President's daughter accused of extorting $1bn for Uzbek telecom licences

By bne IntelliNews March 24, 2015

bne IntelliNews -


Gulnara Karimova, the disgraced eldest daugher of Uzbek strongman Islam Karimov,  has extracted nearly $1bn from mobile telecom firms for entering the Central Asian nation's lucrative market, new records unearthed by a corruption watchdog allege.

The Organised Crime and Corruption Reporting Project (OCCRP), a Maryland-based umbrella programme of regional investigative centres and independent media in eastern Europe to Central Asia, published a report on March 21 that claims Gulnara was "far greedier and the scale of her alleged corruption was far wider than has been reported".

Financial documents the organisation obtained indicate that she received more than $1bn worth of payments and ownership shares from telecom companies that used her influence to enter the Uzbek market or obtain telecom licences. "Even the $1bn figure likely underestimates the true magnitude of the alleged extortion and bribery she received because most records of her business records have not been released," the report says.

The OCCRP established that Karimova had used similar schemes on at least six telecom companies and helped those that agreed to meet her payment demands to obtain operating licences, and squashed those that did not, including three US companies. Karimova, 42, is now believed to be under house arrest for more than a year and is under investigation in Uzbekistan for allegedly being part of an organised crime ring suspected of defrauding the state of millions of dollars,

The documents show that TeliaSonera, which operates under the Ucell brand in Uzbekistan, paid a net $381.2mn to Gulnara between autumn 2007 and December 2010 and pledged to pay another $75mn for her 6% stake; Vimpelcom, the Russian-Norwegian giant with the Beeline brand, and its mother company Alfa Telecom paid $156.5mn between January 2006 and October 2011; the Russian behemoth MTS paid $350.3mn between July 2002 and June 2007; and nearly $90mn was paid by two other unnamed companies that ran fibre optic lines and provided WiMAX and WIFI services in Uzbekistan. "This is likely just the tip of an iceberg as not all records are available," OCCRP said.

In July 2012 the Uzbek authorities charged Uzdunrobita, MTS's local subsidiary, of evading taxes and using equipment illegally, and revoked its operating licence and launched claims to the tune of $600m. In May 2014, the company said it would return to the Uzbek market by ceding part of its business to the government. The new operator Universal Mobile Systems (UMS), in which MTS now holds a 50.01% stake, launched operations in December. In the first month of its operations, the new-old operator managed to attract only 188,000 subscribers against 9mn it had before its expulsion.

TeliaSonera and Vimpelcom, which are being investigated in Sweden, the Netherlands and the US, deny the bribery allegations and say they were not aware of being involved in Gulnara's corrupt schemes. "While the international companies involved claim to have been innocent or unwilling dupes of her manoeuvres, the blatant means by which Karimova allegedly operated made it virtually impossible for those involved not to realise they were giving in to extortion and bribery," the OCCRP said.

Since Gulnara - who before her downfall touted herself as a future "princess of Uzbekistan" - is already under investigation in Uzbekistan on suspicion of setting up an organised criminal ring and defrauding the state, the latest revelations will hardly have any impact on her very low standing in the country at the moment. At the same time, her powerful foes, including her younger sister Lola Tillyayeva-Karimova and mother Tatyana as well as government figures, may well use these revelations to make any political comeback of Gulnara impossible. 

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