The daughter of Uzbek President Islam Karimov is the focus of an investigation into alleged payments that authorities believe secured spectrum in Central Asia for three European carriers. Gulnara Karimova, a recording artist and daughter of Uzbekistan’s president, is reportedly at the center of a case U.S. prosecutors are trying to build against Vimpelcom and Mobile TeleSystems, both of which trade publicly on U.S. stock exchanges.
A third carrier, Sweden’s TeliaSonera, is the subject of a related investigation. TeliaSonera’s former CEO resigned two years ago amid questions about his company’s business in Uzbekistan. But no one was charged with any wrongdoing at that time.
These three carriers allegedly gained spectrum in Uzbekistan by selling stakes in their Uzbek subsidiaries to companies affiliated with Gulnara Karimova, then repurchasing these stakes at multiples of the sales price. The Wall Street Journal reports that Vimpelcom sold a 7% stake in its Uzbek wireless subsidiary Unitel for $20 million and repurchased it two years later for $57.5 million. The company that held the stake in Unitel for two years was owned by an Uzbek businesswoman who was arrested at the home of Gulnara Karimova, according to local media.
Russia’s MTS was Uzbekistan’s largest mobile operator until 2012, when Uzbek authorities revoked its license and arrested several of its executives amid allegations of tax evasion and regulatory violations. At that time, MTS’s Uzbek operations were thought to be controlled by Karimova.
Then in late 2014, MTS returned to the Uzbek mobile market as Universal Mobile Systems. Universal Mobile Systems is majority-owned by MTS, but the Uzbek government owns 49.99% of the company.
Meanwhile the Uzbek government has reassigned the GSM spectrum formerly held by MTS. That spectrum now belongs to Uzmobile, a subsidiary of government-controlled Uzbektelecom. This year the Uzbek government decided to exempt Uzbektelecom from payments for use of that spectrum for five years, while the company builds the UzMobile network.