In re Mobile TeleSystems PJSC

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 85261 / March 6, 2019 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4028 / March 6, 2019 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-19022 
 
 
In the Matter of 
 
Mobile TeleSystems PJSC, 
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-DESIST 
PROCEEDINGS, PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS AND A 
CEASE-AND-DESIST ORDER 
  
 
I 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 
21C of the Securities Exchange Act of 1934 (“Exchange Act”), against Mobile TeleSystems PJSC 
(“MTS” or “Respondent”).   
 
II 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over it  and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings, Pursuant to 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth 
below. 
 
  

 
 
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III 
 
On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that  
 
Summary 
  
A. These proceedings arise out of violations of the anti-bribery, books and records, and 
internal accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) [15 U.S.C. 
§§ 78dd-1, 78m(b)(2)(A), and 78m(b)(2)(B)] by MTS. 
 
B. From 2004 to at least 2012, MTS offered and paid bribes in violation of Section 
30A of the Exchange Act, to a government official in Uzbekistan in connection with its Uzbek 
operations.  The improper payments enabled MTS to enter the Uzbek market, to operate as a 
telecommunications provider, and to receive commercial benefits to its operations.  Those benefits 
continued until 2012, when the Uzbek government expropriated MTS’s Uzbek operations.  During 
the course of the scheme, MTS made at least $420 million in illicit payments for the purpose of 
obtaining and retaining business, and those payments generated more than $2.4 billion in revenues.  
These illicit payments were made through a variety of means, including equity transactions with 
the government official, sham contracts, and in the form of charitable contributions or sponsorships 
at the direction of the government official.  These payments were improperly characterized as 
legitimate expenses in MTS’s books and records.  MTS filed its financial statements, incorporating 
the falsely recorded payments, with the Commission throughout the relevant period.  
 
C. As a result of the scheme, MTS violated Exchange Act Section 30A by agreeing to 
make corrupt payments to a government official in Uzbekistan for the purpose of obtaining or 
retaining business.  MTS also violated Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) by 
improperly recording the  payments as legitimate expenses in its books and records and by failing 
to devise and maintain a reasonable system of internal accounting controls. 
  
Respondent 
 
D. Mobile TeleSystems PJSC is a provider of telecommunications services organized 
under the laws of Russia and headquartered in Moscow, Russia.  It issues and maintains a class of 
publicly traded securities registered pursuant to Exchange Act Section 12(b) that traded on the 
New York Stock Exchange throughout the relevant period. 
 
Other Relevant Entities 
 
E. JV Uzdunrobita (“Uzdunrobita”) was a telecommunications operator in Uzbekistan 
from the 1990s until 2012.  Uzdunrobita became a subsidiary of MTS in 2004 and operated as such 
until 2012.  Uzdunrobita was managed by local managers and had a supervisory board that included 
MTS senior managers. 
                                                 
1
    The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  
 

 
 
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F. Government Official A is a family member of the former President of Uzbekistan 
and was herself an Uzbek government official.  She had influence over decisions made by UzACI, 
the regulatory authority governing telecommunications in Uzbekistan and held an ownership 
interest in Uzdunrobita through Swisdorn Ltd.   
 
G. Swisdorn Ltd is a company beneficially owned and operated by Government 
Official A.  Swisdorn was formed in Gibraltar and was the entity through which MTS made most 
of its payments for the benefit of Government Official A. 
 
H. Takilant Ltd is a company beneficially owned and operated by Government 
Official A.  Takilant was formed in Gibraltar and was the entity through which MTS made some 
payments for the benefit of Government Official A. 
 
Facts 
 
Entry Into Uzbekistan 
 
I. In July 2004 MTS entered the Uzbek telecommunications market by purchasing a 
majority interest in Uzdunrobita, a company with existing operations in Uzbekistan.  At the time, 
Government Official A beneficially owned 59% of Uzdunrobita’s shares through Swisdorn and 
chaired Uzdunrobita’s supervisory board. 
  
J. In July 2004, MTS purchased 74% of the shares of Uzdunrobita for $121 million.  
MTS paid $100 million to Swisdorn for 33% of the shares of Uzdunrobita, which represented a 
significantly higher value per share than the amount paid to the other seller, which sold MTS 41% 
of the shares of Uzdunrobita.  A majority of the payment to Swisdorn represented an illicit 
payment to Government Official A for the purpose of allowing MTS’s entry into the Uzbek 
telecommunications market. 
 
 K.  MTS’s Board of Directors approved the acquisition of 74% of Swisdorn on July 
26, 2004, and the members of Uzdunrobita approved the transaction on August 2, 2004.  From 
that point forward until 2012, Uzdunrobita was managed by a local manager who had a personal 
relationship with Government Official A.   
 
 L. From 2004 to 2012, Uzdunrobita entered into a number of transactions that 
benefitted Government Official A. 
Expansion of Uzbek Operations 
 M. In 2005, MTS began investing in an expansion of its telecommunications network 
in Uzbekistan.  As part of its expansion strategy, MTS sought to acquire a block of new 
telecommunications frequencies in the 900 MHz range, which would complement the emerging 
3G technology.  Under Uzbek law, however, private parties were prohibited from purchasing and 
selling regulatory assets such as frequencies. 
 

 
 
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 N. In order to circumvent this prohibition, MTS entered into an agreement with a 
small telecommunications operator named Buztel that was partially owned by Government 
Official A.  Buztel held a block of frequencies in the 900 MHz range.  Under the agreement, 
Uzdunrobita agreed to pay Buztel $12 million, of which $4 million would go to Government 
Official A.  In return, Buztel agreed to repudiate its rights to the frequencies and allow them to 
be reallocated to Uzdunrobita.  Government Official A, who also exercised control over the 
Uzbek telecommunications regulatory authority, ensured that the regulator approved the intended 
reallocation. 
  
Option Amendment 
 
 O. At the time MTS purchased 33% of the shares of Uzdunrobita from Swisdorn, it 
entered into a three-year put and call option agreement with Swisdorn pertaining to Swisdorn’s 
remaining 26% interest in Uzdunrobita.  Pursuant to the agreement, Swisdorn received a 3-year 
put option to sell its remaining 26% interest in the company to MTS.  MTS received a 
corresponding 3-year call option to purchase the 26% block from Swisdorn.  The exercise price 
of the put and call options was set at 26% of $145,000,000, or $37.7 million, plus five percent 
interest per annum for each year after the signing of the agreement until the put or call option 
was exercised.   
 
 P. On August 17, 2006, as requested by Government Official A, MTS and Swisdorn 
entered into an amendment to the 2004 put and call option agreement that (1) eliminated MTS’s 
call option; (2) extended the expiration date of Swisdorn’s put option to July 14, 2008; and 
(3) amended the purchase price to a valuation to be determined by a mutually-agreeable 
investment bank.  Each of these changes provided a unilateral benefit to Swisdorn and, through 
it, to Government Official A.   
 
 Q. According to an estimate prepared for MTS’s investment committee, the value of 
Swisdorn’s put option increased from $44,000,000 to a fair market valuation of at least 
$150,000,000, while MTS lost its opportunity to exercise the call option at a fixed price.   The 
benefit transferred to Government Official A was one of the series of payments that MTS, through 
Uzdunrobita, made to the official to ensure Uzdunrobita’s continued operation in Uzbekistan.    
 
Option Exercise Package 
 
 R. On April 2, 2007, Uzdunrobita received 3G and WiMax frequencies from the 
Uzbek telecommunications regulator that had the effect of increasing Uzdunrobita’s fair market 
value by approximately $126 million to $140 million, and proportionally increased the value of 
Swisdorn’s 26% share of Uzdunrobita. 
 
 S.   Following the acquisition of the 3G and WiMax licenses, Swisdorn on April 12, 
2007, gave MTS notice of its intent to exercise the put option.  On April 27, 2007, consistent 
with the option amendment, Swisdorn and MTS engaged an international investment bank to 
prepare a valuation of Uzdunrobita.  In its report the investment bank valued the 26% minority 
interest in Uzdunrobita, including the 3G and WiMax frequencies, at between $235 and $256.  In 
June 2007, MTS paid Swisdorn $250 million for its remaining 26% interest in Uzdunrobita.   

 
 
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4G/LTE Transaction 
 
 T. In August 2008, an MTS subsidiary incorporated in Bermuda entered into a 
transaction in which Uzdunrobita would receive the rights to certain frequencies in the 800 MHz 
range in return for a $30 million payment to Takilant Ltd, which was beneficially owned by 
Government Official A.  
 
 U. On August 21, 2008, Takilant and an MTS subsidiary executed an agreement 
under which Takilant’s subsidiary would waive its rights to the 800 MHz frequencies and return 
them to the Uzbek telecommunications regulator.  On August 25, Government Official A 
exercised her control over the Uzbek telecommunications regulator to ensure that the 800 MHz 
frequency rights were assigned to Uzdunrobita. 
 
 V. MTS made its $30 million payment to Takilant in six installments of $5 million 
each, beginning in October 2008 and ending in July 2009. 
 
 W. In connection with the transaction, MTS retained an investigative firm to conduct 
due diligence on Takilant.  When the investigator reported back that Takilant's nominal owner 
had no telecommunications background and was a known proxy for Government Official A, 
MTS ignored the information. 
 
