With Deutsche Bank’s Help, Ukrainian Oligarchs Leave a Trail of Ruin in U.S.
Secret transactions, lost jobs, injuries, gutted buildings, unpaid bills: Ihor Kolomoisky’s untold American legacy.
The tall Swede was insistent as he spoke to journalists and analysts in his characteristically deep, rumbling voice: “I have said it before and I will repeat it: TeliaSonera did not bribe anyone.”
Lars Nyberg, then the CEO of the Swedish telecom giant, was speaking at a press conference in Stockholm in October 2012.
Prosecutors had just launched an investigation into Telia in response to a story Sweden’s national broadcaster SVT had aired the previous month in collaboration with OCCRP. The film showed that the company had paid hundreds of millions of dollars in bribes in exchange for telecom licenses in Uzbekistan.
The recipient of the money, Gulnara Karimova — characterized as a “robber baron” in a U.S. diplomatic cable — was the extravagant daughter of the country’s president at the time, Islam Karimov, who died in 2016.
But even as Nyberg was making his public assurances, Telia was secretly negotiating another payoff to Karimova, and even adjusting the technical arrangements on the fly to account for the unwelcome newfound publicity.
This is revealed in new records obtained by OCCRP and SVT’s flagship investigative program, Uppdrag Granskning (“Mission: Investigate”). The new evidence includes emails, contracts, bank statements, and testimonies gathered around the world, including some collected by U.S. authorities. Some files were read out loud to reporters; they were able to photograph others.
This documentation shows that Telia intended to pay an additional $20 million “protection fee” to Karimova, and that at least $12 million was indeed paid. One middleman in the transactions was ZTE, a Chinese telecoms and electronics company dogged by persistent allegations of corruption. Nyberg and other executives approved the arrangement, a senior manager told investigators.
“Telia never ceases to amaze me,” a lawyer specializing in anti-corruption, Peter Utterström, said on reviewing the new evidence. He recalled Nyberg’s press conference: “Of course it is very, very inappropriate to say something like that when it’s unlikely that he doesn’t know what’s happening behind the scenes.”
Pulat Ahunov, a well-known Karimov critic living in Sweden, put it more bluntly: “They say ‘we didn’t do it,’ and at the same time they give orders to give more money to Gulnara Karimova. It’s such a cynical lie.”
Despite his determined press conference, Nyberg soon left the company as a result of the scandal.
The affair was then investigated in a handful of countries. In 2017, Telia reached a settlement with American and Dutch authorities The United States had jurisdiction over the case because some of the deals had been negotiated on U.S. soil and some of the transactions passed through U.S. banks. The Dutch were also involved because Telia’s Uzbekistani subsidiary was owned by a holding company in the Netherlands. , admitting to bribing Karimova and agreeing to pay $965 million in fines and penalties — arguably the highest such payment in U.S. history.
That same year, Nyberg and two other former executives were indicted in Sweden. But the men walked free. The case against them had floundered on a technicality: The court found that, though Telia had indeed paid Karimova off, she was not a public servant formally in charge of decisions about telecommunications. As a result, the payment did not count as a bribe under Swedish law then in place.
This is why the new evidence is of great significance in Sweden. The crime of “trading in influence” was introduced in Swedish law in July 2012 to cover illicit payments to people with informal power to influence government decisions. The “protection fee” was just a fraction of the previously known bribes — but it was paid to Karimova after this date, making the new law applicable.
OCCRP and SVT found that Swedish prosecutors had been made aware of this information, but did not use it. Contacted by reporters, the prosecutor who led the case, Gunnar Stetler, did not say whether he investigated the “protection fee,” but said that any payments beyond the ones he was using would not have made a difference in the case. He did not go into details, citing confidentiality.
However, three experts who reviewed the evidence agreed that this information could have made the prosecutors’ case much stronger.
“It is of course impossible to say if [using the new evidence] would have led to convictions, but one would have had a different situation. One would not have had the same problem, that the president’s daughter was a person who could not be bribed,” said Natali Engstam Phalén, Secretary General of the Swedish Anti-Corruption Institute.
Having appealed the lower court’s acquittal, prosecutors will have another chance to make the older charges stick. Another trial of Nyberg and the other suspects in Stockholm’s Svea Court of Appeal will begin next week.
