A Stockholm District Court’s acquittal of three former executives of Swedish telecom giant Telia of bribery shocked the global anticorruption community and has smirched Sweden’s reputation as a clean government champion (original decision; English translation). Despite overwhelming evidence, the court refused to find the three guilty of paying Gulnara Karimova, daughter of the then president Uzbekistan, over $300 million in bribes for the right to operate in the country.
E-mails showed defendants directed the money to a Karimova shell company, hid their dealings with her from Telia’s board, and knew paying her violated American antibribery law. (Telia subsidiary’s Statement of Facts in the U.S. prosecution.) Though defendants argued Karimova had no official role in telecom licensing, the evidence showed her father had given her de facto control of the telecom licensing agency. Perhaps most damning, the court had the sworn statement Telia made in settling the FCPA case arising from the bribery. It there admitted “Executive A . . . a high-ranking executive of Telia who had authority over Telia’s Eurasian Business Area” and “certain Telia executives” had been the principals behind the bribery scheme (Statement of Facts, ¶s 12, 17, 19, 26, 30, and 34).
The court defended its acquittal of Tero Kivisaari, apparently Telia “Executive A,” Lars Nyberg, CEO when the bribes were paid, and the lawyer who counseled them on two grounds. One, the prosecutor had not provided “hard evidence” of bribery, and two, even if he had, the law then in effect did not reach defendants’ conduct.
Google’s translation of the decision is rough (mutanklagelser, Swedish for bribery, is rendered as “manslaughter”) but not too rough to see through the court’s skewed findings of fact and flimsy legal reasoning.
Facts. One need only a passing familiarity with Uzbekistan to know that during her father’s presidency Karimova was one of the most powerful people in the country. In a 2007 U.S. lawsuit, Farhod Inogambaev, forced to work for Karimova after she threatened his family, recounted instances where she dictated the decisions judges were to deliver in cases where she had an interest (Affidavit Farod Inogambaev). Radio Free Europe/Radio Liberty reports she took whatever she pleased from the national museum to decorate her Geneva mansion, and in a confidential report appearing in The Guardian, U.S. diplomats described how she used her father to “to crush business people or anyone else who stands in her way,” making her “the single most hated person in the country.”
The prosecution introduced into evidence e-mails defendants sent one another showing they knew how powerful Karimova was. In one they agreed to hold off meeting the then Minister of Telecommunications (current Prime Minster Abdulla Aripov) until they had reached an “understanding” with Karimova (decision ¶86).
The decision shows too the court scraped the record for snippets of testimony and bits of documents that undercut the evidence Karimova was a high-level fixer. Piecing them all together, it concluded that it was just as plausible to infer from the evidence that Karimova “was a serious businesswoman” (decision ¶96). That conclusion can only leave those familiar with Karimova’s portrayal in the fashion pages of European and American newspapers as a modern-day Marie Antoinette wondering at the court’s determination to exonerate defendants.
More evidence of the court’s search for a justification for acquitting defendants comes from the way ignored strong evidence of their guilt. The prosecution introduced the testimony an executive of Telia’s Uzbek subsidiary gave in the U.S. FCPA case where she swore under oath that company personnel well- knew Karimova controlled the telecom sector. The court gave it no weight. Why? Because it said the employee had had access to her files and those of the company to help refresh her recollection (decision ¶100).
Law. The court’s principal reason for excusing defendants was the Swiss-cheese nature of Sweden’s antibribery law during the first decade of the 21st century. Only in 2012, after prodding by the OECD and its own civil society, did Sweden close loopholes that had allowed Swedish companies to escape liability if their foreign subsidiary was the one that actually paid the bribe or if the money was paid through some intermediary. As the court explained in its decision and in a press statement, under the old law, to be guilty of bribery a defendant had to have paid money “to someone who belongs to the circle of persons who, according to applicable law, could be made liable for taking bribes.” (För att mutlagstiftningen överhuvudtaget ska bli tillämplig förutsätts att påstådda mottagare är mutbara, dvs. de måste falla in under den begränsade krets av mutbara personer som gällde enligt dåtidens svenska lagstiftning, decision summary.)
Throughout the decision, the court stressed that prior to 2012 the circle of “bribables” was limited to those who were government employees or were in a position of trust with the government. Again and again it emphasizes that Karimova was not part of that circle. She had no official position with the telecom regulator (examples at decision ¶s 87, 98, 112) nor was she a contractor in a position of trust (examples at decision ¶s 10,45, 48, 56, 61, 66).
