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By John Helmer, Moscow

Lars Nyberg (right), chief executive until Friday afternoon of TeliaSonera, the Swedish and Finnish telecommunications group, is something of an expert on the blowback effect. Firearms and forensics experts understand that blowback is what happens after a gunshot, when the vacuum inside the gun barrel draws in blood and tissue from the person who’s just been shot. Even if the corpse cannot be found, the blowback evidence can convict the shooter whose prints are on the gun, of murder. The typical defence in situations like that is no corpus delicti, no evidence of crime.

In the case of TeliaSonera’s payment of more (much more) than $320 million to a one-person company registered in Gibraltar allegedly having nothing to do with Gulnara Karimova (centre), Nyberg claims he is innocent of intending corruptly to advance TeliaSonera’s profits in its Uzbek mobile telephone concession. Karimova is the senior daughter of Uzbekistan’s president, Islam Karimov, and the dominant business figure in the country.

Nyberg is also innocent, he says, of having looked down the barrel of the gun once fired. “Five years ago,” he told the Financial Times in November, “you had to do something to break the law. The law now says if you don’t do something you might be breaking the law. It is a major difference. We have to do a lot more discovery [of documents]. We have to have all the paperwork.”

Before the release on Friday of the investigative report by Mannheimer Swartling, a Stockholm law firm commissioned by TeliaSonera’s board, Nyberg had claimed that “severe media allegations” didn’t upset his “confiden[ce] that the allegations are legally unfounded.” After the TeliaSonera board of directors refused a vote of confidence in Nyberg, and he had resigned, he said: “Even if this transaction was legal, we should not have gone ahead without learning more about the identity of our counterparty. This is something I regret.”

In fact the Mannheimer Swartling report stops short of concluding that the transaction, and Nyberg’s actions, were legal. It allows the possibility that the media allegations are true, and passes the buck for issuing indictments to Sweden’s prosecutor: “The suspicions of crime expressed in the media and by the Swedish Prosecution Authority cannot be dismissed by this investigation,” reports Mannheimer Swartling. For the full report, click here. The English summary starts at page 159.

Legally, Nyberg didn’t take over as chief executive of TeliaSonera until September 3, 2007, by which time the Swedish company was well down the path of finding an alternative to a company known to be associated with Karimova as the local partner for the operation of its Uzbek telephone concession. The Mannheimer Swartling report appears to let TeliaSonera off the hook by concluding that “TeliaSonera’s acquisition of MCT was preceded by extensive due diligence and planning on how to structure it the best way.”

However, it is clear from the evidence presented to the law firm that once the Swedes had decided to choose Takilant, a 3-year old entity registered in Gibraltar and owned by a 25-year old Armenian Uzbek named Gayane Avakyan, it had also decided not to investigate how she had acquired the concession TeliaSonera was buying from Takilant. TeliaSonera also failed to investigate whether Avakyan and Takilant had the legal right to sell the asset. According to Mannheimer Swartling, Takilant was “introduced” in the autumn of 2007. The formalities were signed three months later in December. According to the Swedish press reports, the first TeliaSonera payment to Takilant came to about $320 million. Nyberg was in charge and personally responsible at the time.

But he didn’t want to know too much. “The reason for levelling criticism at the current CEO,” reports Mannheimer Swartling, “is the uncritical attitude that has been maintained, despite the presence of continued unclear circumstances in connection with transactions in 2007, as well as subsequent events.”

But there is nothing at all in the report about how much in revenues, profits and dividends TeliaSonera has shared with Takilant, and paid to the benefit of its shareholder, allegedly Avakyan, since December 2007. TeliaSonera’s financial releases report sales revenues for the Uzbekistan operation; in 2011, for example, these came to 1.7 billion Swedish krona ($275 million). But there is no reporting by TeliaSonera of the Uzbek joint venture’s earnings, profits, or dividend distribution to Takilant.

The TeliaSonera reports do show that in 2008 and 2009 the Swedes owned 74% of the joint venture, Uzbek Telcom Holding B.V.,while Takilant owned 26%. In February 2010, with Nyberg in charge, TeliaSonera exercised an option and bought another 20% of the joint venture. According to page 18 of the 2010 annual report, it paid Takilant “approximately SEK 1,600 million (USD 220 million).” That leaves Takilant with 6%, and according to TeliaSonera’s annual report for 2011, this is valued at SEK 495 million ($78 million).

Adding the three share transactions together, the Swedish payments to Takilant, and thus allegedly to Karimova, make at least $618 million, plus the annual dividend stream. TeliaSonera refuses to say how much was paid in dividends to Takilant.

It wasn’t enough for Nyberg to inquire officially into the identity of the beneficiary, in case Nyberg really knew nothing. The sum also wasn’t enough for Karimova. That’s now clear in retrospect, because in May or June of 2012, she had a falling out with Bekhzod Akhmedov, the initial negotiator of TeliaSonera’s entry to Uzbekistan through Takilant, and subsequently the head of Vladimir Yevtushenkov’s mobile operator in Uzbekistan, Uzdunrobita.

