TeliaSonera allegedly embroiled in corruption scandal in Azerbaijan

By bne IntelliNews June 2, 2015

bne IntelliNews -

 

Swedish-Finnish telecom TeliaSonera helped a company linked to the family of Azerbaijan’s President Ilham Aliev take over a stake in the country’s largest mobile operator AzerCell, an investigative report alleges.

Citing a number of sources including TeliaSonera’s internal documents, the report led by the Organised Crime and Corruption Reporting Project says that in 2008 a subsidiary of the Nordic telecom acquired a stake in AzerCell from the state for $180mn when the market value was estimated at $785mn.

Through a complex series of offshore transactions, it then handed the stake over, with no payment being made, to its local partner, Turkish company Cenay Iletisim, which is allegedly linked to President Aliyev’s daughters, Leila and Arzu. Cenay Iletisim has since then earned dividends estimated at about €213.2mn.

TeliaSonera retains a 38% stake in AzerCell. According to the report, it has the right to purchase Cenay Iletisim’s stake in Azercell at a market price of €724.9mn.

The deal “that made no sense for all involved except for a murky offshore deeply connected to President Ilham Aliyev” is estimated to have cost Azerbaijan’s taxpayers about $600mn. In exchange TeliaSonera got licenses and other permits in the country.

“The analysis [of the documents] uncovered a scheme to transfer the state’s shares of the profitable mobile carrier into the hands of a ‘local partner’ with numerous links to the ruling Aliyev family,” states the report. “In addition, TeliaSonera and its partners downplayed and obscured what was really going on in its documents and its public statements at the time were often misleading.”

The investigation resulted from a months-long investigation by the Organised Crime and Corruption Reporting Project (OCCRP), Swedish state television SVT and Swedish news agency TT.

Increasingly under pressure to disclose its links with the AzerCell deal,

TeliaSonera’s CEO Johan Dennelind – appointed in 2013 – told SVT that the deal is “disturbing”, still surrounded “by too many question marks”, and added he does not know exactly who the local partner really is.

It is not the first time that TeliaSonera, which is partly owned by the Swedish government, has been embroiled in corruption allegations over its business deals in the former Soviet Union. Dennelind was called to clean up the company after it was revealed that TeliaSonera had made a $320mn payment to a Gibraltar-registered company linked to President Islam Karimov’s daughter, Gulnara Karimova. The alleged bribe was paid to break into the Uzbek telecoms market and obtain a 3G license in the country.

After the Uzbek affair, TeliaSonera vowed to review business practices and ethical standards. The CEO in charge at the time of the AzerCell deal, Lars Nyberg, quit in February 2013 along side chief financial officer Per-Arne Blomquist and three other senior executives.

The report comes a few days ahead of the first ever European Games, which will kick-off in Baku on June 12. Human rights’ groups have called for international condemnation of the Azerbaijani government for the arrest and detention of journalists and critical political activists, and for investigations to be carried out into allegations of financial corruption.

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