Christmas didn’t turn out very merry over at Deutsche Telekom, with the scuttling of its plan to sell its US business quickly followed by an admission of a €31 million fraud by its Hungarian subsidiary.
Magyar Telekom agreed to accept US Department of Justice court charges following a near year-long probe into contracts awarded through other Deutsche Telekom subsidiaries in 2005. The Hungarian telco will pay $59.6 million (€45.6 million) as part of the settlement, however a company statement reveals the total cost will hit $90.8 million.
Even then, Magyar won’t be fully off the hook for another two years. During that time it must lay itself bare to DoJ scrutiny to show it hasn’t broken US laws again. Specifically, anti-bribery and books and records provisions contained in the country’s Foreign Corrupt Practices Act.
The investigation even resulted in Deutsche Telekom chief René Obermann’s home being raided by Bonn prosecutors in August, despite him never being implicated by US authorities.
Deutsche Telekom reported irregularities to the US Securities and Exchange Commission in February 2011 after internal investigations flagged at least 20 suspect contracts cleared by Magyar executives. The deals with consultants and lobbyists were routed through the telco’s subsidiaries in Macedonia and Montenegro, and appeared to serve no legitimate purpose.
Deutsche Telekom itself must fork out $4.36 million as part of the settlement, but isn’t charged with criminal activity, Bloomberg reports.