 X. MTS provided its due diligence investigator with Takilant's certificates of 
incorporation and corporate registration, both of which identified a proxy of Government 
Official A as Takilant's director and shareholder.  MTS did not provide the investigator with any 
information referring to Government Official A, including whether Government Official A held 
a beneficial interest in Takilant.  
 
 Y. On August 29, 2008, the investigative firm reported to MTS that "Uzbek sources 
regard Takilant Ltd as being beneficially owned by the family of the Uzbek president.  . . . 
Confidential sources close to, and knowledgeable about, Uzbek business and political circles, 
regard [the director of Takilant] as being a trustee of [Government Official A], a [relative] of the 
Uzbek president.  Sources believe that [the director of Takilant] works for [Government Official 
A], being in charge of the latter's fashion business and PR matters." 
 
 Z. After receiving the firm's findings, MTS conducted no further investigation and 
proceeded with the transaction.   
 
 AA. In the months leading up to the 800 MHz transaction, senior managers at MTS 
discussed additional demands for payment from Government Official A.  One senior MTS 
manager stated that the consequences for refusing payment included the possible suspension of 
Uzdunrobita's operations and Uzdunrobita's forced sale. 
 
 BB. The same senior MTS manager sent a document to an MTS senior executive 
listing the status of MTS's payment commitments to Government Official A, as well as the status 
of the benefits the company had requested from the official. 
  

 
 
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Status of our commitments 
 
1. Payment of the total amount of $50 million, with the 
following breakdown: 
 $30 million through the purchase of CDMA frequencies, 
prior to 01/11/08. 
 MTS is ready to make the payment immediately. 
 $20 million in an agreed form, prior to 01/01/09, tied to 
the growth of the subscriber base. 
 The basis for payment and the draft agreement are being 
worked out, but no scheme exists other than making the 
payment as a fee for services.  Proposing to increase the 
amount of the contract pertaining to CDMA, with delayed 
payments. 
2. Beginning in 2009, for the assistance in creating favorable 
conditions for the growth of the Company and its 
subscriber base, guarantee the payment of an average of 
$20 million/year. 
 The basis for payment and the draft agreement are being 
worked out. 
 
KolorIt Design Transaction 
 
 CC. In September 2009, MTS agreed to have Uzdunrobita enter into an acquisition 
that would satisfy a portion of MTS’s obligation to confer a $20 million benefit on Government 
Official A.  Uzdunrobita and MTS acquired 100% of an Uzbek advertising company named 
KolorIt Design ("KolorIt") that Government Official A indirectly controlled.  The acquisition 
was a non-core transaction for MTS because KolorIt had no telecommunications operations and 
MTS was not in the advertising business.   
 
 DD. MTS engaged the same investigative firm to conduct due diligence on KolorIt that 
it had with Takilant.  The firm reported that one of KolorIt's two listed shareholders was the 
same proxy of Government Official A who had appeared in the records of Takilant. 
 
 EE. When MTS received the investigator's findings in August 2009 it conducted no 
further investigation and proceeded with the transaction.  MTS paid the equivalent of 
approximately $40 million for KolorIt, substantially more than the $23 million valuation of the 
company that JPMorgan had prepared at MTS's request. 
 
 FF. Following the KolorIt transaction, the senior MTS manager who had earlier 
prepared the document listing the status of MTS's payment commitments to Government Official 
A updated the document.  The updated document, which now referred to Government Official A 

 
 
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as “the local partner,” stated that an obligation to pay $20 million by January 1, 2009 was 
satisfied in part by the KolorIt acquisition. 
 
July 2008' Agreements with the local partner 
status on their fulfilment (on 02.11.2009 r.) 
 
Our obligations 
 
1. To pay $50 [million] by 
 CDMA frequencies acquisition for $30 [million] by 
01.11.08 
 Paid in full in July 2009 
 a way to agree additionally $20 [million] by 01.01.09 
(linked to the customers number growth) 
 Paid in full in September 2009 through ColorIT acquisition 
($10 [million]) and out of the vendor's additional discount 
($10 [million]) 
2. Starting year 2009 to pay up to $20 [million] annually for 
the assistance in creating favorable conditions for the 
operations linked to the customers number growth 
 
Contributions to Charities Supported by Government Official A 
 
 GG. Acting through Uzdunrobita, MTS also made payments to charities supported by, 
and a sponsorship payment to a company connected to, Government Official A.  The payments 
were made in the expectation that they were necessary to ensure Government Official A’s 
continued support for Uzdunrobita’s business.  The payments were falsely recorded in 
Uzdunrobita’s books and records as advertising and non-operating expenses, rather than as 
charitable expenses.  The payments also failed to comply with appropriate internal controls.  The 
payments were not approved until after payment was made and were not memorialized in 
agreements with anti-corruption representations.  Below is a table of the payments made by 
Uzdunrobita in 2012: 
 
 
Date Payment 
Amount 
Charity Name 
3/27/2012 $135,612 Center for Youth Initiatives 
“Kelajak ovozi” 
3/27/2012 $135,612 Fund for Support of Social 
Initiatives 
3/27/2012 $135,612 Republic Social Association 
“Zhenskoye Sobraniye” 
3/27/2012 $135,611 Public Fund “Mehr Nuri” 

 
 
8 
3/27/2012 $189,856 Fund Forum 
3/27/2012 $162,734 Fund Forum 
3/27/2012 $189,856 Fund Forum 
4/24/2012 $54,244 Terra Group 
Total $1,139,137  
 
 
Currency Conversion Transactions 
 
 HH. Between 2005 and 2012, Uzdunrobita entered into equipment purchase contracts 
denominated in U.S. dollars.  Due to restrictions on the conversion of Uzbek soums into U.S. 
dollars, Uzdunrobita was unable to convert enough currency to pay its equipment vendors.  In 
order to make its payments under the contracts, Uzdunrobita entered into debt reassignment and 
equipment purchase agreements with third party companies who agreed to pay the required 
amounts of U.S. dollars to pay Uzdunrobita’s vendors.  
  
 II. During the 2009-11 period, Uzdunrobita paid approximately $461.5 million to 
third party companies to effectuate purchases of network equipment in Uzbekistan.  Of this total, 
approximately $142.7 million represented the difference between the Uzbek Central Bank 
exchange rate and the exchange rate agreed to by the parties and other markups. Approximately 
$92.6 million represented taxes and customs costs.  
  
 JJ. Uzdunrobita’s books and records, which were consolidated into MTS's books and 
records, did not reflect, in an appropriate level of detail and support, the $142.7 million in 
currency rate differentials and markups.  These transactions had a material effect on the financial 
statements of Uzdunrobita.  In addition, Uzdunrobita failed to conduct appropriate due diligence 
on the third party intermediaries to determine whether they were under the ownership or control 
of Government Official A or other Uzbek government officials.  
 
 KK. As a result of the conduct described above, MTS violated Exchange Act Sections 
30A, 13(b)(2)(A), and 13(b)(2)(B). 
 
Undertakings 
 
Cooperation 
 
 LL. Respondent undertakes to cooperate fully with the Commission in any and all 
investigations, litigation, or other proceedings relating to or arising from the matters described in 
this Order.  In connection with such cooperation, Respondent shall: 
 
(1)   produce, without service of a notice or subpoena, any and all non-
privileged documents and other information requested by the Commission 
staff subject to any restrictions under the laws and regulations of any 
foreign jurisdiction; 
 

 
 
9 
(2)   use its best efforts to cause its current or former officers, employees, 
agents, and directors to be interviewed by Commission staff at such times 
and places as the staff reasonably may direct; and 
 
(3)   use its best efforts to cause its current or former officers, employees, 
agents, and directors to appear and testify without service of a notice or 
subpoena in such investigations, depositions, hearings, or trials as may be 
requested by the Commission staff. 
 
 MM. Should Respondent during the period which the Monitor is retained discover 
credible evidence, not previously reported to the Commission staff, that questionable or corrupt 
payments or questionable or corrupt transfers of property or interests may have been offered, 
promised, paid, or authorized by Respondent or by any entity or person while working directly 
for Respondent; that related false books and records have been maintained; or that Respondent 
has failed to implement adequate internal accounting controls, Respondent shall undertake to 
promptly report such conduct to the Commission staff. 
 
 NN. During the period which the Monitor is retained, Respondent shall provide its 
external auditors with its annual internal audit plan and reports of the results of internal audit 
procedures and its assessment of its FCPA compliance policies and procedures. 
 
 OO. During the period which the Monitor is retained, Respondent shall provide the 
Commission staff with any written reports or recommendations provided by Respondent’s 
external auditors in response to Respondent’s annual internal audit plan, reports of the results of 
internal audit procedures, and its assessment of its FCPA compliance policies and procedures. 
 
Retention of Monitor and Term of Engagement 
 
 PP. Respondent shall engage an independent compliance monitor (the "Monitor") not 
unacceptable to the staff of the Commission within sixty (60) calendar days of the entry of the 
Order. The Monitor shall have, at a minimum, the following qualifications:  (i) demonstrated 
expertise with respect to the FCPA and other applicable anti-corruption laws, including 
experience counseling on FCPA issues; (ii) experience designing or reviewing corporate 
compliance policies, procedures, and internal accounting controls, including FCPA and anti-
corruption policies and procedures; (iii) the ability to access and deploy resources as necessary to 
discharge the Monitor's duties as described in the Offer; and (iv) sufficient independence from 
Respondent to ensure effective and impartial performance of the Monitor's duties as described in 
the Offer. The Commission staff may extend Respondent's time period to retain the Monitor, in 
its sole discretion. If the Monitor resigns or is otherwise unable to fulfill the obligations 
described in the Offer, Respondent shall within forty-five (45) days retain a successor Monitor 
that has the same minimum qualifications as the original Monitor and that is not unacceptable to 
the Commission staff. 
 
