This post is related to a prior post from March 2019 regarding the same subject.

In recent years, the U.S. government has secured approximately $1.7 billion in net Foreign Corrupt Practices Act settlement amounts in related FCPA enforcement actions against telecommunications companies VimpelCom, Telia, and most recently MTS. The enforcement actions were largely based on the theory that Gulnara Karimova (the daughter of former Uzbekistan President Islam Karimov) was a “foreign official” under the FCPA’s anti-bribery provisions. Like many FCPA enforcement theories, this theory was not subjected to any meaningful judicial scrutiny.

However, in a 2019 criminal prosecution of former Telia executives Tero Kivisaari, Olli Tuohimaa and Lars Nyberg, a Swedish trial court acquitted the defendants because Karimova was not a “public official” under the relevant law.

Earlier this year, a Swedish appellate court affirmed the acquittal and once again concluded that Karimova was not a “public official” under the relevant law.

If I ever update my 2009 article “The Facade of FCPA Enforcement,” there is going to be special mention of the above facts and circumstances. In fact, as highlighted in this prior postJoshua Ray (a London-based Partner at Rahman Ravelli Solicitors who leads the Firm’s U.S.-facing business crime practice group) did just that in his recent article titled “The Continuing Facade of FCPA Enforcement: A Critical Look at the Telia DPA.”

In pertinent part, the Swedish appellate court stated (from the English translation):

“In order for corruption legislation to be applicable at all, it is assumed that alleged recipients are bribes, ie. they must fall under the circle of bribes people. In this section, the Court of Appeal examines the prosecutor’s first claim that Gulnara Karimova belonged to the circle of people affected by bribery, which Tero Kivisaari, Olli Tuohimaa and Lars Nyberg have denied.

[…]

The prosecutor has argued in the Court of Appeal that Gulnara Karimova had a number positions in the Uzbek Foreign Service under the relevant case the period and that she has also been a foreign minister for part of the year 2008. The prosecutor has further alleged that Gulnara Karimova due to has been given the task of administering justice and on behalf of Islam Karimov economic affairs or has in fact exercised the authority of a foreign State, and that she was competent to do so.

According to the prosecutor, Gulnara Karimova should be considered an employee as an official or person with a high-level position of trust, e.g. as Deputy Minister of the Ministry of Foreign Affairs, whereby she held functions within what can be described as the Government Offices. This was also the entrance for Telia in connection with the company communicated with the President and his immediate circle. Also as an ambassador Gulnara Karimova belonged to the circle of bribes. Her principal was the state and her actions in the telecom industry took place within the state’s area of activity.

According to the prosecutor, Gulnara Karimova continued as a member of the ruling family and because of its position in the administration, a controlling influence over especially the Uzbek telecommunications authority.

The prosecutor has, in order to illustrate Gulnara Karimova’s position as bribery person and show that there was an established service relationship in relation to Gulnara Karimova’s benefits and the telecom sector in Uzbekistan, provided evidence of her condition acted in other transactions.

According to the prosecutor, these examples show, which partly lies in the time before Telia’s business in Uzbekistan, that Gulnara Karimova in a concrete way under for a long time engaged in the actual exercise of authority and established a service relationship in in relation to the government assignments she has had and any payments that then has happened. According to the prosecutor, the examples show that Gulnara Karimova has received bribes from three companies – ICG, Mobile TeleSystems OJSC and VimpelCom Ltd – through shell companies in which she owned shares in locally owned limited companies. According to the prosecutor demanded Gulnara Karimova both shares in companies and ready money. She promised in return positive government decisions or threatened with Uzbek regulators. The agreements contained option rights to repurchase in order to conceal value transfers in companies’ accounting. According to the prosecutor, the examples show that she controlled the Uzbek the telecommunications authority without it formally appearing as her direct area of responsibility as a politician or civil servant.

The prosecutor has in more detail regarding ICG claimed that Gulnara Karimova demanded bribes and shares from the company as well as forced the Uzbek state, by instruct the Uzbek State Property Committee to provide her with shares without consideration. According to the prosecutor, it was Farkhodjon Inogambaev who led Gulnara Karimova’s account formed Revi Holdings, in which company the assets were invested, to be later transferred to Gulnara Karimova’s company Swisdorn Ltd. According to the prosecutor, licenses in Uzbekistan did not constitute a commodity but required permits that could only be obtained by government decision, upon application. The Uzbek in addition, the regulations required the applicant to obtain licenses activities in the telecom area. The prosecutor has invoked new supplementary evidence regarding Gulnara in the Court of Appeal Karimova’s role and position in the Uzbek administration in supporting that she actually had a controlling influence over the telecommunications authority in Uzbekistan.

[…]

The prosecutor has in the Court of Appeal argued that Gulnara Karimova during the case is relevant period has held the following positions in Uzbekistan, which qualifies her as employees according to Swedish conditions.

