Montenegro former minister denies alleged graft in telecom privatisation deal

By bne IntelliNews January 19, 2012

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The former Montenegrin economy minister Darko Uskokovic told the Mina news agency that the government was not involved in any corruption during the privatisation deal of Crnogorski Telekom, which under his supervision in 2005 saw a majority stake sold to Deutsche Telekom's Hungarian unit Magyar Telekom.

"There was certainly no corruption whatsoever, at least not on the part of the government. We finished the privatisation and neither the government nor its representatives involved in the sale of telecom know what happened afterwards," he told Mina.

Uskokovic confirmed he is ready to appear for a hearing in case of further investigation.

His comments come after Deutsche Telekom and Magyar Telekom agreed December 29 to pay more than $95m in civil and criminal penalties to resolve US probes over alleged bribes by former senior executives to government officials in Macedonia and Montenegro. At least two Montenegrin government officials involved in the acquisition received payments.

Neither Deutsche Telekom nor Magyar Telekom admitted or denied the Securities and Exchange Commission's allegations when consenting to the final judgements, which saw Magyar Telekom entering into a two-year deferred-prosecution agreement with the Justice Department and agreeing to pay a $59.6m criminal penalty, along with another $31.2m in disgorgement and prejudgment interest to the SEC.

The SEC complaint alleges that Magyar Telekom's subsidiaries in Macedonia made illegal payments of about $6m under the guise of sham consulting and marketing contracts. It says the company tried to head off potential legal changes to the telecom market there by eventually entering into a secret agreement known as a "protocol of cooperation" with Macedonian government officials to delay the entry of a competitor into the mobile-phone market. Magyar also paid about $9m through four sham contracts to funnel money to government officials in Montenegro, the SEC said.

"Magyar Telekom's senior executives used sham contracts to funnel millions of dollars in corrupt payments to foreign officials who could help them keep competitors out and win business," Kara Novaco Brockmeyer, chief of the SEC Enforcement Division's FCPA Unit, said in a statement. "They purposely structured the sham contracts to circumvent internal review, and when questions were eventually raised about their use of 'consulting' contracts, they reconfigured them as 'marketing' contracts to avoid scrutiny and prolong their scheme."

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