HSE University Anti-Corruption Portal
MTS Goes Under Investigation Again

The US law enforcement authorities are investigating alleged corrupt practices of MTS in Armenia.


The information about a new investigation being conducted into alleged violations of the US Foreign Corrupt Practices Act (FCPA) by MTS has been unveiled in a form 6-k (a form for foreign issuers: the shares of MTS are listed on the US stock exchange) which is submitted to the United States Securities and Exchange Commission (SEC).

According to the information provided in the report, suspicious transactions were identified in MTS in relation to the company’s subsidiary in Armenia and were disclosed to the US Department of Justice (DOJ) and the SEC. Both authorities asked MTS to provide additional information about those transactions, which resulted in the company’s internal investigation in this regard.

The signs of possible violations were detected in connection with an independent compliance monitorship under a Deferred Prosecution Agreement and a Consent Order signed with the DOJ and the SEC respectively in 2019. At that time, the company’s subsidiaries in Uzbekistan, Uzdunrobita LLC and KOLORIT Dizayn Inc LLC, were accused of violating the anti-bribery, books and records and internal controls provisions: MTS had repeatedly bribed Gulnora Karimova, a daughter of a former Uzbek president, through the companies affiliated with her in order to gain access to Uzbekistan’s market. MTS conducted its unlawful activities during the period between 2004 and 2012 with the total amount of bribes reaching $420 million, as per the investigators.

The 2019 investigation concluded with the company’s paying a monetary penalty of $850 million and agreeing to the independent three-year monitor of its compliance programme. As highlighted in the company’s Agreement with the DOJ, MTS “had inadequate anti-corruption controls and an inadequate anti-corruption compliance program during the period of the [mis]conduct”.

The MTS case was the first proceeding of the US law enforcement authorities against a Russian company. Besides MTS other two telecommunications companies, VEON (VimpelCom) and TeliaSonera, were held liable for having used similar corruption schemes to get access to the Uzbek market in 2016 and 2917 respectively.

It should be highlighted that over the recent years there has been a clear trend in the FCPA enforcement towards repeatedly holding companies liable also during the term of the previous agreements with the US law enforcement authorities: experts stress that a half of 18 cases of repeated instances has been detected by the US authorities since 2017. In 2021 for instance, new indictments were brought against Deutsche Bank and Credit Suisse that had already been held liable for the FCPA violations shortly before that, in 2019 and 2018 respectively.

Consequently, the investigation of the MTS unlawful activities in Armenia can presumably result in the initiation of new proceedings against the company. However, MTS says that “at the moment [it is impossible] to predict the term or the outcome of the investigation”.

Foreign bribery

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