When contacted by reporters, Telia acknowledged that it was aware of the new agreement, writing in an email that it had found evidence of them “on servers abroad” and that they involved “companies that were previously part of the company group.” The company had shared the findings with Swedish and foreign legal authorities, a representative said. It has not made this information public.
Karimova is serving a lengthy prison sentence in her home country for corruption and other crimes, and was contacted via her lawyer for comment. He did not respond to questions for this story.
Telia had its roots in a Swedish government agency in charge of telegraph communications, founded in 1853.
For many years, its predecessor, Televerket, was a state-owned public service corporation in charge of all telecommunications in the country. In 1993, Telia AB was created and became a limited company on an increasingly competitive national telecom market. In 2000 it was floated on the Stockholm stock exchange.
In 2002, it teamed up with Finnish telecom company Sonera to form TeliaSonera. The next decade saw a rapid expansion eastwards, mainly into the former Soviet republics.
After several reports by OCCRP and others of suspicious multi-million-dollar deals in the region, Telia sold all of its holdings in its “Eurasian” unit, including its operator in Uzbekistan, Ucell.
The Swedish state is the company’s main owner, with 39.5 percent of shares. Telia is present in the Nordic and Baltic countries, as well as in Turkey. Its net sales in 2019 were about $9 billion, and it describes itself as Europe’s fifth-largest telecom operator.
Telia began expanding into the former Soviet states in the 2000s.
It didn’t shy away from Uzbekistan, one of the most brutal and corrupt dictatorships in the world. It formed a local subsidiary, Ucell, after buying one of the country’s major telecom operators in 2007.
But in order to operate in the country, Telia needed licenses. And it got them — by paying more than $400 million to a so-called local partner.
Telia’s annual reports stated that this partner was called Takilant Ltd. But the company was a mystery, unknown in the telecom business, with only a mailbox in Gibraltar and no website or phone number to its name.
SVT and OCCRP’s 2012 investigation showed that, in fact, Takilant had ties to Karimova. The company was run by a woman who served as Karimova’s right hand.
In subsequent years, claims circulated that Telia’s management continued to bribe, or intended to bribe, Karimova after these payments. But this has never been publicly confirmed — until now.
The new materials obtained by reporters reveal that, even after it had been exposed, the company continued to negotiate a $20 million “protection fee” with Karimova. They also show that it reconfigured the arrangement in haste, disguising payments behind a series of fake deals to avoid scrutiny in the face of the already public scandal.
One of the key new documents is an email dated July 12, 2012. A senior Telia manager wrote to Tero Kivisaari, then the company’s head of business in Eurasia, to inform him that Karimova’s negotiator had approached him with a threatening demand. The president’s daughter, who had already made hundreds of millions of dollars from deals with Telia, now wanted more.
“They are asking about [a] protection fee,” the executive wrote to Kivisaari, who did not respond to requests for comment on this exchange.
The threat was serious, according to a report written by U.S. investigators who questioned a senior Telia executive who cannot be named to protect his safety. If no payment was made, Telia’s Uzbek operator, Ucell, could have been confiscated by the authorities and had its CEO arrested or its staff put in danger.
This would fit with Karimova’s reputation. The ambassador, businesswoman, fashion icon, pop singer, and jet setter is known in Uzbekistan as a “greedy, power hungry individual who uses her father to crush business people or anyone else who stands in her way,” according to U.S. diplomats.
When contacted about the new findings, Nyberg confirmed in an email that Telia had received a demand for “protection.” However, he said that he “immediately refused to pay.”
“I have as president never heard of a $20 million transaction in Uzbekistan during 2012,” he wrote. Nyberg said that a payment of that size would have required his endorsement and a decision by the company’s board.
“I have not made such a recommendation, and would under no circumstances pay for ‘protection,’ and of course the board never made such a decision during 2012,” he wrote. No such transactions had been proven despite many years of criminal investigations, he added. Nyberg’s lawyers also expressed doubts about the credibility of the testimonies in the U.S. investigation.
Nyberg’s successor, former Acting CEO Per-Arne Blomquist, gave a similar response, telling SVT in 2013 that Telia had rejected such a demand. He has refrained from further comments.
But the new evidence contradicts both former CEOs’ versions.
