Deutsche Telekom in Macedonia bribery case

The United States hit Deutsche Telekom and a Hungarian subsidiary Thursday with $95 million in fines to settle charges they bribed officials in Macedonia to gain a business advantage. The German telecoms giant and subsidiary Magyar Telekom paid off Macedonian politicians and officials to stall the country from opening its wireless market to new competition in 2005-2006, according to the US Justice Department and the Securities and Exchange Commission (SEC). Magyar Telekom faced three charges under the US Foreign Corrupt Practices Act, one for the bribery and two for not keeping accurate records. Deutsche Telekom also faced charges of books and record-keeping and internal controls violations of the FCPA. The two have agreed to pay the fines to avoid prosecution under the FCPA, while not admitting guilt. The settlements are subject to court approval. "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," SEC official Kara Novaco Brockmeyer said in a statement. The Justice Department said both companies had cooperated with the investigation with "voluntary disclosure" of the violations of the FCPA, which the US applies to both US companies and foreign companies with US operations. At the time of the alleged conduct, Magyar Telekom's shares were trading on the New York Stock Exchange as American Depositary Receipts. Three former officials of Magyar Telekom still face charges for their role in the case.