 QQ. Respondent shall retain the Monitor for a period of not less than thirty-six (36) 
months, unless the Commission staff finds, in its sole discretion, that there exists a change in 
circumstances sufficient to eliminate the need for the Monitor, in which case the Monitorship 

 
 
10 
may be terminated early. The term of the Monitorship can be extended as set forth in Paragraph 
FF, below.  Respondent shall provide the Commission staff with a copy of the agreement 
detailing the scope of the Monitor's responsibilities within thirty (30) days after the Monitor is 
engaged. 
 
 RR. During the Term of the Monitorship and for a period of one year from the 
conclusion of the Monitorship, neither the Respondent nor any of its then-current or former 
affiliates, subsidiaries, directors, officers, employees, or agents acting in their capacity as such 
shall enter into, or discuss the possibility of, any employment, consultant, attorney-client, 
auditing, or other professional relationship with the Monitor. 
 
Respondent's Obligations 
 
 SS. Respondent shall cooperate fully with the Monitor and provide the Monitor with 
access to all non-privileged information, documents, books, records, facilities, and personnel as 
reasonably requested by the Monitor; such access shall be provided consistent with Respondent's 
and the Monitor's obligations under applicable local laws and regulations, including applicable 
data privacy and national security laws and regulations.  Respondent shall use its best efforts, to 
the extent reasonably requested, to provide the Monitor with access to Respondent's former 
employees, third party vendors, agents, and consultants.  Respondent does not intend to waive 
the protection of the attorney work product doctrine, attorney-client privilege, or any other 
privilege applicable as to third parties.  
 
 TT. The parties agree that no attorney-client relationship shall be formed between the 
Respondent and the Monitor.  In the event that Respondent seeks to withhold from the Monitor 
access to information, documents, books, records, facilities, current or former personnel of the 
Respondent, its third-party vendors, agents, or consultants that may be subject to a claim of 
attorney-client privilege or to the attorney work-product doctrine, or where Respondent 
reasonably believes production would otherwise be inconsistent with the applicable laws and 
regulations, Respondent shall work cooperatively with the Monitor to resolve the matter to the 
satisfaction of the Monitor.  If, during the Term of the Monitorship, the Monitor believes that 
Respondent is unreasonably withholding access on the basis of a claim of attorney-client 
privilege, attorney work-product doctrine, or other asserted applicable law, the Monitor shall 
notify the Commission staff. 
 
 UU. Any disclosure by Respondent to the Monitor concerning potential corrupt 
payments, false books and records, or internal accounting control issues shall not relieve 
Respondent of any otherwise applicable obligation to truthfully disclose such matters to the 
Commission staff.   
 
Monitor's Mandate 
 
 VV. The Monitor shall review and evaluate the effectiveness of the Respondent's 
policies, procedures, practices, internal accounting controls, recordkeeping, and financial 
reporting as they relate to Respondent's current and ongoing compliance with the anti-bribery, 
books and records, and internal accounting controls provisions of the FCPA and other applicable 

 
 
11 
anti-corruption laws, and make recommendations reasonably designed to improve the 
effectiveness of Respondent's internal accounting controls and FCPA corporate compliance 
program (the "Mandate").  This Mandate shall include an assessment of the board of directors' 
and senior management's commitment to, and effective implementation of, the FCPA corporate 
compliance program.  In carrying out the Mandate, to the extent appropriate under the 
circumstances, the Monitor may coordinate with Respondent personnel, including in-house 
counsel, compliance personnel, and internal auditors. To the extent the Monitor deems 
appropriate, it may rely on Respondent's processes, and on sampling and testing methodologies.  
The Monitor is not expected to conduct a comprehensive review of all business lines, all business 
activities, and all markets. Any disputes between Respondent and the Monitor with respect to the 
work plan shall be decided by the Commission staff in its sole discretion.  
 
 WW. During the term of the Monitorship, the Monitor shall conduct three reviews, 
issue a report following each review, and issue a final certification report, as described below.  
The Monitor's work plan for the first review shall include such steps as are reasonably necessary 
to conduct an effective first review. It is not intended that the Monitor will conduct its own 
inquiry into historical events. In developing each work plan and in carrying out the reviews 
pursuant to such plans, the Monitor is encouraged to coordinate with Respondent's personnel, 
including auditors and compliance personnel.  
First Review and Report 
 
 XX. The Monitor shall commence the first review no later than one hundred twenty 
(120) calendar days from the date of the engagement of the Monitor (unless otherwise agreed by 
Respondent, the Monitor, and the Commission staff). Promptly upon being retained, the Monitor 
shall prepare a written work plan, which shall be submitted to Respondent and the Commission 
staff for comment no later than sixty (60) days after being retained. 
 
 YY. In order to conduct an effective first review and to understand fully any existing 
deficiencies in Respondent's internal accounting controls and FCPA corporate compliance 
program, the Monitor's work plan shall include such steps as are reasonably necessary to 
understand Respondent's business and its global anti-corruption risks. The steps shall include: 
 
(1)  inspection of relevant documents, including the internal accounting 
controls, recordkeeping, and financial reporting policies and procedures as 
they relate to Respondent's compliance with the books and records, 
internal accounting controls, and anti-bribery provisions of the FCPA and 
other applicable anti-corruption laws; 
 
(2)  onsite observation of selected systems and procedures comprising 
Respondent's FCPA corporate compliance program, including 
anticorruption compliance procedures, internal accounting controls, 
recordkeeping, due diligence, and internal audit procedures, including at 
sample sites; 
 
(3)  meetings with, and interviews of, as relevant, Respondent’s employees, 
officers, directors, and, where appropriate and feasible, its third-party 

 
 
12 
vendors, agents, or consultants and other persons at mutually convenient 
times and places; and 
 
(4)  risk-based analyses, studies, and testing of Respondent's FCPA corporate 
compliance program.  
 
 ZZ. The Monitor may take steps as reasonably necessary to develop an understanding 
of the facts and circumstances surrounding prior FCPA violations that gave rise to this action or 
violations of other applicable anti-corruption laws, but shall not conduct his or her own inquiry 
into those historical events. 
 
 AAA. After receiving the first review work plan, Respondent and Commission staff 
shall provide any comments concerning the first review work plan within thirty (30) days to the 
Monitor. Any disputes between Respondent and the Monitor with respect to the first review 
work plan shall be decided by the Commission staff in its sole discretion. Following comments 
by Respondent and Commission staff, the Monitor will have fifteen (15) days to submit a final 
first review work plan. 
 
 BBB. The first review shall commence no later than one hundred twenty (120) days 
from the date of the engagement of the Monitor (unless otherwise agreed by Respondent, the 
Monitor, and the Commission staff). The Monitor shall issue a written report within one hundred 
eighty (180) days of commencing the first review, setting forth the Monitor's assessment and, if 
necessary, making recommendations reasonably designed to improve the effectiveness of 
Respondent's internal accounting controls and FCPA corporate compliance program as they 
relate to Respondent's compliance with the FCPA and other applicable anti-corruption laws. The 
Monitor should consult with Respondent concerning his or her findings and recommendations on 
an ongoing basis and should consider Respondent's comments and input to the extent the 
Monitor deems appropriate. The Monitor may also choose to share a draft of his or her report 
with Respondent and Commission staff prior to finalizing it. The Monitor shall provide the 
report to the Board of Directors of Respondent and contemporaneously transmit a copy to 
Commission staff.  
 
 CCC. Within one hundred eighty (180) days after receiving the Monitor's first review 
report, Respondent shall adopt and implement all recommendations in the Review, provided, 
however, that as to any recommendation that Respondent considers unduly burdensome, 
impractical, costly, or inconsistent with applicable law or regulation, Respondent need not adopt 
that recommendation at that time, but may submit in writing to the Monitor and the Commission 
staff within thirty (30) days of receiving the report an alternative policy, procedure, or system 
designed to achieve the same objective. 
 
 DDD. In the event Respondent and the Monitor are unable to agree on an acceptable 
alternative proposal, Respondent shall promptly consult with the Commission staff.  Any 
disputes between Respondent and the Monitor with respect to the recommendations shall be 
decided by the Commission staff in its sole discretion.  The Commission staff shall consider the 
Monitor's recommendation and Respondent's reasons for not adopting the recommendation in 

 
 
13 
determining whether Respondent has fully complied with its obligations.  Pending such 
determination, Respondent shall not be required to implement any contested recommendation(s). 
 
 EEE. With respect to any recommendation that the Monitor determines cannot 
reasonably be implemented within one hundred and eighty (180) days after receiving the report, 
the Monitor may extend the time period for implementation with prior written approval of the 
Commission staff. 
Second Review 
 
 FFF. Within one hundred twenty (120) days after the issuance of the first review report, 
the Monitor shall submit a written work plan for the second review to Respondent and 
Commission staff. Respondent and Commission staff shall provide any comments concerning the 
work plan within thirty (30) days in writing to the Monitor.  Any disputes between Respondent 
and the Monitor with respect to the written work plan shall be decided by the Commission staff 
in its sole discretion. Following comments by Respondent and Commission staff, the Monitor 
will have fifteen (15) days to submit a final second review work plan.  
 
