Affidavit claims Gulnara Karimova turned major Uzbek telecoms operator into cash cow

Affidavit claims Gulnara Karimova turned major Uzbek telecoms operator into cash cow
The court document outlines how the charitable foundation of Gulnara Karimova (pictured) once sent an invoice for $250,000 to an executive for entrance to a Cannes Film Festival gala event hosted by Monaco's Prince Albert and Bill Clinton's foundation.
By bne IntelliNews October 14, 2017

Court documents assert that Gulnara Karimova, the elder daughter of Uzbekistan’s late long-ruling autocrat Islam Karimov, used tactics of intimidation to wrest control of a major telecoms operator and turn it into a cash cow that she could draw on at her whim, RFE/RL reported on October 12.

Karimova disappeared from the public eye three years ago and was reportedly placed under house arrest. In July, almost a year after the death of her father, it was confirmed by Uzbekistan’s chief prosecutor that in 2015 she was convicted of “economic crimes” and sentenced to five years of “restricted freedom”. In 2010, a leaked US diplomatic cable described her as “the single most hated person in the country”. Police in several countries have spent years trying to untangle the story of how Karimova allegedly came to squeeze a fortune out of the Uzdunrobita company.

RFE/RL obtained court documents compiled by Swedish prosecutors pursuing criminal bribery and other charges against the Finnish-Swedish telecom company formerly known as TeliaSonera, now named Telia. They include a September 2012 affidavit by one of Karimova’s closest business associates, Bekhzod Akhmedov, who was a senior executive at Uzdunrobita.

In his 17-page affidavit—given to an investigator with the Russian Interior Ministry's organised crime unit in Moscow in 2012 three months after he had fled Uzbekistan allegedly fearing for his life—Akhmedov reportedly asserts that Karimova and an aide issued explicit or implied threats against him and his family, pressured him to provide hundreds of thousands of dollars for a Karimova-foundation event and even pushed him to sell a family home to obtain demanded cash, while reminding him that "every dollar of your property belongs to me."

Karimova introduced to US investors
Karimova essentially controlled Uzdunrobita, founded by US investors after the demise of the Soviet Union, through a series of shell companies from 2002. Akhmedov reportedly relates in his affidavit how in 2001 he introduced Karimova to Uzdunrobita's main American investors, who were seeking a licence in Uzbekistan and wanted her to secure the involvement of her father, then-President Islam Karimov. Karimova is said to have demanded a 20% stake in Uzdunrobita, while warning there could be problems for the company.

Like many foreign investors by 2004, the US investors decided to try and exit Uzbekistan partly due to currency restrictions preventing them from repatriating Uzbek profits in American dollars. Mobile phone usage was by then expanding enormously in Central Asia's most populous country, drawing the attention of Russia's largest telecom company, MTS. It went on to take control of Uzdunrobita, but in 2014, MTS announced it was under investigation by US authorities for potential violation of US corruption laws and in 2016 it sold its Uzdunrobita stake and stated that it planned to leave the Uzbekistan altogether.

Also among the allegations reported as in the affidavit are a claim that in 2012 Karimova's close associate Gayane Avakyan once ordered Akhmedov to come to Karimova's Tashkent office, where he was told he owed her $15mn because of claimed losses incurred by Uzdunrobita's advertising operations; how in 2012, Akhmedov received an invoice from Karimova's charitable foundation, the Fund Forum, for $250,000, to attend a gala event at the Cannes Film Festival being hosted by Monaco's Prince Albert and the foundation of former US President Bill Clinton; and how in May 2012, Karimova demanded Akhmedov's wife and children return to Tashkent from Russia, and that their apartment in Moscow be sold to pay off alleged debts.

On September 25, the Swedish Prosecution Authority said that three former employees at Telia, including ex-chief executive Lars Nyberg, were to be charged in connection with the ongoing Uzbek bribery case. Three days earlier, it was announced by US prosecutors that Telia and Uzbek subsidiary Coscom LLC, had agreed to pay a global foreign bribery penalty amounting to $965mn to resolve charges related to hundreds of millions of dollars in bribes paid out to enter Uzbekistan’s mobile market. 

Telia, along with Russian VimpelCom (now VEON) and MTS, were pursued by prosecutors for bribing entities connected to Karimova, to win licences to operate 3G and 4G services on the Uzbek mobile market. VimpelCom was fined $795m by US and Dutch authorities for the bribes it paid in Uzbekistan.