Another foreign telecoms firm appears to have been paying millions of dollars to various charities in Uzbekistan, some of them linked to Gulnara Karimova, strongman Islam Karimov’s flamboyant daughter. The revelations come in the wake of reports that Nordic telecoms giant TeliaSonera paid Karimova’s charities to stop harassment from Uzbek officials.
Russia's Beeline funneled about $3 million to various charities in Uzbekistan last year, the company has said, some of them linked to Karimova’s Fund Forum group of charities. Beeline did not forget its “social obligations,” Andrey Safronyuk, general director of Unitel, a Beeline subsidiary in Uzbekistan, said in remarks quoted by the semi-official Uzdaily.uz website on May 28.
Citing Beeline’s press service, Uzdaily.uz reported that the company spent 6 billion sums ($2.9 million at the official exchange rate) on charity and sponsorships in 2012.
But, as Swedish investigative journalists reported this month, businesses operating in Uzbekistan often do not have a choice about what charities they support. The country ranked 170th of 174 on Transparency International’s latest Corruption Perceptions Index.
John Davy, who served in 2008 as chief financial officer at Ucell, TeliaSonera’s local subsidiary, told Swedish public broadcaster SVT's "Uppdrag Granskning" ("Mission: Investigation") program this month that foreign investors are forced to payoff officials in Uzbekistan under the cover of charitable donations.
It often works like this, Davy explained: One day service is interrupted. “Down goes the switch and all of a sudden we lose a hundred base stations," he said. "We would have thousands of subscribers screaming about why they don't have their service. So after two or three days we have to make a $100,000 payment to a charitable organization, at the choice of whomever."
The payments were filed as donations to charities, but "everybody knew what they were for,” he added.
In TeliaSonera’s case, some of the payments supported Style.uz, a fashion and art festival organized by Fund Forum, a charity run by Karimova, the self-styled society diva who was described in one leaked US Embassy cable as a “robber baron.”
Beeline's charity contributions last year included a computer games championship, which Fund Forum helped organize. Karimova's Style.uz, which draws semi-retired celebrities like pop singers Sting and Demis Roussos, lists Beeline as a sponsor of its fashion and art week last autumn, though the company does not include Style.uz on its list of charity recipients for 2012.
This year Beeline is, according to an advertisement on its website, sponsoring the Zo'r-Zo'r Star televised music talent show and gala finale on June 7. The Zo’r-Zo’r Star site lists Beeline and the Fund Forum as sponsors and organizers.
Uzbekistan’s telecoms market, which is dominated by foreign investors, has been rocked by relentless scandals in recent years. Swedish prosecutors are investigating allegations that TeliaSonera paid bribes to enter the Uzbek market, possibly to Karimova. Last year O’zdunrobita, the Uzbek subsidiary of Russian mobile phone titan MTS, became embroiled in a taxation dispute that forced the company to declare bankruptcy and withdraw from the country.
**UPDATE: Forty minutes after we posted this blog, a media advisor to TeliaSonera, John Lough of BGR Gabara in London, requested EurasiaNet.org add some biographical information about Davy. Davy had been convicted of fraud by a New Zealand court in 2002 and had been fired by Ucell in 2009 "on account of incorrect and false financial reporting," Lough said. "Ucell’s swift action to terminate Mr Davy’s employment is an example of the company’s zero tolerance of corrupt practices."