Following the admission by embattled Nordic telecoms giant TeliaSonera this week that its operations in Kazakhstan and four other countries had breached the company’s own ethical requirements and may have broken the law, the firm is bracing itself for a new round of scrutiny.
TeliaSonera's dealings with the rich and powerful in Uzbekistan, where its payments of millions of dollars to an intermediary of Gulnara Karimova’s, the president’s daughter, have already put the company in the crosshairs of investigators in Sweden, The Netherlands and the United States. TeliaSonera is also linked to a money-laundering probe in Switzerland in which Karimova is a suspect.
Now questions are being asked about TeliaSonera’s dealings in neighboring Kazakhstan, where it owns the Kcell brand (with 14.1 million subscribers in a country with a population of 17 million). Kazakhstan’s media has previously noted some striking similarities between TeliaSonera’s modus operandi in the two countries—namely its dealings with business people well connected to the powers-that-be and with links to rival companies.
One lucrative deal likely to come under the microscope is TeliaSonera’s $170-million purchase of WiMAX frequencies in Kazakhstan in December 2012, after questions had already been raised about its operations in Uzbekistan. Business weekly Delovaya Nedelya described the agreement at the time as conducted “according to a similar scenario” to the deals in Uzbekistan.
TeliaSonera bought the frequencies from Midas Telecom, owned by prominent businesswoman Aigul Nuriyeva. Nuriyeva also owns a stake in rival telecoms provider Tele2, described by Forbes Kazakhstan as “TeliaSonera’s main competitor on the domestic market.”
This calls to mind uncomfortable parallels with TeliaSonera’s activities in Uzbekistan, where the company has acknowledged dealing with two intermediaries of Karimova’s who had interests in rival telecoms companies: Bekhzod Akhmetov, then director of competitor O’zdunrobita (operated by Russia’s MTS, which was later forced out of Uzbekistan), and Gayane Avakyan, who had interests in rival firm Vimpelcom (operator of the Beeline brand), whose activities are now under investigation in the United States and Holland.
“Judging by the Uzbek deals, experts note that this is not the first time that [TeliaSonera] has had to deal with partners which are rivals,” Delovaya Nedelya commented about TeliaSonera’s Kazakhstan acquisition.
The agreement went through after the storm had already broken over TeliaSonera’s dealings in Uzbekistan, where it came under fire in fall 2012 over payments of some $330 million to an offshore company called Takilant Limited run by Avakyan. (TeliaSonera has acknowledged making those payments, but denied wrongdoing in the affair, which last year prompted the resignation of top management.)
Nuriyeva was ranked by Forbes Kazakhstan last year as the country’s 12th most-influential business person and its ninth wealthiest, with a fortune of $780 million made in the financial and telecoms sectors.
She also has business links to Prime Minister Karim Masimov. In 2008, according to a leaked US diplomatic cable, Masimov confirmed to the US ambassador information published in a Wall Street Journal article that he was “co-owner of a Singapore-based company together with a Kazakhstani banker named Aigul Nuriyeva who, according to the article, helps manage the Nazarbayev family finances.” (A spokesman for Nuriyeva denied to the Wall Street Journal that she played any role in managing the first family’s funds.)
“Masimov explained to the ambassador that his share in this company is not a secret, as the asset is listed on his financial disclosure forms,” the cable said.
TeliaSonera has not made specific reference to potential issues in Kazakhstan. Presenting the results of the external review into the firm’s activities in Nepal, Kazakhstan, Azerbaijan, Tajikistan, and Georgia on April 2, TeliaSonera board chair Marie Ehrling said “several transactions, and actions during [2007-2013] have been conducted in a manner inconsistent with sound business practice and TeliaSonera’s ethical requirements.”
“It cannot even be ruled out that certain conduct has been in violation of the law,” she added.
Ehrling said full information about the review could not be made public, since “we are operating in many complicated legally geographical areas, and there is a risk that the company incurs lawsuits that may harm the company.”