US wants to seize allegedly corrupt funds in Irish banks

US authorities are seeking to seize $300 million (€269 million) that resides in bank accounts in Ireland, Luxembourg and Belgium which they allege are the proceeds of corrupt payments in Uzbekistan by two Russian telecoms companies.

In a case taken in New York on Monday, the US is alleging the money is linked to corrupt payments totalling $500 million made by Mobile Telesystems OJSC (MTS) and Vimpelcom to “official A”, so he/she would influence the government in Uzbekistan in relation to mobile phone licences and radio frequencies. There has been no response to the court claims.

Although the official is not named in the claim, there have been widespread reports of investigations into Gulnara Karimova, daughter of Uzbekistan president Islam Karimov.

The court document grounding the claim says the payments were made between 2004 and 2011 to shell companies owned by the official. The payments were nominally in return for equity interests in the Russian companies’ Uzbek subsidiaries, business transactions and consultancy services.

It is alleged the proceeds of the corruption were then laundered in a complicated series of transactions including the purchase of investment portfolios and assets in Ireland, Luxembourg and Belgium.

The alleged money-laundering involved transferring the funds through correspondent bank accounts in the US, giving the US authorities jurisdiction in the matter.

The assets that are the target of the claim include shares of First Global Investments SPC Ltd held for two Gibraltar companies, Swisdorn Ltd and Takilant Ltd, as well as Expoline Ltd of Hong Kong, at Bank of New York Mellon Investment Servicing (International) in Ireland, as well as other assets.

Telecoms services

MTS has 100 million subscribers for its telecoms services in Russia and the Commonwealth of Independent States (CIS). Its shares trade on the New York Stock Exchange. Vimpelcom, which has its headquarters in Amsterdam, is associated with Russian billionaire Mikhail Fridman, whose Alfa Group is one of the largest business groups in Russia.

The Irish Bank Resolution Corporation teamed up with the asset recovery arm of the Alfa Group, A1, in 2012 as part of its effort to retrieve assets in Russia worth tens of millions of euro which were formerly owned by children of Irish businessman Seán Quinn. The family had sought to put the assets beyond the reach of the State-owned bank.

The shareholders in Vimpelcom include Norwegian telecoms giant Telenor, which has been put under pressure by ongoing accusations of corruption in Uzbekistan. The Vimpelcom offices in Amsterdam have been raided and investigations are under way in European jurisdictions. The firm has said it is fully co-operating.

In 2014, Swiss authorities said they had frozen more than $900 million in assets linked to Ms Karimova, as part of an investigation into corruption in Uzbekistan.

In 2012, a Swedish television documentary claimed that TeliaSonera, the Swedish telecoms group, had paid $320 million to Takilant, the Gibraltar-based company with funds in Ireland and which is allegedly linked to Ms Karimova. The programme said the payments were in exchange for 3G licences and frequencies in Uzbekistan. TeliaSonera said the allegations were unfounded.

Wikileaks

The Wikileaks documents in 2012 included communications from the US embassy in Uzbekistan describing the country as “rampantly corrupt” and Ms Karimova as “the single most hated person in the country”. Ms Karimova, whose father has ruled Uzbekistan since 1991, was described as a “robber baron”.

Human Rights Watch describes the situation in Uzbekistan as “atrocious” and says torture is “endemic”. However the US has been understood to want to maintain relations with Mr Karimov as it uses the country for access to Afghanistan.