Another Russian mobile giant came under attack in Uzbekistan this week.
Uzmetronom, a website that frequently features leaks and opinions from well-placed sources, reports that Beeline subscribers in Uzbekistan have been experiencing "serious difficulties" with the company’s connection over the past couple of days.
That wouldn’t normally be strange, except that last summer another Russian telecoms firm was forcibly shutdown in what looked like a state-orchestrated corporate raid. At the time, authorities accused MTS’s local subsidiary, O’zdunrobita, of violating equipment-usage terms and of tax evasion. When the plug was pulled on July 17, some 9.5 million customers were forced to flee to other carriers.
Now this, from a website believed to have close ties to the Uzbek security services: "[Beeline] telephones are either showing the complete absence of a signal, even in areas where it has always been stable, or the connection is such that it is impossible to comprehend the words of the interlocutor," Uzmetronom reported on April 18.
Uzmetronom says Beeline’s "vaunted" 3G services have stopped working outside Tashkent altogether, while the company is keeping "total silence" about the problems and whatever actions it has taken to solve them. "Beeline seems to understand perfectly that after the liquidation of MTS the people of Uzbekistan practically have no choice.”
Soap opera writers in Uzbekistan need not look far for inspiration.
This spring, the state-run Uzbektelefilm studio is scheduled to release a series on the inner workings of a fictional local mobile phone company, Silkphone.
The private Podrobno.uz website reports that the 100-part series will be filmed at the Uzbekistan national broadcasting company, O'zbekiston. Director Andrey Afrin says he will employ over 100 actors and the first 20 episodes of “Steps of Life” will air in May and June.
As they turn Silkphone into Uzbekistan’s leading mobile provider, the soap’s main characters – young female manager Dilyafruz and her underlings – will tangle with "important topics such as love and betrayal, problems of morality and rethinking mistakes,” says Podrobno.
The topic may prompt some observers to snigger: Over the past year two large international telecoms firms working in Uzbekistan have been embroiled in scandals linked to the strongman president’s socialite daughter, Gulnara Karimova. Russian giant MTS was summarily closed and its assets seized last year when authorities accused the company of tax evasion. MTS was forced to write off over $1 billion in assets and said the state was trying to expropriate its business. An appeals court later ordered the assets returned, in exchange for fines and penalties to the tune of $600 million.
The head of Swedish-Finnish telecoms giant TeliaSonera, Lars Nyberg, has resigned after an auditor found the company was negligent when purchasing mobile licenses in graft-saturated Uzbekistan.
The 2007 deal was thrust into the spotlight in September, when Swedish journalists accused TeliaSonera of paying some 2.2 billion Kroner ($337 million) to a small, offshore company linked to President Islam Karimov’s daughter, Gulnara Karimova.
Mannheimer Swartling, which carried out the review for TeliaSonera, found no evidence of bribery or money laundering, but said “the suspicions of crime expressed in the media and by the Swedish Prosecution Authority cannot be dismissed by this investigation.”
Biörn Riese, a lawyer for Mannheimer Swartling, “notes that the transactions have been surrounded by so many remarkable circumstances that at least someone should have reacted to the lack of clarity regarding the local partner,” the firm said in a February 1 statement.
“If one carries out business in a corrupt country, one should quite simply be more thorough than TeliaSonera has been,” Riese said.
Last month documents surfaced showing TeliaSonera knew it was dealing with Karimova, who has been described in US diplomatic cables released by WikiLeaks as a “robber baron,” for the way she uses her father’s leverage to take over profitable businesses in Uzbekistan.
Russian telecoms giant MTS has filed for bankruptcy in Tashkent amid its long-running dispute with the Uzbek government, which is currently embroiled in telecoms scandals on several fronts.
MTS’s Uzbekistan subsidiary O’zdunrobita has petitioned for bankruptcy due to its “inability” to carry out a November court ruling ordering it to pay fines and penalties of $600 million, MTS said in a January 16 statement.
The company’s troubles began last July, when Tashkent accused it of using equipment illegally, then brought tax evasion charges, and finally shut it down.
In September, a court ordered MTS’s assets in Uzbekistan seized. To the surprise of many, that ruling was overturned on appeal in November. But with the good news came a catch: The court that overturned the assets seizure ordered MTS to pay penalties of $600 million – the approximate value of the assets the court had just returned. Some $150 million has already been seized from its bank accounts in Uzbekistan, MTS says.
MTS has protested its innocence, condemning the affair as the kind of assets grab not uncommon in Uzbekistan’s murky business climate – a charge Tashkent denies.
As a probe into allegations of shady payments in Uzbekistan by a Swedish-Finnish telecoms firm continues, fresh accusations have surfaced linking the deal directly to Gulnara Karimova, daughter of President Islam Karimov, whose name has repeatedly emerged in connection with the controversy.
Swedish broadcaster SVT -- which this fall broadcast the exposé that sparked the opening of a corruption investigation in Sweden involving TeliaSonera’s acquisition of the rights to operate in Uzbekistan -- says it has interviewed two senior TeliaSonera executives who linked Gulnara Karimova to the agreement allowing the company to enter Uzbekistan’s lucrative cellphone market.
“To reach a deal with Gulnara was a prerequisite to the whole deal,” one executive (both requested anonymity) told SVT’s “Uppdrag granskning” program. The executives said TeliaSonera officials traveled to Uzbekistan in 2007 to negotiate with the president’s daughter, who has extensive economic interests in Uzbekistan. (One WikiLeaked US Embassy cable describes her as a “robber baron.”) Karimova, who casts herself a sultry pop diva and fashion designer, and is her country's permanent representative to the UN in Geneva, has not commented on any of the corruption allegations.
