounts. The case is ongoing.
UK/Saudi Arabia: Listing rules and Aramco

In September 2017, a proposal by the FCA to reform listing rules for the London Stock Exchange was questioned by several UK MPs, including chair of the Treasury Select Committee, Nicky Morgan. The reforms, put forth by the FCA in July, would create a new category for state-owned entities hoping to list on the London Stock Exchange, and allow these companies to remain exempt from some of the more rigorous stipulations demanded for UK listing. The proposal has been widely regarded as the FCA’s attempt to court Saudi Aramco, Saudi Arabia’s national oil company, who are planning to float a 5 percent stake in their company. The listing, which will likely be on the London Stock Exchange or the New York Stock Exchange, has been valued at USD 2 trillion.

Russia CIS

Tajikistan: At least nine former anti-corruption officers jailed for fraud and bribery

A government crackdown on anti-corruption officials launched in Tajikistan in April of this year has led to the arrest of at least nine more officials. On 19 September, a former deputy head of the investigations department of the Tajik State Anti-Corruption Agency was sentenced to 15 years on charges of bribery and abuse of power, with five of his former subordinates also given lengthy terms. Three days later, a former officer at the Agency for State Financial Control and Combating Corruption was sentenced to seven years in jail for accepting bribes, fraud and other related offences. A corruption investigator, the son-in-law of a former Tajik MP, was also given 13 years. The trials were closed to the public, and neither prosecution nor defence lawyers have commented on the cases to journalists.

Sub-Saharan Africa

Nigeria: Chinese state-owned firm investigated for corruption

In August, the US Securities Exchange Commission and Department of Justice publicly announced the opening of an investigation into Sinopec Corporation, a Chinese state-owned oil company. Under investigation are allegations of USD 100 million in bribes paid by Addax Petroleum Corporation (a Swiss-headquartered Sinopec subsidiary) in 2015 to Nigerian public officials in relation to a construction contract. Swiss authorities arrested and bailed two senior Addax executives in March, prompted by the January resignation of Deloitte as Addax’s auditors due to concerns identified regarding the alleged payments.

Zambia: President holds firm on alleged mining fraud

Controversy concerning one of the largest copper mines in Africa intensified this month, with Zambian President Edgar Lungu rejecting Canadian mining company First Quantum Mineral’s (FQM) explanation of its financial activities. FQM is accused of using over USD 2 billion in revenue from Kanshani Mine to develop its international operations, without appropriately compensating the mine’s state-controlled minority shareholder. Lungu allegedly halted a state company’s lawsuit against FQM in May, instead calling for an out-of-court settlement, prompting fears regarding commercial transparency. However, pushing for a substantial settlement may have become an economic necessity as Zambia continues to await progress on its USD 1.6 billion credit application to the International Monetary Fund.

South Africa: Foreign corruption laws brought to bear on the Gupta empire?

The fallout over ‘Gupta Leaks’, a leaked cache of emails relating to the Gupta family, a controversial South African family alleged to have improperly benefited from their close relationship to President Jacob Zuma, is gaining momentum, and with it the prospect of dismantling the Gupta empire in South Africa seems most likely to come through stringent extra-territorial anti-corruption laws in the US and UK. In the absence of action from South Africa’s prosecuting bodies, these foreign laws have formed the basis of proposed investigations into KPMG and McKinsey’s South Africa-based operations, which have both recently come under fire for dealings with Gupta-related companies. This follows the collapse of Bell Pottinger in September after major clients abandoned the firm once details of its campaign for the Guptas became public. Prosecution of these companies based on foreign anti-corruption laws seems increasingly likely, which is a testament to the reach of this legislation.