 GGG. The second review shall commence no later than one hundred eighty (180) days 
after the issuance of the first review report (unless otherwise agreed by Respondent, the Monitor, 
and the Commission staff). The Monitor shall issue a written second review report within one 
hundred twenty (120) days of commencing the second review.  The second review report shall 
set forth the Monitor's assessment of, and any additional recommendations regarding, 
Respondent's internal accounting controls and FCPA corporate compliance program as they 
relate to Respondent's compliance with the FCPA and other applicable anti-corruption laws; the 
Monitor's assessment of the implementation by Respondent of any recommendations made in the 
first review report; and the Monitor's assessment of the commitment of Respondent's board of 
directors and senior management to compliance with anti-corruption laws.  
 
 HHH. Within one hundred twenty (120) days after receiving the Monitor's second 
review report, Respondent shall adopt and implement all recommendations in the report, 
provided, however, that as to any recommendation that Respondent considers unduly 
burdensome, impractical, costly, or inconsistent with applicable law or regulation, Respondent 
need not adopt that recommendation at that time, but may submit in writing to the Monitor and 
the Commission staff within thirty (30) days of receiving the report an alternative policy, 
procedure, or system designed to achieve the same objective. 
 
 III. In the event Respondent and the Monitor are unable to agree on an acceptable 
alternative proposal within thirty (30) days, Respondent shall promptly consult with the 
Commission staff. Any disputes between Respondent and the Monitor with respect to the 
recommendations shall be decided by the Commission staff in its sole discretion.  The 
Commission staff shall consider the Monitor's recommendation and Respondent's reasons for not 
adopting the recommendation in determining whether Respondent has fully complied with its 
obligations.  Pending such determination, Respondent shall not be required to implement any 
contested recommendation(s). 
 
  

 
 
14 
Third Review 
 
 JJJ. The Monitor shall commence a third review no later than one hundred twenty 
(120) days after the issuance of the second review report (unless otherwise agreed by 
Respondent, the Monitor, and the Commission staff). The monitor shall issue a written third 
review report within ninety (90) days of commencing the third review, setting forth the Monitor's 
assessment and, if necessary, making recommendations in the same fashion as with the prior 
reviews. 
 KKK. Within ninety (90) days after receiving the Monitor's third review report, 
Respondent shall adopt and implement all recommendations in the report, provided, however, 
that as to any recommendation that Respondent considers unduly burdensome, impractical, 
costly, or inconsistent with applicable law or regulation, Respondent need not adopt that 
recommendation at that time, but may submit in writing to the Monitor and the Commission staff 
within thirty (30) days of receiving the report an alternative policy, procedure, or system 
designed to achieve the same objective. 
 
 LLL. In the event Respondent and the Monitor are unable to agree on an acceptable 
alternative proposal within thirty (30) days, Respondent shall promptly consult with the 
Commission staff. Any disputes between Respondent and the Monitor with respect to the 
recommendations shall be decided by the Commission staff in its sole discretion.  The 
Commission staff shall consider the Monitor's recommendation and Respondent's reasons for not 
adopting the recommendation in determining whether Respondent has fully complied with its 
obligations.  Pending such determination, Respondent shall not be required to implement any 
contested recommendation(s).  
Certification 
 
 MMM. No later than seventy-five (75) days before the end of the term of the 
Monitorship, the Monitor shall certify whether the Respondent's compliance program, including 
its policies and procedures, is reasonably designed and implemented to prevent and detect 
violations of the FCPA and is functioning effectively.  Such certification shall be supported by a 
written final certification report that certifies Respondent's compliance with its obligations under 
the Order, and which shall set forth an assessment of the sustainability of the Respondent's 
remediation efforts and may also recommend areas for further follow-up by Respondent.  
 
 NNN. The monitor shall orally notify the Commission staff at least fourteen (14) days 
prior to the issuance of the final certification report whether he or she expects to be able to 
certify as provided herein.  In the event the Monitor is unable to certify within the three year 
term of the monitor period, the following extension provisions shall be in effect.  
 
Extension of Monitor Period 
 
 OOO. If, as informed by the Monitor's inability to certify that the Respondent's 
compliance program, including its policies and procedures, is reasonably designed and 
implemented to prevent and detect violations of the FCPA and is functioning effectively, the 
Commission staff concludes that Respondent has not successfully satisfied its obligations under the 

 
 
15 
Monitorship, the Monitor period shall be extended for a reasonable time not to exceed one year 
absent extenuating circumstances. 
 
 PPP. Under such circumstances, the Monitor shall commence a fourth review no later 
than sixty (60) days after the Commission staff concludes that Respondent has not successfully 
satisfied its compliance obligations under the Order (unless otherwise agreed by Respondent, the 
Monitor, and the Commission staff). The Monitor shall issue a written fourth review report 
within ninety (90) days of commencing the fourth review in the same fashion as set forth in 
Paragraph BBB with respect to the first review and in accordance with the procedures for follow-
up reports set forth in Paragraphs FFF to LLL.  A determination to terminate the Monitorship 
shall then be made in accordance with Paragraph MMM. 
 
 QQQ. If, after completing the fourth review the Monitor is unable to certify, the 
Monitorship shall be extended, and the Monitor shall commence a fifth review (unless otherwise 
agreed by Respondent, the Monitor, and the Commission staff). The Monitor shall issue a written 
fifth review report within ninety (90) days of commencing the fifth review in the same fashion as 
set forth in Paragraph BBB with respect to the first review and in accordance with the procedures 
for follow-up reports set forth in Paragraphs FFF to LLL.  These reviews shall continue until the 
Monitor is able to certify, or unless as otherwise agreed by Respondent and Commission staff. 
 
Monitor's Discovery of Potential or Actual Misconduct 
 
 RRR. Throughout the term of the Monitorship, the Monitor shall disclose to the 
Commission staff any credible evidence that corrupt or otherwise suspicious transactions 
occurred, or payments or things of value were offered, promised, made, or authorized by any 
entity or person within Respondent, or any entity or person working directly or indirectly for or 
on behalf of Respondent, or that related false books and records may have been maintained by or 
on behalf of Respondent or that relevant internal accounting controls were circumvented or were 
not reasonably designed or implemented.  The Monitor shall contemporaneously notify 
Respondent's general counsel, chief compliance officer, or audit committee for further action 
unless at the Monitor's discretion he or she believes disclosure to Respondent would be 
inappropriate under the circumstances. The Monitor shall address in his or her reports the 
appropriateness of Respondent's response to all improper activities, whether previously disclosed 
to the Commission staff or not. 
 
Certification of Completion 
 
 SSS. No later than sixty (60) days from date of the completion of the undertakings with 
respect to the Monitorship, Respondent shall certify, in writing, compliance with the 
undertakings set forth above.  The certification shall identify the undertakings, provide written 
evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to 
demonstrate compliance. The Commission staff may make reasonable requests for further 
evidence of compliance, and Respondent agrees to provide such evidence. 
 
  

 
 
16 
Extensions of Time 
 
 TTT. Upon request by the Monitor or Respondent, the Commission staff may extend 
any procedural time period set forth above for good cause shown. 
 
Confidentiality of Reports 
 
 UUU. The reports submitted by the Monitor and the periodic reviews and reports 
submitted by Respondent will likely include confidential financial, proprietary, competitive 
business, or commercial information.  Public disclosure of the reports could discourage 
cooperation, impede pending or potential government investigations, or undermine the objective 
of the reporting requirement.  For these reasons the reports and the contents thereof are intended 
to remain and shall remain non-public, except (i) pursuant to court order, (ii) as agreed to by the 
parties in writing, (iii) to the extent that the Commission determines in its sole discretion that 
disclosure would be in furtherance of the Commission's discharge of its duties and 
responsibilities, or (iv) as is otherwise required by law. 
Address for All Written Communications and Reports 
 
 VVV. All reports or other written communications by the Monitor or Respondent 
directed to the Commission staff shall be transmitted to Charles E. Cain, Chief, FCPA Unit, 
Division of Enforcement, U.S. Securities and Exchange Commission, 100 F Street, N.E., 
Mailstop 5631, Washington, D.C. 20549.  A copy of the certification of completion and 
supporting materials shall also be transmitted to the Office of Chief Counsel of the Enforcement 
Division at the same address. 
 
IV 
 
 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 
1934 [15 U.S.C. §§ 78dd-1, 78m(b)(2)(A), and 78m(b)(2)(B)].  
 
 B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $100,000,000 to the Securities and Exchange Commission for transfer 
to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 
  
 C. Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 
 
17 
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
 D. Payments by check or money order must be accompanied by a cover letter 
identifying MTS as a Respondent in these proceedings, and the file number of these proceedings; 
a copy of the cover letter and check or money order must be sent to Charles Cain, Division of 
Enforcement, Securities and Exchange Commission, 100 F St., NE, Mailstop 5631, Washington, 
DC 20549.   
 
 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 
the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
F. Respondent shall comply with the undertakings enumerated above at Section III, 
paragraphs MM through VVV. 
 
