Deutsche Telekom pays $95M to settle bribery case

Deutsche Telekom (DT) and its Hungarian subsidiary Magyar Telekom have agreed to pay the U.S. Securities Exchange Commission $95 million to settle allegations of bribing government officials in Montenegro and Macedonia.

The two firms were accused by the SEC of making bribes valued at over €12 million to politicians in Macedonia and Montenegro in an effort to stop rival mobile operators from entering the market.

Kara Novaco Brockmeyer, chief of the SEC Enforcement Division's FCPA unit, said in a release carried by Bloomberg: "Magyar Telekom's senior executives used sham contracts to funnel millions of dollars in corrupt payments to foreign officials who could help them keep competitors out and win business."

The three Magyar Telekom executives accused of making the bribes deny any wrongdoing and say they will fight the U.S. ruling. The case only came to light after DT reported suspicious consultancy contracts totalling €31m in 2006.

While the U.S. Department of Justice agreed not to criminally prosecute DT and Magyar Telekom with corruption under the U.S. Foreign Corrupt Practices Act for two years, both firms must reinforce internal controls and avoid breaking U.S. law, according to a report in the Financial Times.

For more:
- see this Bloomberg article
- see this Financial Times article

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