One of the sources linked Karimova to Bekhzod Akhmedov, formerly a major player on the Uzbekistan’s telecoms market and currently the prime suspect in a separate money-laundering probe under way in Switzerland.
In the latest twist in the long-running saga of Russian cellphone operator MTS in Uzbekistan, a Tashkent appeals court reportedly has made a landmark ruling and promised to return the company to its Russian owners. Tashkent had shut down the billion-dollar firm this summer.
Russia’s RIA Novosti news agency quoted a “source close to the company” as saying that MTS had been told verbally that the appeals court had overturned a September ruling granting Tashkent the property of O’zdunrobita, MTS’ Uzbekistan arm, following a months-long dispute over alleged legal violations and tax evasion charges that the company vehemently denied.
Vedomosti newspaper quoted another source “close to one of the sides in the proceedings” as confirming the news, but said that the court had ruled that the company should pay Tashkent “the monetary equivalent of the cost of its assets -- around $600 million.” The report said MTS had declined to comment.
If confirmed, the ruling would signal an abrupt about-face by Tashkent that could suggest it has bowed to pressure from Moscow, which -- although not too vocal in its criticism -- has made it clear that it does look kindly on the treatment meted out to one of its oligarchs, Vladimir Yevtushenkov, owner of MTS.
As Swiss and Swedish investigators probe allegations of corruption and money-laundering involving Uzbekistan, one name is increasingly appearing linked to the cases: Gulnara Karimova, the eldest daughter of strongman President Islam Karimov.
Leaked documents (whose authenticity is not confirmed) relating to the Swiss money-laundering inquiry suggest that investigators have identified the suspect at the heart of the probe as an associate of Karimova’s and designated the case politically sensitive.
A French-language letter (carried by regional news site Centrasia.ru) purportedly sent by anti-laundering investigators to the Swiss Office of the Attorney General suggests the Uzbek government -- perhaps inadvertently -- sparked the money-laundering probe that is now coming uncomfortably close to Karimova.
The letter states that the probe was launched after investigators received notification from Geneva-based bank Lombard Odier (acting under its legal obligations) that one of its clients was on the Interpol wanted list for alleged fraud.
That client was Bekhzod Akhmedov, former director of the Uzbekistan subsidiary of Russian cellphone company MTS. Tashkent declared him wanted after he fled the country amid a row between the firm and the government that culminated with Tashkent seizing MTS’s assets this summer.
Uzbekistan is facing a second corruption investigation in Europe, as Swedish police open a graft probe into claims that Swedish-Finnish telecoms giant TeliaSonera paid hundreds of millions of dollars in bribes for the rights to operate in Uzbekistan. The case is allegedly linked to a money-laundering investigation in Switzerland.
TeliaSonera (whose largest shareholders are the Swedish and Finnish states) said that Swedish police are investigating allegations of “bribes and money laundering” involving Uzbekistan. The allegations surfaced in a September 19 documentary on Swedish broadcaster SVT.
“We can confirm that the Swedish police has collected information from TeliaSonera regarding Uzbekistan,” TeliaSonera – which owns the Ucell mobile phone company in Uzbekistan – said in a statement on September 26. It said that the company had already announced an external review “regarding the allegations of bribes and money laundering” and that now the Swedish Prosecuting Authorities’ anti-corruption unit had launched its own probe, “which we welcome.”
TeliaSonera has denied any wrongdoing but pledged to “cooperate fully” with the Swedish investigation, which follows SVT’s allegations that the firm paid hundreds of millions of dollars to “a small, one-woman company in a tax haven” for the rights to operate in Uzbekistan. The company, Takilant Limited, is run out of Gibraltar by Uzbekistan national Gayane Avakyan.
President Islam Karimov has signed a law that promises to do something new in Uzbekistan: “On the defense of private property and guarantee of the rights of owners.”
“Every entrepreneur should know that he can without fear invest in his own business, expand production activities, increase production and generate income [...] keeping in mind that the government is guarding the legal rights of the property owner,” Karimov said two years ago when proposing the law.
The new law, signed on September 24, even has a special section on the rights of foreign businesses in Uzbekistan.
Try telling that to Russian mobile giant MTS.
In June, Uzbek authorities began investigating senior officials at MTS for tax evasion and money laundering. Within two months, the company’s entire Uzbekistan operation was seized, 9.5 million users were left without service, and the company was forced to write off $1 billion. MTS denies wrongdoing and observers believe the company was simply plundered by well-connected Tashkent elites.
Once again a foreign telecoms firm in Uzbekistan is at the heart of an international scandal, and this time the trail leads back to a close associate of Gulnara Karimova's.
An investigation to be aired September 19 by Swedish public broadcaster Sveriges Television (SVT) charges that Swedish-Finnish mobile giant TeliaSonera has paid hundreds of millions of dollars to a shady offshore firm for the rights to operate in Uzbekistan. Karimova, the daughter of Uzbekistan’s dictator Islam Karimov, is close to the action, says SVT's Uppdrag Granskning (“Mission Scrutiny”) program.
TeliaSonera, which is 37 percent owned by the Swedish government, started operating in Uzbekistan in 2007. In order to work there, the company relied on a partner called Takilant Limited, which is based in Gibraltar and run by an Uzbekistan national named Gayane Avakyan.
Uppdrag Granskning reports that Avakyan has strong links to Karimova. Her name appears frequently in association with Gulnara’s pet fashion projects. And Radio Ozodlik has quoted sources calling Avakyan very close to Karimova, adding that she manages the first daughter’s finances.
Over the course of six years, SVT says, TeliaSonera has paid Takilant 2.2 billion Swedish krona ($336 million) in exchange for 3G licenses, mobile frequencies and phone numbers in Uzbekistan. But, the program notes, the money cannot be accounted for in public financial records.