 By the Commission. 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 85261 / March 6, 2019 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4028 / March 6, 2019 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-19022 

 

 

In the Matter of 

 

Mobile TeleSystems PJSC, 

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-DESIST 

PROCEEDINGS, PURSUANT TO SECTION 

21C OF THE SECURITIES EXCHANGE ACT 

OF 1934, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS AND A 

CEASE-AND-DESIST ORDER 

  

 

I 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 

21C of the Securities Exchange Act of 1934 (“Exchange Act”), against Mobile TeleSystems PJSC 

(“MTS” or “Respondent”).   

 

II 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over it  and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings, Pursuant to 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth 

below. 

 

  



 

 
2 

III 

 

On the basis of this Order and Respondent’s Offer, the Commission finds1 that  

 

Summary 
  

A. These proceedings arise out of violations of the anti-bribery, books and records, and 

internal accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) [15 U.S.C. 

§§ 78dd-1, 78m(b)(2)(A), and 78m(b)(2)(B)] by MTS. 

 

B. From 2004 to at least 2012, MTS offered and paid bribes in violation of Section 

30A of the Exchange Act, to a government official in Uzbekistan in connection with its Uzbek 

operations.  The improper payments enabled MTS to enter the Uzbek market, to operate as a 

telecommunications provider, and to receive commercial benefits to its operations.  Those benefits 

continued until 2012, when the Uzbek government expropriated MTS’s Uzbek operations.  During 

the course of the scheme, MTS made at least $420 million in illicit payments for the purpose of 

obtaining and retaining business, and those payments generated more than $2.4 billion in revenues.  

These illicit payments were made through a variety of means, including equity transactions with 

the government official, sham contracts, and in the form of charitable contributions or sponsorships 

at the direction of the government official.  These payments were improperly characterized as 

legitimate expenses in MTS’s books and records.  MTS filed its financial statements, incorporating 

the falsely recorded payments, with the Commission throughout the relevant period.  

 

C. As a result of the scheme, MTS violated Exchange Act Section 30A by agreeing to 

make corrupt payments to a government official in Uzbekistan for the purpose of obtaining or 

retaining business.  MTS also violated Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) by 

improperly recording the  payments as legitimate expenses in its books and records and by failing 

to devise and maintain a reasonable system of internal accounting controls. 

  

Respondent 

 

D. Mobile TeleSystems PJSC is a provider of telecommunications services organized 

under the laws of Russia and headquartered in Moscow, Russia.  It issues and maintains a class of 

publicly traded securities registered pursuant to Exchange Act Section 12(b) that traded on the 

New York Stock Exchange throughout the relevant period. 

 

Other Relevant Entities 

 

E. JV Uzdunrobita (“Uzdunrobita”) was a telecommunications operator in Uzbekistan 

from the 1990s until 2012.  Uzdunrobita became a subsidiary of MTS in 2004 and operated as such 

until 2012.  Uzdunrobita was managed by local managers and had a supervisory board that included 

MTS senior managers. 

                                                 
1    The findings herein are made pursuant to Respondent's Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  

 



 

 
3 

 

F. Government Official A is a family member of the former President of Uzbekistan 

and was herself an Uzbek government official.  She had influence over decisions made by UzACI, 

the regulatory authority governing telecommunications in Uzbekistan and held an ownership 

interest in Uzdunrobita through Swisdorn Ltd.   

 

G. Swisdorn Ltd is a company beneficially owned and operated by Government 

Official A.  Swisdorn was formed in Gibraltar and was the entity through which MTS made most 

of its payments for the benefit of Government Official A. 

 

H. Takilant Ltd is a company beneficially owned and operated by Government 

Official A.  Takilant was formed in Gibraltar and was the entity through which MTS made some 

payments for the benefit of Government Official A. 

 

Facts 

 

Entry Into Uzbekistan 
 

I. In July 2004 MTS entered the Uzbek telecommunications market by purchasing a 

majority interest in Uzdunrobita, a company with existing operations in Uzbekistan.  At the time, 

Government Official A beneficially owned 59% of Uzdunrobita’s shares through Swisdorn and 

chaired Uzdunrobita’s supervisory board. 

  

J. In July 2004, MTS purchased 74% of the shares of Uzdunrobita for $121 million.  

MTS paid $100 million to Swisdorn for 33% of the shares of Uzdunrobita, which represented a 

significantly higher value per share than the amount paid to the other seller, which sold MTS 41% 

of the shares of Uzdunrobita.  A majority of the payment to Swisdorn represented an illicit 

payment to Government Official A for the purpose of allowing MTS’s entry into the Uzbek 

telecommunications market. 

 

 K.  MTS’s Board of Directors approved the acquisition of 74% of Swisdorn on July 

26, 2004, and the members of Uzdunrobita approved the transaction on August 2, 2004.  From 

that point forward until 2012, Uzdunrobita was managed by a local manager who had a personal 

relationship with Government Official A.   

 

 L. From 2004 to 2012, Uzdunrobita entered into a number of transactions that 

benefitted Government Official A. 

Expansion of Uzbek Operations 

 M. In 2005, MTS began investing in an expansion of its telecommunications network 

in Uzbekistan.  As part of its expansion strategy, MTS sought to acquire a block of new 

telecommunications frequencies in the 900 MHz range, which would complement the emerging 

3G technology.  Under Uzbek law, however, private parties were prohibited from purchasing and 

selling regulatory assets such as frequencies. 

 



 

 
4 

 N. In order to circumvent this prohibition, MTS entered into an agreement with a 

small telecommunications operator named Buztel that was partially owned by Government 

Official A.  Buztel held a block of frequencies in the 900 MHz range.  Under the agreement, 

Uzdunrobita agreed to pay Buztel $12 million, of which $4 million would go to Government 

Official A.  In return, Buztel agreed to repudiate its rights to the frequencies and allow them to 

be reallocated to Uzdunrobita.  Government Official A, who also exercised control over the 

Uzbek telecommunications regulatory authority, ensured that the regulator approved the intended 

reallocation. 

  

Option Amendment 

 

 O. At the time MTS purchased 33% of the shares of Uzdunrobita from Swisdorn, it 

entered into a three-year put and call option agreement with Swisdorn pertaining to Swisdorn’s 

remaining 26% interest in Uzdunrobita.  Pursuant to the agreement, Swisdorn received a 3-year 

put option to sell its remaining 26% interest in the company to MTS.  MTS received a 

corresponding 3-year call option to purchase the 26% block from Swisdorn.  The exercise price 

of the put and call options was set at 26% of $145,000,000, or $37.7 million, plus five percent 

interest per annum for each year after the signing of the agreement until the put or call option 

was exercised.   

 

 P. On August 17, 2006, as requested by Government Official A, MTS and Swisdorn 

entered into an amendment to the 2004 put and call option agreement that (1) eliminated MTS’s 

call option; (2) extended the expiration date of Swisdorn’s put option to July 14, 2008; and 

(3) amended the purchase price to a valuation to be determined by a mutually-agreeable 

investment bank.  Each of these changes provided a unilateral benefit to Swisdorn and, through 

it, to Government Official A.   

 

 Q. According to an estimate prepared for MTS’s investment committee, the value of 

Swisdorn’s put option increased from $44,000,000 to a fair market valuation of at least 

$150,000,000, while MTS lost its opportunity to exercise the call option at a fixed price.   The 

benefit transferred to Government Official A was one of the series of payments that MTS, through 

Uzdunrobita, made to the official to ensure Uzdunrobita’s continued operation in Uzbekistan.    

 

Option Exercise Package 
 

 R. On April 2, 2007, Uzdunrobita received 3G and WiMax frequencies from the 

Uzbek telecommunications regulator that had the effect of increasing Uzdunrobita’s fair market 

value by approximately $126 million to $140 million, and proportionally increased the value of 

Swisdorn’s 26% share of Uzdunrobita. 

 

 S.   Following the acquisition of the 3G and WiMax licenses, Swisdorn on April 12, 

2007, gave MTS notice of its intent to exercise the put option.  On April 27, 2007, consistent 

with the option amendment, Swisdorn and MTS engaged an international investment bank to 

prepare a valuation of Uzdunrobita.  In its report the investment bank valued the 26% minority 

interest in Uzdunrobita, including the 3G and WiMax frequencies, at between $235 and $256.  In 

June 2007, MTS paid Swisdorn $250 million for its remaining 26% interest in Uzdunrobita.   



 

 
5 

4G/LTE Transaction 
 

 T. In August 2008, an MTS subsidiary incorporated in Bermuda entered into a 

transaction in which Uzdunrobita would receive the rights to certain frequencies in the 800 MHz 

range in return for a $30 million payment to Takilant Ltd, which was beneficially owned by 

Government Official A.  

 

 U. On August 21, 2008, Takilant and an MTS subsidiary executed an agreement 

under which Takilant’s subsidiary would waive its rights to the 800 MHz frequencies and return 

them to the Uzbek telecommunications regulator.  On August 25, Government Official A 

exercised her control over the Uzbek telecommunications regulator to ensure that the 800 MHz 

frequency rights were assigned to Uzdunrobita. 

 

 V. MTS made its $30 million payment to Takilant in six installments of $5 million 

each, beginning in October 2008 and ending in July 2009. 

 

 W. In connection with the transaction, MTS retained an investigative firm to conduct 

due diligence on Takilant.  When the investigator reported back that Takilant's nominal owner 

had no telecommunications background and was a known proxy for Government Official A, 

MTS ignored the information. 