The Swedish press have been focusing their investigations on alleged wrongdoing in Uzbekistan by TeliaSonera and Nyberg. The Swiss press have been focusing on the falling-out between Karimova and Akhmedov; the latter’s flight from Uzbekistan; and an attempt by people reportedly close to both of them to remove cash from Takilant’s bank account at the Geneva branch of the private bank, Lombard Odier. The Swiss police arrested two Uzbeks in July 31 on charges of money-laundering, and then released them on bail at the start of November. No indictments have yet been issued in court or released to the press. Lombard Odier has released this document from the Swiss authorities detailing their suspicions of what has been happening.

In Moscow the media focus has been on Yevtushenkov, his Mobile Telesystems (MTS), and the fate of Russian nationals arrested in a sweep of Uzdunrobita last summer by the Uzbek police. There have been warnings from the Russian Foreign Minister to his Uzbek counterpart, and the arrest by Moscow court marshals of real estate owned by Karimova in Moscow. Yevtushenkov continues to express optimism that he will retrieve the Uzdunrobita concession. The Uzbek authorities lost their first attempt to confiscate the assets, but they continue to press for payment of a $600 million penalty for alleged tax evasion. Yevtushenkov has put the subsidiary into bankruptcy to stop payment.

In the interval, it has been crystal clear to every telecommunications sector analyst in Moscow that whatever Karimova’s intentions had been last June, her actions have been good for at least one Russian rival of Yevtushenkov’s, and probably two. According to the MTS financial reports, its sales revenues in Uzbekistan in the second quarter to June 30 came to $132.8 million. After Karimova hit the fan, the corresponding figure for the third quarter (September 30) was just $26 million. The corresponding earnings figures went from $72.3 million to minus-$2.2 million. In MTS’s worldwide balance sheet, the Uzbek concession generated just 3.5% of revenues; 4.4% of earnings. However, if to the third-quarter losses on MTS’s account, the fourth-quarter losses are added, there is now a hole on the balance-sheet of more than $200 million, compared to 2011.

In the Uzbek mobile telephone market until last June, MTS’s Uzdunrobita was the biggest operator geographically and numerically, and claimed to have 9 million subscribers. TeliaSonera’s Uzbek Holding claimed 7 million, and Vimpelcom, controlled by Mikhail Fridman (far left) and his Alfa group, another 7 million. You don’t need Mannheimer Swartling to work out that once Uzdunrobita’s operations had been halted, its local subscribers moved to one of the two alternatives. So Yevtushenkov’s misfortune is turning out to be good for TeliaSonera, good for Fridman.

The latest Vimpelcom financial reports for the second and third quarters reveal that its sales revenues in Uzbekistan have jumped 54% from $89 million to $137 million. Earnings have risen even more lucratively from $45 million to $77 million; that’s a gain of 71%. In Uzbekistan VimpelCom reported on November 14, 2012, it has “substantially strengthened its market position in 3Q12 after the forced closure of a competitor´s network. Revenue was up 88% organically YoY in 3Q12, supported by a 62% YoY increase in the subscriber base as well as 26% ARPU growth.”

TeliaSonera’s latest financial report includes several implicit acknowledgements of how much better business has been in Uzbekistan since Karimova acted against MTS in June. Second-quarter revenues, for example, were $474 million. In the preceding two quarters, Teliasonera recorded comparable sales figures of $462 million and $470 million, respectively. Evidently, TeliaSonera and Miss Avakyan weren’t managing to extract much fresh growth out of the Uzbek subscriber base. However, with Yevtushenkov out of the way, the third-quarter revenue jumped to $684 million, a growth rate of 44% — not quite as good as Vimpelcom had achieved, but much, much better than Nyberg and Avakyan were managing on their own in the first six months.

The December quarter revenue total is $749 million, a quarterly growth rate of 10%. Comparing the first and second-half sales results, TeliaSonera has added $497 million in revenues which it almost certainly could not have earned with Avakyan’s talent — and without Karimova’s influence.

Is it likely that TeliaSonera’s Russian partner assisted in this outcome? That partner is Alisher Usmanov (second from left), a figure in whom Nyberg has so much confidence he personally invested from his own pocket $2 million in the initial public offering of Usmanov’s Megafon last November. Netting Nyberg’s outlay against his income from serving as a board member of Megafon, and adding the 40% capital gain ($800,000) he has already made on the share, Nyberg’s vote of confidence in Usmanov has been a modest one.

Did Usmanov’s relationship with Karimova motivate her conduct in any way towards Yevtushenkov and Uzdunrobita? Did that relationship have any bearing on the good fortune that has befallen TeliaSonera?

For the time being it isn’t clear what relationship there is between Usmanov and Karimova. In 2007 Usmanov told the London Guardian: “There isn’t any relationship between me and President Karimov and any members of his family”. Last September, sources confirm Usmanov was in Tashkent. There have been press reports claiming he attended the celebration of a wedding between a member of his family and a member of Karimova’s. The reports claim Usmanov spoke in praise of Karimova and of his relationship with her. But did he?

Anastasia Gorokhova is an associate partner of the London public relations firm RLM Finsbury, and communication advisor to Usmanov’s Metalloinvest holding. She was asked to clarify what Usmanov said at the Tashkent event. She had not replied by publication time.

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