Saturday 3 December 2016

Irish bank used to funnel cash in $114m global bribes scandal

US authorities put stay on court order to seize Irish-based assets in telecoms corruption probe, writes Simon Rowe

Simon Rowe

Published 12/06/2016 | 02:30

Bribes were allegedly paid to dictator’s daughter Gulnara Karimova to award mobile phone licences
Bribes were allegedly paid to dictator’s daughter Gulnara Karimova to award mobile phone licences

Hundreds of millions of dollars worth of assets held in Irish bank accounts allegedly linked to Gulnara Karimova - daughter of Uzbek dictator Islam Karimova - will be seized by US authorities next month if legal talks to settle one of the world's biggest corporate bribery cases are not successful.

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US authorities have been granted seizure orders over assets valued at €269m that reside in bank accounts in Ireland, Luxembourg and Belgium, which they allege are the proceeds of corrupt payments to Uzbek officials by two of Russia's largest telecoms companies.

But a stay has been put on a court order to seize the Irish-based assets to enable high-level talks between the Republic of Uzbekistan and the US Department of Justice in a bid to reach an out-of-court resolution. This stay in legal proceedings elapses in 50 days' time.

Gulnara Karimova is named in US court filings as the alleged beneficial owner of at least six Irish bank accounts.

The US Department of Justice claims the money is linked to corrupt payments totalling $114m made by MTS, Russia's largest mobile operator, and Vimpelcom, the world's sixth-largest telecoms company, to Ms Karimova and her business associates from 2006 to 2012 to secure mobile phone licences and radio frequencies from the Uzbek government.

A US Department of Justice spokesman told the Sunday Independent: "Warrants of arrest in rem were duly executed on the defendant property located in Ireland and named for forfeiture in this action on August 27, 2015. The forfeiture case is presently stayed through July 31, 2016, to permit the Republic of Uzbekistan and the United States to discuss a potential out-of-court resolution."

US Court filings allege that payments were made to shell companies owned by an Uzbek official. The payments were nominally in return for shares in Uzbek subsidiaries owned by the two implicated Russian telecoms companies, and for consultancy services.

The money was laundered in a complicated series of transactions involving US financial institutions before being used to purchase investment portfolios and assets in Ireland.

The funds targeted for seizure are held at Bank of New York Mellon Investment Servicing (International) in Ireland, which is headquartered in Dublin. The targeted assets include shares of First Global Investments SPC Ltd held for two Gibraltar companies, Swisdorn Ltd and Takilant Ltd, as well as Expoline Ltd of Hong Kong, and "all assets underlying the shares, and property traceable thereto".

Vimpelcom, which is headquartered in Amsterdam and is listed on the Nasdaq, agreed in February to pay a record $795m in penalties to US and Dutch authorities after it admitted bribing a government official in Uzbekistan to gain entry into the country and win valuable telecoms licences.

The corrupt payments were primarily made through sham contracts, but were also made under the guise of legitimate charitable contributions or sponsorships.

During the course of the bribery scheme, Vimpelcom generated more than $2.5bn in revenues from its telecoms subsidiaries in Uzbekistan.

Gulnara Karimova is the eldest daughter of Uzbek President Islam Karimova. But, in 2014, she fell out with her father and was placed under house arrest. Prior to this she held several diplomatic jobs and built a sprawling business empire in the resource-rich ex-Soviet nation.

Anti-corruption group Transparency International said Karimova is "suspected of receiving more than $1bn worth of shares and payments from mobile phone companies in exchange for her influence".

Court papers also describe a string of companies owned by Karimova's long-time boyfriend Rustam Madumarov. Madumarov, a former Uzbek pop star, was sentenced to 10 years' imprisonment in Uzbekistan in 2014 on charges of stealing assets worth tens of millions of dollars and tax evasion.

Sunday Indo Business

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