Adviser to the Minister, Head of the Center for Political Research under the period from 18 April 2005 to 1 February 2008

Permanent Representative of the Republic of Uzbekistan to the United Nations Office and others international organizations in Geneva during the period of 3 September 2008 to September 1, 2011

Ambassador to Spain from January 2010 to August 2011.

The prosecutor has in support of his claim regarding the specified positions, except as regards the post of ambassador to Spain, invoked i.a. an act of information on the posts of Gulnara Karimova in the system of the Republic of Uzbekistan Ministry of Foreign Affairs, which document Uzbekistan submitted to one Swiss investigation, and which has entered the Swedish investigation. Concerning the allegation of Gulnara Karimova’s ambassadorial post in Spain, which position does not was the subject of the district court’s review, the prosecutor has relied on articles from the FreeEurope RadioLiberty and BBC News. According to the prosecutor, the latter also provides support for Gulnara Karimova’s position as Permanent Representative to the UN. The prosecutor also has cited data from Wikipedia in support of Gulnara Karimova’s possession alleged positions.

The parties to the case agree that information provided by Uzbek authorities should valued with great care. The Court of Appeal agrees with this assessment. Like The district court finds the court of appeal because the probative value of the Uzbek document is low. The information receives some support in Wikipedia. For the obvious reasons stated by the district court however, the probative value is low in a criminal trial of information taken from this free encyclopedia. There is also no documentation in the Court of Appeal that Gulnara Karimova in competent order has been appointed by appointment or equivalent which is a shortcoming in the report. Furthermore, there is no investigation that she has actually performed any work corresponding to the descriptions.

In summary, the Court of Appeal considers that it has not been shown that any of the alleged the positions are linked to national telecom issues and to some service connection between any benefits from Telia and the positions and functions either has been shown.”

[…]

The prosecutor has claimed that Gulnara Karimova has, due to a position of trust given the task of managing legal and financial matters concerning the telecom sector in Uzbekistan. According to the prosecutor, that means deciding on behalf of a country on permits for foreign companies wishing to conduct commercial business an assignment which includes both legal and financial matters.

[…]

Prosecutor’s allegations is based on the political system in Uzbekistan, which is under the leadership of Islam Karimov constituted a kleptocracy in which he enriched himself and his family as much as possible. The prosecutor has stated that it is impossible that Islam Karimov did not know and accept that foreign companies to Gulnara Karimova’s shell companies paid close to one billion dollars during a ten-year period, which according to the prosecutor would otherwise have come to the state the administration to part.

The prosecutor has, as in the district court, also emphasized that Gulnara Karimova had a large business empire, including the telecom sector, and her criminal activities.

The Court of Appeal finds that the prosecutor has not reported an actual concrete course of events regarding her claim that Gulnara Karimova due to has been given the task of administering justice and on behalf of Islam Karimov financial matters. There are also no direct clues that show that Gulnara Karimova has been given an assignment in writing, orally or by delegation in position of trust in the telecom sector.

[…]

The prosecutor has claimed that Gulnara Karimova was deputy minister international cooperation in the field of culture and humanities period from 1 February to 3 September 2008. In support of this claim, the prosecutor relied on the Uzbek document mentioned above, with information about Gulnara Karimova’s positions in Uzbekistan, partly information from Wikipedia, partly and information from a “Country Report” dated 19 February 2008, produced within Telia.

[…]

According to the prosecutor, Telia has offered an improper reward to a foreign minister who has demonstrably had one decisive influence on the exercise of authority within Telia’s area.

[…]

However, there is no investigation that shows Gulnara Karimova as deputy Minister had some influence on issues affecting the telecom sector. The Court of Appeal is coming therefore to the same conclusion as the district court, that any service relationship between any benefits to Telia and Gulnara Karimova in the position that the Deputy Minister does not have proven.

[…]

The prosecutor has claimed that Gulnara Karimova was authorized to “de facto” exercise authority; that, through her informal position of power, she was competent to take decision. According to the prosecutor, her competence was based on the power she supported of his father, President Islam Karimov, held by being part of the country ruling family.

As the Court of Appeal reported above presupposes the exercise of a foreigner state authority that employment or assignment exists. The prosecutor’s statement – as only includes an informal position of power – thus falls on legal grounds.

The Court of Appeal has also previously stated that it has not proved that Gulnara Karimova herself belongs to the circle of people that can be bribed

[…]

The objective requisites for bribery are not met. That means the Court of Appeal considered that several key props in the penal provision have not been proven and that the charges against Tero Kivisaari, Olli Tuohimaa and Lars Nyberg must be rejected already on objective basic.

[…]

As the district court has found, Tero Kivisaari, Olli Tuohimaa and Lars Nyberg must be acquitted from the charges of gross bribery.”

The post Swedish Appellate Court Agrees, Karimova Was Not A “Public Official” (The Same Enforcement Theory That The U.S. Largely Used To Secure Approximately $1.7 Billion In FCPA Settlements) appeared first on FCPA Professor.