Articles Posted in DOJ compliance programs

Russian telecom companyRussia-based Mobile TeleSystems PJSC (MTS), the largest mobile telecommunications company in that country and an issuer of publicly traded securities in the United States, has settled with the Department of Justice and Securities and Exchange Commission (SEC) paying $850 million to resolve charges of paying bribes in Uzbekistan.  A former Uzbek official who is the daughter of the former president of Uzbekistan and the former CEO of Uzdunrobita LLC, another MTS subsidiary, were said to have participated in a bribery and money laundering scheme involving more than $865 million in bribes from MTS, VimpelCom Limited (now VEON) and Telia Company AB (Telia) to the former Uzbek official in order to secure her assistance in entering and maintaining their business operations in Uzbekistan’s telecommunications market.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman of the Southern District of New York, Special Agent in Charge Raymond Villanueva of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Washington, D.C. and Chief Don Fort of IRS Criminal Investigation (IRS-CI) made the announcement.

Gulnara Karimova, 46, a citizen of Uzbekistan, was charged in an indictment filed in the Southern District of New York on March 7 with one count of conspiracy to commit money laundering.  Karimova is a former Uzbek official who allegedly had influence over the Uzbek governmental body that regulated the telecom industry.  Bekhzod Akhmedov, 44, a citizen of Uzbekistan and the former Uzbek executive, was charged in the same indictment with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), two counts of violating the FCPA, and one count of conspiracy to commit money laundering.  Karimova’s and Akhmedov’s case is assigned to U.S. District Judge Kimba Wood of the Southern District of New York.

The US Department of Justice (DOJ) is changing its focus to make sure companies create and implement strong regulatory compliance programs. The Department has actually hired a special lawyer whose title will be the Compliance Counsel, Hui Chen. Her job, according to the DOJ, will be to go out and to test the validity of the company’s claims about its regulatory compliance programs to make sure they are not just window dressing.

Chen was selected because of her substantial in-house compliance experience across diverse industries, including the financial, pharmaceutical and software technology sectors. Chen most recently headed Standard Chartered Bank’s global anti-bribery and corruption program. She previously served as an Assistant US Attorney in Brooklyn, New York.

The DOJ is no  longer willing to accept a company’s representations about the  strength of its compliance program.  The Compliance Counsel’s assessment is expected to influence the DOJ’s charging decisions as well as any remedial measures the DOJ may require a company to undertake, including whether to impose a compliance monitor.