 

 X. MTS provided its due diligence investigator with Takilant's certificates of 

incorporation and corporate registration, both of which identified a proxy of Government 

Official A as Takilant's director and shareholder.  MTS did not provide the investigator with any 

information referring to Government Official A, including whether Government Official A held 

a beneficial interest in Takilant.  

 

 Y. On August 29, 2008, the investigative firm reported to MTS that "Uzbek sources 

regard Takilant Ltd as being beneficially owned by the family of the Uzbek president.  . . . 

Confidential sources close to, and knowledgeable about, Uzbek business and political circles, 

regard [the director of Takilant] as being a trustee of [Government Official A], a [relative] of the 

Uzbek president.  Sources believe that [the director of Takilant] works for [Government Official 

A], being in charge of the latter's fashion business and PR matters." 

 

 Z. After receiving the firm's findings, MTS conducted no further investigation and 

proceeded with the transaction.   

 

 AA. In the months leading up to the 800 MHz transaction, senior managers at MTS 

discussed additional demands for payment from Government Official A.  One senior MTS 

manager stated that the consequences for refusing payment included the possible suspension of 

Uzdunrobita's operations and Uzdunrobita's forced sale. 

 

 BB. The same senior MTS manager sent a document to an MTS senior executive 

listing the status of MTS's payment commitments to Government Official A, as well as the status 

of the benefits the company had requested from the official. 

  



 

 
6 

Status of our commitments 

 

1. Payment of the total amount of $50 million, with the 

following breakdown: 

 $30 million through the purchase of CDMA frequencies, 

prior to 01/11/08. 

 MTS is ready to make the payment immediately. 

 $20 million in an agreed form, prior to 01/01/09, tied to 

the growth of the subscriber base. 

 The basis for payment and the draft agreement are being 

worked out, but no scheme exists other than making the 

payment as a fee for services.  Proposing to increase the 

amount of the contract pertaining to CDMA, with delayed 

payments. 

2. Beginning in 2009, for the assistance in creating favorable 

conditions for the growth of the Company and its 

subscriber base, guarantee the payment of an average of 

$20 million/year. 

 The basis for payment and the draft agreement are being 

worked out. 

 

KolorIt Design Transaction 

 

 CC. In September 2009, MTS agreed to have Uzdunrobita enter into an acquisition 

that would satisfy a portion of MTS’s obligation to confer a $20 million benefit on Government 

Official A.  Uzdunrobita and MTS acquired 100% of an Uzbek advertising company named 

KolorIt Design ("KolorIt") that Government Official A indirectly controlled.  The acquisition 

was a non-core transaction for MTS because KolorIt had no telecommunications operations and 

MTS was not in the advertising business.   

 

 DD. MTS engaged the same investigative firm to conduct due diligence on KolorIt that 

it had with Takilant.  The firm reported that one of KolorIt's two listed shareholders was the 

same proxy of Government Official A who had appeared in the records of Takilant. 

 

 EE. When MTS received the investigator's findings in August 2009 it conducted no 

further investigation and proceeded with the transaction.  MTS paid the equivalent of 

approximately $40 million for KolorIt, substantially more than the $23 million valuation of the 

company that JPMorgan had prepared at MTS's request. 

 

 FF. Following the KolorIt transaction, the senior MTS manager who had earlier 

prepared the document listing the status of MTS's payment commitments to Government Official 

A updated the document.  The updated document, which now referred to Government Official A 



 

 
7 

as “the local partner,” stated that an obligation to pay $20 million by January 1, 2009 was 

satisfied in part by the KolorIt acquisition. 

 

July 2008' Agreements with the local partner 

status on their fulfilment (on 02.11.2009 r.) 

 

Our obligations 

 

1. To pay $50 [million] by 

 CDMA frequencies acquisition for $30 [million] by 

01.11.08 

 Paid in full in July 2009 

 a way to agree additionally $20 [million] by 01.01.09 

(linked to the customers number growth) 

 Paid in full in September 2009 through ColorIT acquisition 

($10 [million]) and out of the vendor's additional discount 

($10 [million]) 

2. Starting year 2009 to pay up to $20 [million] annually for 

the assistance in creating favorable conditions for the 

operations linked to the customers number growth 

 

Contributions to Charities Supported by Government Official A 
 

 GG. Acting through Uzdunrobita, MTS also made payments to charities supported by, 

and a sponsorship payment to a company connected to, Government Official A.  The payments 

were made in the expectation that they were necessary to ensure Government Official A’s 

continued support for Uzdunrobita’s business.  The payments were falsely recorded in 

Uzdunrobita’s books and records as advertising and non-operating expenses, rather than as 

charitable expenses.  The payments also failed to comply with appropriate internal controls.  The 

payments were not approved until after payment was made and were not memorialized in 

agreements with anti-corruption representations.  Below is a table of the payments made by 

Uzdunrobita in 2012: 

 

 

Date Payment 

Amount 

Charity Name 

3/27/2012 $135,612 Center for Youth Initiatives 

“Kelajak ovozi” 

3/27/2012 $135,612 Fund for Support of Social 

Initiatives 

3/27/2012 $135,612 Republic Social Association 

“Zhenskoye Sobraniye” 

3/27/2012 $135,611 Public Fund “Mehr Nuri” 



 

 
8 

3/27/2012 $189,856 Fund Forum 

3/27/2012 $162,734 Fund Forum 

3/27/2012 $189,856 Fund Forum 

4/24/2012 $54,244 Terra Group 

Total $1,139,137  

 

 

Currency Conversion Transactions 
 

 HH. Between 2005 and 2012, Uzdunrobita entered into equipment purchase contracts 

denominated in U.S. dollars.  Due to restrictions on the conversion of Uzbek soums into U.S. 

dollars, Uzdunrobita was unable to convert enough currency to pay its equipment vendors.  In 

order to make its payments under the contracts, Uzdunrobita entered into debt reassignment and 

equipment purchase agreements with third party companies who agreed to pay the required 

amounts of U.S. dollars to pay Uzdunrobita’s vendors.  

  

 II. During the 2009-11 period, Uzdunrobita paid approximately $461.5 million to 

third party companies to effectuate purchases of network equipment in Uzbekistan.  Of this total, 

approximately $142.7 million represented the difference between the Uzbek Central Bank 

exchange rate and the exchange rate agreed to by the parties and other markups. Approximately 

$92.6 million represented taxes and customs costs.  

  

 JJ. Uzdunrobita’s books and records, which were consolidated into MTS's books and 

records, did not reflect, in an appropriate level of detail and support, the $142.7 million in 

currency rate differentials and markups.  These transactions had a material effect on the financial 

statements of Uzdunrobita.  In addition, Uzdunrobita failed to conduct appropriate due diligence 

on the third party intermediaries to determine whether they were under the ownership or control 

of Government Official A or other Uzbek government officials.  

 

 KK. As a result of the conduct described above, MTS violated Exchange Act Sections 

30A, 13(b)(2)(A), and 13(b)(2)(B). 

 

Undertakings 

 

Cooperation 

 

 LL. Respondent undertakes to cooperate fully with the Commission in any and all 

investigations, litigation, or other proceedings relating to or arising from the matters described in 

this Order.  In connection with such cooperation, Respondent shall: 

 

(1)   produce, without service of a notice or subpoena, any and all non-

privileged documents and other information requested by the Commission 

staff subject to any restrictions under the laws and regulations of any 

foreign jurisdiction; 

 



 

 
9 

(2)   use its best efforts to cause its current or former officers, employees, 

agents, and directors to be interviewed by Commission staff at such times 

and places as the staff reasonably may direct; and 

 

(3)   use its best efforts to cause its current or former officers, employees, 

agents, and directors to appear and testify without service of a notice or 

subpoena in such investigations, depositions, hearings, or trials as may be 

requested by the Commission staff. 

 

 MM. Should Respondent during the period which the Monitor is retained discover 

credible evidence, not previously reported to the Commission staff, that questionable or corrupt 

payments or questionable or corrupt transfers of property or interests may have been offered, 

promised, paid, or authorized by Respondent or by any entity or person while working directly 

for Respondent; that related false books and records have been maintained; or that Respondent 

has failed to implement adequate internal accounting controls, Respondent shall undertake to 

promptly report such conduct to the Commission staff. 

 

 NN. During the period which the Monitor is retained, Respondent shall provide its 

external auditors with its annual internal audit plan and reports of the results of internal audit 

procedures and its assessment of its FCPA compliance policies and procedures. 

 

 OO. During the period which the Monitor is retained, Respondent shall provide the 

Commission staff with any written reports or recommendations provided by Respondent’s 

external auditors in response to Respondent’s annual internal audit plan, reports of the results of 

internal audit procedures, and its assessment of its FCPA compliance policies and procedures. 

 

Retention of Monitor and Term of Engagement 

 

 PP. Respondent shall engage an independent compliance monitor (the "Monitor") not 

unacceptable to the staff of the Commission within sixty (60) calendar days of the entry of the 

Order. The Monitor shall have, at a minimum, the following qualifications:  (i) demonstrated 

expertise with respect to the FCPA and other applicable anti-corruption laws, including 

experience counseling on FCPA issues; (ii) experience designing or reviewing corporate 

compliance policies, procedures, and internal accounting controls, including FCPA and anti-

corruption policies and procedures; (iii) the ability to access and deploy resources as necessary to 

discharge the Monitor's duties as described in the Offer; and (iv) sufficient independence from 

Respondent to ensure effective and impartial performance of the Monitor's duties as described in 

the Offer. The Commission staff may extend Respondent's time period to retain the Monitor, in 

its sole discretion. If the Monitor resigns or is otherwise unable to fulfill the obligations 

described in the Offer, Respondent shall within forty-five (45) days retain a successor Monitor 

that has the same minimum qualifications as the original Monitor and that is not unacceptable to 

the Commission staff. 

