Telecom Executives Agree to Pay Penalties for FCPA Violations
Former Magyar Telekom CEO Elek Straub and chief strategy officer Andras Balogh agreed to pay $250,000 and $150,000 penalties respectively and accept five-year officer-and-director bars to settle SEC FCPA charges for orchestrating sham contracts to bribe officials in Macedonia and Montenegro, while the company previously paid $95 million and a third executive, Tamas Morvai, paid $60,000 for book falsification.
Former Magyar Telekom executives Elek Straub and Andras Balogh agreed to pay $250,000 and $150,000 penalties, respectively, and accept five-year bars from serving as officers or directors of SEC-registered companies to settle SEC charges under the Foreign Corrupt Practices Act. They were accused of orchestrating sham contracts to funnel millions in bribes to officials in Macedonia and Montenegro to secure business and eliminate competition, conduct for which Magyar Telekom already paid a $95 million penalty in December 2011. A third executive, Tamas Morvai, previously settled by paying a $60,000 penalty for falsifying the company’s books and records in connection with the scheme.
Former Magyar Telekom CEO Elek Straub and chief strategy officer Andras Balogh agreed to pay $250,000 and $150,000 penalties, respectively, and accept five-year bars from serving as officers or directors of any SEC-registered public company to settle SEC charges under the Foreign Corrupt Practices Act. The SEC alleged they orchestrated a bribery scheme using sham contracts to funnel millions of dollars to officials in Macedonia and Montenegro to win business and shut out competitors, conduct that led to Magyar Telekom’s $95 million penalty in December 2011 to resolve parallel civil and criminal charges. A third executive, Tamas Morvai, former director of business development and acquisitions, had already settled in February by paying a $60,000 penalty for falsifying the company’s books and records in connection with the same bribery scheme. The executives were originally set to stand trial, but the settlements—subject to court approval—avoided litigation. The SEC emphasized its commitment to holding overseas executives accountable for corrupt practices affecting U.S.-listed companies. The enforcement action was led by the SEC’s FCPA Unit and supported by the Department of Justice’s Fraud Section and the Federal Bureau of Investigation.
Extracted insights
- $95.00M $95 million $10M–$100M
- $250K $250,000 $100K–$1M
- $150K $150,000 $100K–$1M
- $60K $60,000 $10K–$100K
- person andras balogh
- person both executives
- person elek straub
- person magyar telekom
- agency Securities and Exchange Commission
- person tamas morvai
- Securities and Exchange Commission announced two former executives agreed to pay financial penalties and accept officer-and-director bars
- Magyar Telekom paid $95 million penalty in December 2011 to settle parallel civil and criminal charges
- Elek Straub agreed to pay $250,000 penalty
- Andras Balogh agreed to pay $150,000 penalty
- Both Executives agreed to five-year bar from serving as an officer or director of any SEC-registered public company
- Tamas Morvai agreed to pay $60,000 penalty
The Securities and Exchange Commission today announced that two former executives at Hungarian-based telecommunications company Magyar Telekom have agreed to pay financial penalties and accept officer-and-director bars to settle a previously-filed SEC case alleging they violated the Foreign Corrupt Practices Act (FCPA). Magyar Telekom paid a $95 million penalty in December 2011 to settle parallel civil and criminal charges that the company bribed officials in Macedonia and Montenegro to win business and shut out competition in the telecommunications industry. The SEC’s complaint also charged the company’s former CEO Elek Straub and former chief strategy officer Andras Balogh with orchestrating the use of sham contracts to funnel millions of dollars in corrupt payments. The two executives were set to stand trial this month. Straub has agreed to pay a $250,000 penalty and Balogh has agreed to pay a $150,000 penalty. Both executives agreed to a five-year bar from serving as an officer or director of any SEC-registered public company. The settlements are subject to court approval. “The executives in this case were charged with spearheading secret agreements with a prime minister and others to block out telecom competitors,” said Stephanie Avakian, Acting Director of the SEC’s Division of Enforcement. “We persevered in order to hold these overseas executives culpable for corrupting a company that traded in the U.S. market.” A third Magyar Telekom executive charged in the SEC’s complaint, former director of business development and acquisitions Tamas Morvai, agreed to a settlement that was approved by the court in February requiring him to pay a $60,000 penalty for falsifying the company’s books and records in connection with the bribery scheme. The SEC’s litigation was led by Robert I. Dodge, Thomas A. Bednar, and John D. Worland Jr. The case was investigated by Adam J. Eisner and supervised by Charles E. Cain, Deputy Chief of the Enforcement Division’s FCPA Unit. The SEC appreciates the assistance of the Fraud Section of the Department of Justice’s Criminal Division and the Federal Bureau of Investigation.
The Securities and Exchange Commission today announced that two former executives at Hungarian-based telecommunications company Magyar Telekom have agreed to pay financial penalties and accept officer-and-director bars to settle a previously-filed SEC case alleging they violated the Foreign Corrupt Practices Act (FCPA). Magyar Telekom paid a $95 million penalty in December 2011 to settle parallel civil and criminal charges that the company bribed officials in Macedonia and Montenegro to win business and shut out competition in the telecommunications industry. The SEC’s complaint also charged the company’s former CEO Elek Straub and former chief strategy officer Andras Balogh with orchestrating the use of sham contracts to funnel millions of dollars in corrupt payments. The two executives were set to stand trial this month. Straub has agreed to pay a $250,000 penalty and Balogh has agreed to pay a $150,000 penalty. Both executives agreed to a five-year bar from serving as an officer or director of any SEC-registered public company. The settlements are subject to court approval. “The executives in this case were charged with spearheading secret agreements with a prime minister and others to block out telecom competitors,” said Stephanie Avakian, Acting Director of the SEC’s Division of Enforcement. “We persevered in order to hold these overseas executives culpable for corrupting a company that traded in the U.S. market.” A third Magyar Telekom executive charged in the SEC’s complaint, former director of business development and acquisitions Tamas Morvai, agreed to a settlement that was approved by the court in February requiring him to pay a $60,000 penalty for falsifying the company’s books and records in connection with the bribery scheme. The SEC’s litigation was led by Robert I. Dodge, Thomas A. Bednar, and John D. Worland Jr. The case was investigated by Adam J. Eisner and supervised by Charles E. Cain, Deputy Chief of the Enforcement Division’s FCPA Unit. The SEC appreciates the assistance of the Fraud Section of the Department of Justice’s Criminal Division and the Federal Bureau of Investigation.