A report by U.S. investigators notes that the company’s top management had been informed of Karimova’s demand. The setup and the payments “were approved by Kivisaari and Nyberg,” a Telia executive is described as saying.
He elaborated that a memorandum of understanding (MoU) about the arrangement was sent to Telia’s headquarters in Stockholm for review.
“Kivisaari (at the direction of Nyberg) agreed with the terms of the MoU, and instructed that the MoU be paid in Uzbek Soms and kept at the local (Ucell) management level,” the U.S. report reads. But Karimova’s company, Takilant, did not want local currency, so Kivisaari agreed to pay in U.S. dollars.
The report continued: “Kivisaari and Nyberg sought to keep the MoU payment at the local level so as to avoid having to report the payment on TeliaSonera’s books and records.”
This version of events is supported by an email written on July 31, 2012 by Ali Agan, a Telia executive who had just been appointed to take over as CEO of Ucell. He mentions “long discussions with HQ” — Telia’s headquarters — about the agreement, and notes that the company preferred to pay in Uzbek soms.
But Telia wouldn’t be dealing with Takilant for long. After September 2012, when SVT first aired its story about the bribery scandal, the Gibraltar shell company became infamous as the presumed vehicle for Karimova’s large-scale corruption.
Telia needed another plan.
This time, in order to disguise the improper payments, the company arranged to transfer the money in stages — backed by false contracts all the way.
The first step was to route it from Ucell, Telia’s operator in Uzbekistan, to ZTE, a Chinese telecom giant. Minutes from a meeting between ZTE and Telia executives show that the parties discussed three “schemes” — three alternative fake contracts — under which the payments could be made. In the end, the parties agreed to justify the payments using “software agreements.”
An internal ZTE memo shows that the management was ready to help Telia, but concerned about what was in it for them. "[ZTE] is willing to assist the customer with this,” the document notes, "but help must not be a loss-making business!"
The company ended up charging Ucell a six percent commission on the transfers. In addition, ZTE was promised new business opportunities from Ucell at the expense of Huawei, the Chinese tech giant.
A ZTE memo notes that “F7” — widely reported to be an internal ZTE code for Huawei — was trying to become Ucell’s supplier “at all costs.” But Ucell agreed to steer its business to ZTE instead, promising to “conclude a contract to replace the core network in six areas in the West of Uzbekistan with our company.” ZTE did not respond to requests for comment.
To send the money onward, ZTE concluded consulting contracts with Eurasia Advisory Services, a newly-established offshore company affiliated with Telia on the Caribbean island of Nevis.
Eurasia Advisory Services in turn concluded a $20 million consulting services agreement with a Karimova company registered in the British Virgin Islands, Morriby Global.
According to the top manager interviewed by U.S. investigators, the contract was an obvious fake. Telia did not need the services it described, and the amount of $20 million was “very unusual”, costing ten times more than a regular consulting job.
Morriby Global’s bank statements show the company receiving a total of $12 million from Eurasia Advisory Services in four installments, one for each quarter of 2013. Each transaction referenced the “consulting services agreement.” (More may have been sent, but this is the amount that can be definitively confirmed through bank records.)
Telia’s General Counsel and Executive Vice President Jonas Bengtsson confirmed that these agreements took place.
“We have seen them. There was a draft agreement with Takilant which later on turned into a memorandum of understanding with Morriby. To me it is rather obvious that there is a connection there,” he said.
However, Bengtsson noted that Telia had never figured out how or whether these payments had been made, or who ordered the setup.
Gunnar Stetler, now retired, was the chief prosecutor in the case against Nyberg and the other Telia executives, as well as director of the Swedish National Anti-Corruption Unit. When confronted with these new findings, Stetler said he would “not comment on possible payments other than those I referred to in the case,” but said any additional payments would not have made a difference.
He did not comment on whether he investigated the $20 million paid to Karimova for “protection.”
However, reporters found several instances over the years when clues about these payments had emerged. These included stories published in the media, but also evidence given to Swedish prosecutors directly.
In October 2015, Telia met with Swedish, Dutch, and American law enforcement authorities to negotiate the company’s settlement. Among the topics of discussion was a “protection fee,” according to a slide from a presentation by the law firm that hosted the meeting.
