MTS Uzbekistan court case: “Faster, faster!”
The court case against MTS-Uzbekistan (foreign enterprise of Uzdunrobita) is quickly moving towards the finishing line. The hearing began on 27 August and the court has managed to question all the participants and witnesses and publish the case materials. Yesterday, on 12 September, oral arguments took place in the Tashkent city criminal court.
“THE COURT IS FAST AND UNJUST”
According to information received by Fergana from a source familiar with the hearings taking place at the Tashkent city court, the case is proceeding with a series of process violations by judges and government prosecutors. Our source noted several cases when case witnesse – Uzdunrobita and contracting party employees – confused their testimonies. Some of their testimonies, which were given during the investigation, did not correspond to what they said at court. However, the court did not take any notice of these digressions and moreover the prosecutors constantly and firmly reminded the witnesses about the statements they had given during questioning at the prosecutor’s office.
During the investigations, arrested and free “Uzdunrobita” employees, who acted as witness in the case, were threatened and put under psychological pressure with the aim of getting self-incriminating admissions from them. MTS has previously said that questioning often took place at night and defence lawyers did not always have access to their clients, and according to one of the company’s staff, investigators threatened “to search his home and find drugs”.
Some of the witnesses testified in court in Uzbek, yet the parallel interpretation into Russian left much to be desired. All the defence attorney’s rebukes about this were ignored by the court. Besides, during court sessions prosecutors prevented witnesses who could have voiced testimony "unsuitable" to the accusers to give evidence.
MTS brought up the prejudice of the investigation and judicial enquiry several times. In a press release of 31 August the company said “MTS states that the decision to arrest company assets in connection with the criminal investigation of its staff, when MTS Uzbekistan is itself not involved as a civil defendant despite its petitions, is vivid testament to the commissioned nature of the company being pursued, with the final aim of the Uzbek authorities seizing MTS assets in the shortest amount of time possible.”
Testament to the hurried nature of the process is that 56 people were questioned on one of the days in the hearing, and 90 in another. It should be noted that according to Uzbekistan’s laws, a case like this should be examined over three months.
“The entire process of seizing the business, from the first examinations to the seizure of assets, has taken the Uzbekistan prosecutor only three months. It is difficult to doubt that the case against Uzdunrobita was planned in advance”, says Dmitry Shukov, current Uzdunrobita general director, who was appointed to his post several days after the arrest of the previous director, Radik Dautov.
ACCUSING GULNARA’S CREATION
At the end of August 2012, almost at the same time as the judicial process began, the Justice Department Administration of Tashkent, fulfilling orders of the Prosecutor’s office, issued a decree to seize Uzdunrobita assets. The fact that the seizure of assets was carried out in connection with criminal accusations and demands to pay damages of around $700 million by four MTS Uzbekistan staff categorically contradicts Uzbek law.
The main volume of accusations comes from Article 190 of the Legal Code of Uzbekistan “Activity without License”. The investigation insists that the illegal activities of Uzdunrobita subsidiaries lead to the concealment of taxes and cost the government more than $400 million. MTS immediately announced that this accusation has no basis and contradicts official documents, including those previously granted by the licensing body Communications and Information Agency of Uzbekistan (UzACI).
“As a shareholder of LLC Uzdunrobita until 2002, UzACI created and used the branch structure of the company, which is active to this day, and later confirmed the company’s ability to use this structure by granting the license to the operator. The license agreement concluded by Uzdunrobita in 2004 and signed by Abdullah Aripov, UzACI General Director at the time and current Deputy Prime Minister, obviously states that Uzdunrobita licenses are applicable to all Uzdunrobita subsidiaries, regardless of when they were created, and the list of subsidiaries is enclosed with the licensing agreement as an attachment”, said MTS press release from 9 August 2012.
The most interesting aspect is that Gulnara Karimova attributed the creation of the Uzdunrobita branch structure to herself. Fergana found a May 2005 issue of Moscow magazine “Kariera”, describes the “Uzbek princess’s” important role in establishing the company.
In this article, clearly written favouring Gulnara Karimova, the daughter of the Uzbek president is described as follows:
“In the public role of representative of the Chairman of the Management Board Karimova did not limit herself to simply carrying out the duties of representative. Her main tasks were forcing through modernisation to shift to GSM standards, increasing geographical coverage, progressive marketing policy relating to subscribers and pricing, and strengthening the company with ambitious professionals. Significant financial resources were needed for this and a unique programme of efficient control and unification of cashflows and decreasing financial expenses of regional units was developed under Gulnara Karimova. “The team was tasked with making the company a leader and strengthening its position from the very beginning”, recalls Gulnara.”
Gulnara Karimova, surrounded by top management from Uzdunrobita in 2005. Photo from “Kariera” magazine
It is highly likely that Uzbekistan’s most powerful business woman Gulnara Karimova was not only a member of the management board of Uzdunrobita, but was also its real owner. It is from companies controlled by her that Moscow’s Mobile TeleSystems were buying the communications company. It seems that it is the interests of Gulnara Karimova that stand behind the vigorous destruction of the successful mobile company.
CALCULATED, MEASURED, DIVIDED
Fast and unjust court cases can lead to only one thing: the seizure of Uzdunrobita assets by the government, in other words the nationalisation of a foreign company. Several other foreign firms have already been nationalised like this – India’s Spentex Toshkent Toytepa, Russia’s Vimm-Bill-Dann and Turkish Demir and Turkuaz. British and US gold mining assets and Kazakhstan’s “Bekabadcement” were taken away by a government which previously welcomed foreign investors with open arms promising them the best working conditions. Under pressure from the authorities, Carlsberg, one of the world’s leading beer producers is also leaving Uzbekistan.
After quick nationalisation the profitable business is put on the balance sheet of some sort of specially created quasi-government company, which is under the full control of people in the government. The companies quickly change their name and brand and soon begin working again, bringing significant profits to their new owners.
This behaviour towards foreign business is threatening to result in the final departure of foreign investors from Uzbekistan and the loss of the capital they had already invested. The Russian Chamber of Commerce had already expressed its concern with the situation surrounding MTS Uzbekistan. The US organisation Commission on Security and Cooperation in Europe also came to the defence of the Russian company.
The officials in Tashkent remain silent. But for how long?
Fergana international information agency. Translated by Sophia Matveeva