Scandal-plagued Nordic telecom giant TeliaSonera has distanced itself from its local subsidiary in Uzbekistan, Ucell, after Ucell sponsored an event hosted by Gulnara Karimova, the controversial daughter of the country’s strongman.
Ucell sponsored a concert this week marking the opening of Karimova’s annual weeklong arts, music, and fashion extravaganza, Style.uz.
That’s likely a little embarrassing for TeliaSonera, which is embroiled in a corruption investigation in Sweden, accused of paying over $300 million in bribes to a Karimova associate for access to Uzbekistan’s telecoms market.
A spokesperson for TeliaSonera confirmed that Ucell had sponsored the event but stressed the decision was taken locally without its involvement, Sweden’s The Local website said on October 24. "Ucell contributes to projects meant to contribute to Uzbek society," The Local quoted the TeliaSonera representative as telling the TT news agency. TeliaSonera did not disclose the amount of money Ucell had paid for Karimova's bash, which is billed as a charity fundraiser, The Local said.
In February, an audit unearthed no evidence of corruption, but found TeliaSonera had not employed adequate safeguards when entering as opaque an environment as Uzbekistan, which Transparency International ranks as 170 out of 174 on its Corruption Perceptions Index.
“If one carries out business in a corrupt country, one should quite simply be more thorough than TeliaSonera has been,” one of the lead lawyers on the review said. The CEO then resigned. The company denies wrongdoing.
A former Ucell executive, speaking to Swedish media earlier this year, described the incestuous way business is transacted in Uzbekistan. He said excessive harassment from authorities leaves foreign investors no choice but to bribe local officials. In Ucell’s case, the payments were filed as donations to charities, but "everybody knew what they were for,” the former executive, who had been fired, added.
Ucell sponsored Style.uz in 2011 and 2012, as well.
Karimova’s event is not off to an auspicious start this year. After pressure from human rights groups, Belgian-Italian singer Lara Fabian has cancelled her scheduled performance on the closing night, saying she refuses to become a "shop window for the torturous Uzbek regime” as celebrities like Sting and Gerard Depardieu have been in the past.