An even more remarkable clue came from Uzbekistan itself. After the scandal broke, Uzbek authorities initially dismissed allegations of corruption and protested to the Swedish government. But after President Karimov died in September 2016, Swedish prosecutors said they noticed a change in attitude. By then, Karimova had also had a spectacular fall from grace. She and her associates were in jail or house arrest for embezzlement, tax evasion, and other financial crimes.
In June 2017, Stetler, the prosecutor in Stockholm, received a letter from his counterpart in Tashkent. In the document, Uzbekistani prosecutor Shavkat Umurzakov answered many of the Swedish investigator’s questions and listed all of the “corruption schemes to receive funds from telecommunications companies” — millions and millions of dollars received by Karimova and her circle of friends.
Umurzakov wrote that one of these schemes was “20 million US dollars to the accounts of the company ‘Morriby Global LTD’ as remuneration for assistance in activities in Uzbekistan; transferred from the company ‘Eurasia Advisory Services’,” which he described as affiliated with Telia.
The payments from Eurasia Advisory Services, the letter continued, were made in 2012–2013, which also fits with the new material.
However, this information was not used in the case against Nyberg and the other Telia executives.
In February 2019, the Stockholm District Court passed its sentence on their aggravated bribery charge: All three men were acquitted.
“Me, and I think many others, were unfortunately not surprised,” said Phalén of the Swedish Anti-Corruption Institute, in response to the verdict. “A big problem was that the indictment was thrown out already on objective grounds: that the person who was allegedly bribed was not a person who could be bribed, according to the law.”
“The prosecutor suffered a severe setback. He made a fatal misjudgement,” said Claes Sandgren, a law professor and former board member of Transparency International in Sweden. “The charge ‘trading in influence’ ought to be applicable in this case.”
Sandgren and two other experts asked to review the findings agreed that using the new charge would have resulted in a stronger case.
“You would of course have to evaluate the evidence. But in principle, you should be able to get a conviction based on these payments,” Sandgren said.
“This is serious. Very serious. What a prosecutor would want to do with this material is up to him. But of course this means there should be a strong case,” said Utterström, the lawyer.
Stetler said he disagreed with the experts’ view that trading in influence could have been applicable in this case.
But the judge thought otherwise. When the district court acquitted the three Telia executives, OCCRP’s partner TT News Agency asked the judge in the case, Tomas Zander, if arguing the case under the new law would have made a difference. Zander replied:
“Yes, trading in influence is a crime that casts a wider net, so to speak. But that is something we didn’t consider in this case since we applied the law that was in place when the crimes were committed.”
In any case, it may now be too late. While aggravated bribery has a statute of limitations of 10 years, an indictment for trading in influence must be launched within five years of the crime being committed, in this case no later than 2018.
“Today, that opportunity is gone,” Phalén said.
Prosecutors, who have appealed the lower court’s acquittal, are now employing a slightly different tactic as Nyberg and the other suspects are once more to stand trial in the Svea Court of Appeal in Stockholm next week.
The charges are the same, the evidence the same, the transactions the same. The difference is that the prosecutors now also implicate Karimova’s father, the late president Islam Karimov, as benefitting from the bribes.
Even if Nyberg and his former colleagues are cleared of all charges again, they may eventually be wanted by the United States.
“The U.S. has long been criticized for holding companies accountable with high fines and penalties, but not holding individuals responsible,” said Jessica Tillipman, a corruption specialist at The George Washington University Law School.
That is also Lars Nyberg’s concern. There is no official information about a criminal case against him or his associates. However, the former CEO’s American lawyers have said that there is reason to believe that there is one, Nyberg told OCCRP during the trial in 2018.
“My lawyers say I should avoid going to the U.S.,” he said at the time.
Ahunov, the Uzbek regime critic, is still unsatisfied that, though the company paid a large fine, its individual leaders have not been punished.
“This is not logical,” he said. “Telia admits that they committed crimes. So the people who signed these agreements, they must be punished… Corruption is the biggest obstacle to developing a democracy. TeliaSonera’s funding of the dictatorship helped it survive.”
“If there is crime, there must be punishment. It’s like the Dostoyevsky classic,” Ahunov added.
Additional reporting by Axel Gordh Humlesjö (SVT).
Secret transactions, lost jobs, injuries, gutted buildings, unpaid bills: Ihor Kolomoisky’s untold American legacy.
The FinCEN Files show public money pouring from the collapsing country.