 

 QQ. Respondent shall retain the Monitor for a period of not less than thirty-six (36) 

months, unless the Commission staff finds, in its sole discretion, that there exists a change in 

circumstances sufficient to eliminate the need for the Monitor, in which case the Monitorship 



 

 
10 

may be terminated early. The term of the Monitorship can be extended as set forth in Paragraph 

FF, below.  Respondent shall provide the Commission staff with a copy of the agreement 

detailing the scope of the Monitor's responsibilities within thirty (30) days after the Monitor is 

engaged. 

 

 RR. During the Term of the Monitorship and for a period of one year from the 

conclusion of the Monitorship, neither the Respondent nor any of its then-current or former 

affiliates, subsidiaries, directors, officers, employees, or agents acting in their capacity as such 

shall enter into, or discuss the possibility of, any employment, consultant, attorney-client, 

auditing, or other professional relationship with the Monitor. 

 

Respondent's Obligations 

 

 SS. Respondent shall cooperate fully with the Monitor and provide the Monitor with 

access to all non-privileged information, documents, books, records, facilities, and personnel as 

reasonably requested by the Monitor; such access shall be provided consistent with Respondent's 

and the Monitor's obligations under applicable local laws and regulations, including applicable 

data privacy and national security laws and regulations.  Respondent shall use its best efforts, to 

the extent reasonably requested, to provide the Monitor with access to Respondent's former 

employees, third party vendors, agents, and consultants.  Respondent does not intend to waive 

the protection of the attorney work product doctrine, attorney-client privilege, or any other 

privilege applicable as to third parties.  

 

 TT. The parties agree that no attorney-client relationship shall be formed between the 

Respondent and the Monitor.  In the event that Respondent seeks to withhold from the Monitor 

access to information, documents, books, records, facilities, current or former personnel of the 

Respondent, its third-party vendors, agents, or consultants that may be subject to a claim of 

attorney-client privilege or to the attorney work-product doctrine, or where Respondent 

reasonably believes production would otherwise be inconsistent with the applicable laws and 

regulations, Respondent shall work cooperatively with the Monitor to resolve the matter to the 

satisfaction of the Monitor.  If, during the Term of the Monitorship, the Monitor believes that 

Respondent is unreasonably withholding access on the basis of a claim of attorney-client 

privilege, attorney work-product doctrine, or other asserted applicable law, the Monitor shall 

notify the Commission staff. 

 

 UU. Any disclosure by Respondent to the Monitor concerning potential corrupt 

payments, false books and records, or internal accounting control issues shall not relieve 

Respondent of any otherwise applicable obligation to truthfully disclose such matters to the 

Commission staff.   

 

Monitor's Mandate 

 

 VV. The Monitor shall review and evaluate the effectiveness of the Respondent's 

policies, procedures, practices, internal accounting controls, recordkeeping, and financial 

reporting as they relate to Respondent's current and ongoing compliance with the anti-bribery, 

books and records, and internal accounting controls provisions of the FCPA and other applicable 



 

 
11 

anti-corruption laws, and make recommendations reasonably designed to improve the 

effectiveness of Respondent's internal accounting controls and FCPA corporate compliance 

program (the "Mandate").  This Mandate shall include an assessment of the board of directors' 

and senior management's commitment to, and effective implementation of, the FCPA corporate 

compliance program.  In carrying out the Mandate, to the extent appropriate under the 

circumstances, the Monitor may coordinate with Respondent personnel, including in-house 

counsel, compliance personnel, and internal auditors. To the extent the Monitor deems 

appropriate, it may rely on Respondent's processes, and on sampling and testing methodologies.  

The Monitor is not expected to conduct a comprehensive review of all business lines, all business 

activities, and all markets. Any disputes between Respondent and the Monitor with respect to the 

work plan shall be decided by the Commission staff in its sole discretion.  

 

 WW. During the term of the Monitorship, the Monitor shall conduct three reviews, 

issue a report following each review, and issue a final certification report, as described below.  

The Monitor's work plan for the first review shall include such steps as are reasonably necessary 

to conduct an effective first review. It is not intended that the Monitor will conduct its own 

inquiry into historical events. In developing each work plan and in carrying out the reviews 

pursuant to such plans, the Monitor is encouraged to coordinate with Respondent's personnel, 

including auditors and compliance personnel.  

First Review and Report 

 

 XX. The Monitor shall commence the first review no later than one hundred twenty 

(120) calendar days from the date of the engagement of the Monitor (unless otherwise agreed by 

Respondent, the Monitor, and the Commission staff). Promptly upon being retained, the Monitor 

shall prepare a written work plan, which shall be submitted to Respondent and the Commission 

staff for comment no later than sixty (60) days after being retained. 

 

 YY. In order to conduct an effective first review and to understand fully any existing 

deficiencies in Respondent's internal accounting controls and FCPA corporate compliance 

program, the Monitor's work plan shall include such steps as are reasonably necessary to 

understand Respondent's business and its global anti-corruption risks. The steps shall include: 

 

(1)  inspection of relevant documents, including the internal accounting 

controls, recordkeeping, and financial reporting policies and procedures as 

they relate to Respondent's compliance with the books and records, 

internal accounting controls, and anti-bribery provisions of the FCPA and 

other applicable anti-corruption laws; 

 

(2)  onsite observation of selected systems and procedures comprising 

Respondent's FCPA corporate compliance program, including 

anticorruption compliance procedures, internal accounting controls, 

recordkeeping, due diligence, and internal audit procedures, including at 

sample sites; 

 

(3)  meetings with, and interviews of, as relevant, Respondent’s employees, 

officers, directors, and, where appropriate and feasible, its third-party 



 

 
12 

vendors, agents, or consultants and other persons at mutually convenient 

times and places; and 

 

(4)  risk-based analyses, studies, and testing of Respondent's FCPA corporate 

compliance program.  

 

 ZZ. The Monitor may take steps as reasonably necessary to develop an understanding 

of the facts and circumstances surrounding prior FCPA violations that gave rise to this action or 

violations of other applicable anti-corruption laws, but shall not conduct his or her own inquiry 

into those historical events. 

 

 AAA. After receiving the first review work plan, Respondent and Commission staff 

shall provide any comments concerning the first review work plan within thirty (30) days to the 

Monitor. Any disputes between Respondent and the Monitor with respect to the first review 

work plan shall be decided by the Commission staff in its sole discretion. Following comments 

by Respondent and Commission staff, the Monitor will have fifteen (15) days to submit a final 

first review work plan. 

 

 BBB. The first review shall commence no later than one hundred twenty (120) days 

from the date of the engagement of the Monitor (unless otherwise agreed by Respondent, the 

Monitor, and the Commission staff). The Monitor shall issue a written report within one hundred 

eighty (180) days of commencing the first review, setting forth the Monitor's assessment and, if 

necessary, making recommendations reasonably designed to improve the effectiveness of 

Respondent's internal accounting controls and FCPA corporate compliance program as they 

relate to Respondent's compliance with the FCPA and other applicable anti-corruption laws. The 

Monitor should consult with Respondent concerning his or her findings and recommendations on 

an ongoing basis and should consider Respondent's comments and input to the extent the 

Monitor deems appropriate. The Monitor may also choose to share a draft of his or her report 

with Respondent and Commission staff prior to finalizing it. The Monitor shall provide the 

report to the Board of Directors of Respondent and contemporaneously transmit a copy to 

Commission staff.  

 

 CCC. Within one hundred eighty (180) days after receiving the Monitor's first review 

report, Respondent shall adopt and implement all recommendations in the Review, provided, 

however, that as to any recommendation that Respondent considers unduly burdensome, 

impractical, costly, or inconsistent with applicable law or regulation, Respondent need not adopt 

that recommendation at that time, but may submit in writing to the Monitor and the Commission 

staff within thirty (30) days of receiving the report an alternative policy, procedure, or system 

designed to achieve the same objective. 

 

 DDD. In the event Respondent and the Monitor are unable to agree on an acceptable 

alternative proposal, Respondent shall promptly consult with the Commission staff.  Any 

disputes between Respondent and the Monitor with respect to the recommendations shall be 

decided by the Commission staff in its sole discretion.  The Commission staff shall consider the 

Monitor's recommendation and Respondent's reasons for not adopting the recommendation in 



 

 
13 

determining whether Respondent has fully complied with its obligations.  Pending such 

determination, Respondent shall not be required to implement any contested recommendation(s). 

 

 EEE. With respect to any recommendation that the Monitor determines cannot 

reasonably be implemented within one hundred and eighty (180) days after receiving the report, 

the Monitor may extend the time period for implementation with prior written approval of the 

Commission staff. 

