TeliaSonera boss quits after damning review of Uzbek conduct

Lars Nyberg has quit his role as chief executive of TeliaSonera following criticism of the company’s activities in Uzbekistan.

Chief financial officer Per-Arne Blomquist has been appointed acting chief executive, but a board shake-up is likely to result in further departures, according to chairman Anders Narvinger, who told a news conference the operator’s situation is “troublesome”.

Lars Nyberg has quit his role as chief executive of TeliaSonera following criticism of the company’s activities in Uzbekistan.

Chief financial officer Per-Arne Blomquist has been appointed acting chief executive, but a board shake-up is likely to result in further departures, according to chairman Anders Narvinger, who told a news conference the operator’s situation is “troublesome”.

Nyberg’s ignominious exit comes several months after allegations were first made in a Swedish television report that TeliaSonera (Stockholm, Sweden) had been involved in bribery and money laundering in 2007 during its $315 million acquisition of a 3G license, frequencies and number blocks in Uzbekistan, where it owns 94% of Ucell (Tashkent, Uzbekistan), the country’s second-biggest operator.

Nyberg issued a vigorous denial of those allegations while appointing a law firm called Mannheimer Swartling to uncover the truth of the matter.

However, while Mannheimer Swartling’s report found no evidence that TeliaSonera had been involved in bribery or money laundering, it strongly criticized the operator for its failure to investigate its local partner.

“Mannheimer Swartling says that the internal controls were not sufficient to ensure that it did not risk becoming involved in any unethical business, and that thereby the company’s internal ethical guidelines were not followed completely,” said TeliaSonera’s board in a statement.

According to the accusations, Goulnara Karimova, the daughter of Uzbekistan’s President Islam Karimov, was a local partner of Takilant (Gibraltar), the company with which TeliaSonera conducted the transaction – a fact of which TeliaSonera was fully cognizant.

TeliaSonera has denied being aware of any connections between Karimova and Takilant, which also owns the 6% of Ucell not held by TeliaSonera, but Biörn Riese, an attorney with Mannheimer Swartling, has cast doubt on the operator’s conduct.

“When the project initially was managed within Fintur, where TeliaSonera is a majority owner, the intention was to enter into an agreement with Goulnara Karimova’s investment team as the local partner,” he said. “This information was communicated in an internal memo and has also appeared in email correspondence.”

Although Mannheimer Swartling could not find concrete evidence of ties between Karimova and Takilant, Riese was unforgiving in his assessment of TeliaSonera’s behavior in Uzbekistan.

“If one carries out business in a corrupt country, one should quite simply be more thorough than TeliaSonera has been,” he said.

In his resignation statement, Nyberg agreed that “[TeliaSonera] should not have gone ahead without learning more about the identity of our counterparty”, but expressed relief that “Mannheimer Swartling has not found anything to support the allegations that TeliaSonera committed bribery or participated in money laundering”.

Nevertheless, the situation could worsen for TeliaSonera, with Swedish prosecutors pursuing their own investigation into the corruption allegations.

What’s more, according to a report from Dow Jones Newswires, from February 15 Takilant will be able to exercise an option requiring TeliaSonera to buy it out of Ucell for approximately SKR500 million ($79 million).

“That would be an incredibly complicated situation,” Narvinger is quoted as saying.