Second Review 

 

 FFF. Within one hundred twenty (120) days after the issuance of the first review report, 

the Monitor shall submit a written work plan for the second review to Respondent and 

Commission staff. Respondent and Commission staff shall provide any comments concerning the 

work plan within thirty (30) days in writing to the Monitor.  Any disputes between Respondent 

and the Monitor with respect to the written work plan shall be decided by the Commission staff 

in its sole discretion. Following comments by Respondent and Commission staff, the Monitor 

will have fifteen (15) days to submit a final second review work plan.  

 

 GGG. The second review shall commence no later than one hundred eighty (180) days 

after the issuance of the first review report (unless otherwise agreed by Respondent, the Monitor, 

and the Commission staff). The Monitor shall issue a written second review report within one 

hundred twenty (120) days of commencing the second review.  The second review report shall 

set forth the Monitor's assessment of, and any additional recommendations regarding, 

Respondent's internal accounting controls and FCPA corporate compliance program as they 

relate to Respondent's compliance with the FCPA and other applicable anti-corruption laws; the 

Monitor's assessment of the implementation by Respondent of any recommendations made in the 

first review report; and the Monitor's assessment of the commitment of Respondent's board of 

directors and senior management to compliance with anti-corruption laws.  

 

 HHH. Within one hundred twenty (120) days after receiving the Monitor's second 

review report, Respondent shall adopt and implement all recommendations in the report, 

provided, however, that as to any recommendation that Respondent considers unduly 

burdensome, impractical, costly, or inconsistent with applicable law or regulation, Respondent 

need not adopt that recommendation at that time, but may submit in writing to the Monitor and 

the Commission staff within thirty (30) days of receiving the report an alternative policy, 

procedure, or system designed to achieve the same objective. 

 

 III. In the event Respondent and the Monitor are unable to agree on an acceptable 

alternative proposal within thirty (30) days, Respondent shall promptly consult with the 

Commission staff. Any disputes between Respondent and the Monitor with respect to the 

recommendations shall be decided by the Commission staff in its sole discretion.  The 

Commission staff shall consider the Monitor's recommendation and Respondent's reasons for not 

adopting the recommendation in determining whether Respondent has fully complied with its 

obligations.  Pending such determination, Respondent shall not be required to implement any 

contested recommendation(s). 

 

  



 

 
14 

Third Review 

 

 JJJ. The Monitor shall commence a third review no later than one hundred twenty 

(120) days after the issuance of the second review report (unless otherwise agreed by 

Respondent, the Monitor, and the Commission staff). The monitor shall issue a written third 

review report within ninety (90) days of commencing the third review, setting forth the Monitor's 

assessment and, if necessary, making recommendations in the same fashion as with the prior 

reviews. 

 KKK. Within ninety (90) days after receiving the Monitor's third review report, 

Respondent shall adopt and implement all recommendations in the report, provided, however, 

that as to any recommendation that Respondent considers unduly burdensome, impractical, 

costly, or inconsistent with applicable law or regulation, Respondent need not adopt that 

recommendation at that time, but may submit in writing to the Monitor and the Commission staff 

within thirty (30) days of receiving the report an alternative policy, procedure, or system 

designed to achieve the same objective. 

 

 LLL. In the event Respondent and the Monitor are unable to agree on an acceptable 

alternative proposal within thirty (30) days, Respondent shall promptly consult with the 

Commission staff. Any disputes between Respondent and the Monitor with respect to the 

recommendations shall be decided by the Commission staff in its sole discretion.  The 

Commission staff shall consider the Monitor's recommendation and Respondent's reasons for not 

adopting the recommendation in determining whether Respondent has fully complied with its 

obligations.  Pending such determination, Respondent shall not be required to implement any 

contested recommendation(s).  

Certification 

 

 MMM. No later than seventy-five (75) days before the end of the term of the 

Monitorship, the Monitor shall certify whether the Respondent's compliance program, including 

its policies and procedures, is reasonably designed and implemented to prevent and detect 

violations of the FCPA and is functioning effectively.  Such certification shall be supported by a 

written final certification report that certifies Respondent's compliance with its obligations under 

the Order, and which shall set forth an assessment of the sustainability of the Respondent's 

remediation efforts and may also recommend areas for further follow-up by Respondent.  

 

 NNN. The monitor shall orally notify the Commission staff at least fourteen (14) days 

prior to the issuance of the final certification report whether he or she expects to be able to 

certify as provided herein.  In the event the Monitor is unable to certify within the three year 

term of the monitor period, the following extension provisions shall be in effect.  

 

Extension of Monitor Period 

 

 OOO. If, as informed by the Monitor's inability to certify that the Respondent's 

compliance program, including its policies and procedures, is reasonably designed and 

implemented to prevent and detect violations of the FCPA and is functioning effectively, the 

Commission staff concludes that Respondent has not successfully satisfied its obligations under the 



 

 
15 

Monitorship, the Monitor period shall be extended for a reasonable time not to exceed one year 

absent extenuating circumstances. 

 

 PPP. Under such circumstances, the Monitor shall commence a fourth review no later 

than sixty (60) days after the Commission staff concludes that Respondent has not successfully 

satisfied its compliance obligations under the Order (unless otherwise agreed by Respondent, the 

Monitor, and the Commission staff). The Monitor shall issue a written fourth review report 

within ninety (90) days of commencing the fourth review in the same fashion as set forth in 

Paragraph BBB with respect to the first review and in accordance with the procedures for follow-

up reports set forth in Paragraphs FFF to LLL.  A determination to terminate the Monitorship 

shall then be made in accordance with Paragraph MMM. 

 

 QQQ. If, after completing the fourth review the Monitor is unable to certify, the 

Monitorship shall be extended, and the Monitor shall commence a fifth review (unless otherwise 

agreed by Respondent, the Monitor, and the Commission staff). The Monitor shall issue a written 

fifth review report within ninety (90) days of commencing the fifth review in the same fashion as 

set forth in Paragraph BBB with respect to the first review and in accordance with the procedures 

for follow-up reports set forth in Paragraphs FFF to LLL.  These reviews shall continue until the 

Monitor is able to certify, or unless as otherwise agreed by Respondent and Commission staff. 

 

Monitor's Discovery of Potential or Actual Misconduct 

 

 RRR. Throughout the term of the Monitorship, the Monitor shall disclose to the 

Commission staff any credible evidence that corrupt or otherwise suspicious transactions 

occurred, or payments or things of value were offered, promised, made, or authorized by any 

entity or person within Respondent, or any entity or person working directly or indirectly for or 

on behalf of Respondent, or that related false books and records may have been maintained by or 

on behalf of Respondent or that relevant internal accounting controls were circumvented or were 

not reasonably designed or implemented.  The Monitor shall contemporaneously notify 

Respondent's general counsel, chief compliance officer, or audit committee for further action 

unless at the Monitor's discretion he or she believes disclosure to Respondent would be 

inappropriate under the circumstances. The Monitor shall address in his or her reports the 

appropriateness of Respondent's response to all improper activities, whether previously disclosed 

to the Commission staff or not. 

 

Certification of Completion 

 

 SSS. No later than sixty (60) days from date of the completion of the undertakings with 

respect to the Monitorship, Respondent shall certify, in writing, compliance with the 

undertakings set forth above.  The certification shall identify the undertakings, provide written 

evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to 

demonstrate compliance. The Commission staff may make reasonable requests for further 

evidence of compliance, and Respondent agrees to provide such evidence. 

 

  



 

 
16 

Extensions of Time 

 

 TTT. Upon request by the Monitor or Respondent, the Commission staff may extend 

any procedural time period set forth above for good cause shown. 

 

Confidentiality of Reports 

 

 UUU. The reports submitted by the Monitor and the periodic reviews and reports 

submitted by Respondent will likely include confidential financial, proprietary, competitive 

business, or commercial information.  Public disclosure of the reports could discourage 

cooperation, impede pending or potential government investigations, or undermine the objective 

of the reporting requirement.  For these reasons the reports and the contents thereof are intended 

to remain and shall remain non-public, except (i) pursuant to court order, (ii) as agreed to by the 

parties in writing, (iii) to the extent that the Commission determines in its sole discretion that 

disclosure would be in furtherance of the Commission's discharge of its duties and 

responsibilities, or (iv) as is otherwise required by law. 

Address for All Written Communications and Reports 

 

 VVV. All reports or other written communications by the Monitor or Respondent 

directed to the Commission staff shall be transmitted to Charles E. Cain, Chief, FCPA Unit, 

Division of Enforcement, U.S. Securities and Exchange Commission, 100 F Street, N.E., 

Mailstop 5631, Washington, D.C. 20549.  A copy of the certification of completion and 

supporting materials shall also be transmitted to the Office of Chief Counsel of the Enforcement 

Division at the same address. 

 

IV 

 

 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 

 

 A. Respondent cease and desist from committing or causing any violations and any 

future violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 

1934 [15 U.S.C. §§ 78dd-1, 78m(b)(2)(A), and 78m(b)(2)(B)].  

 

 B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $100,000,000 to the Securities and Exchange Commission for transfer 

to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 

  

 C. Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  



 

 
17 

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

 D. Payments by check or money order must be accompanied by a cover letter 

identifying MTS as a Respondent in these proceedings, and the file number of these proceedings; 

a copy of the cover letter and check or money order must be sent to Charles Cain, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Mailstop 5631, Washington, 

DC 20549.   

 

 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 

the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

F. Respondent shall comply with the undertakings enumerated above at Section III, 

paragraphs MM through VVV. 

 

 By the Commission. 

 

 

       Brent J. Fields 

       Secretary