While OECD reports explain these were indeed two positions that made an individual “bribable” under the law then in force, there was also a third. In 2004 the antibribery law was amended to bring within the bribable circle “a person who, without holding an appointment or assignment as aforesaid [i.e. government employees], exercises public authority,” Penal Code chapter 20(2)(4), OECD 2005 report p. 38). Although the prosecution must have surely pressed this point, the court waived it off in a brief aside in the decision summary (p. 8) and never considered it thereafter. In its legal ratiocination, the court analyzed only sections one, two, five, and six of chapter 20(2) (decision §4.2).
To be sure, it may be that a careful reading of the decision in Swedish would reveal the court was more judicious in weighing the facts and analyzing the law than the mangled Google translation shows. It could be too that the court’s decision is an outlier, a deviation from the reputation Sweden has as a strong rule of law state, one where defendants are judged on the facts and the law rather than how important they, and their company is, to the national economy.
Furthermore, Sweden’s legal system leaves more room to correct erroneous trial court decisions than many others. The prosecution can appeal the acquittal, and if Sweden follows the usual continental procedure, the appellate court can entertain additional evidence. So all may not be lost after all.
Or perhaps not. There is the 2017 inexplicable acquittal for bribery of a high ranking employee of Bombardier and the 2009 refusal to prosecute Saab for foreign bribery. As renowned corruption fighter Fritz Heimann and Mark Pieth suggest in their 2018 book Confronting Corruption, Sweden may be “one of those countries with a good reputation on corruption,” but which is reluctant to pursue “key corporations” for bribery “when fundamental interests are at stake.”
Let us hope that is not the case and that Sweden’s appellate court acts swiftly to overturn the Telia decision.
Well, this is depressing.
Your summary of the decision, particularly its alternate-universe characterization of the facts, naturally invites the question: Why was the Swedish court seemingly so dead-set on acquitting these defendants? Your penultimate paragraph hints at one possible explanation. Are there others? The Swedish judiciary has a reputation for independence, doesn’t it? Why would the judges care so much? Especially in this case, where the defendants are executives rather than the company itself, so there’s not really much risk of inflicting significant economic harm on national champions?
On the law, I’m slightly confused: Has the law been updated since 2012, so that under the current law there’d be no question the defendants are covered? I take it that in this case the relevant conduct occurred before 2012?
One, one teeny tiny silver lining: If it’s indeed the case that Sweden closed those legal loopholes in 2012 as a result of OECD prodding, this would be one more piece of evidence that the OECD Anti-Bribery Convention is surprisingly effective.
Oh, one more thing: My info may be a few years out of date, but I understand that in Finland, there are still virtually no convictions for foreign bribery, despite having the laws on the books and prosecutors bringing at least some cases, because the Finnish courts always rule for the defendants. And of course in Norway there was the Statoil case from a dozen years or so back,where the US DOJ ended up bringing charges despite the Statoil because the DOJ concluded that Norway wouldn’t impose sufficient sanctions on the company.
Perhaps there’s more than a bit of Scandinavian hypocrisy on these good governance issues? Even more so if one takes into account the still-unfolding Danske Bank scandal?
I should have made the changes in Swedish antibribery law clearer. Glad you gave me the chance to clarify.
The 1962 statute on foreign bribery was amended first in 1999 when Sweden ratified the OECD Antibribery Convention, again in 2004 after it ratified the Council of Europe Criminal Law Convention and once more in 2012. The bribes were paid in the period 2007 – 2012; all are covered by the law as amended in 2004. The provision I read covering payments to Karimova was added in 2004.
The 1999, 2004 and 2012 amendments all seem to have been spurred in part by the OECD Antibribery Convention. So yes, that is the good news about the convention.
The bad news is here: http://www.oecd.org/daf/anti-bribery/OECD-WGB-Enforcement-Data-2018-ENG.pdf
This is the data on enforcement actions by each convention party from 1999 to December 2007. Sweden reports “sanctioning” six individuals over the period and acquitting two individual and one “legal person.” That at least puts it ahead of Finland. No individual or legal person has ever been sanctioned while 18 individuals and four legal persons have been found not liable. Both are ahead of Denmark. Through December 2017 it reports zero cases.
Norway falls somewhere in between. It has sanctioned three individuals and three legal persons while finding five individuals and one legal person not liable.
It may be less a question of judicial independence in Sweden and more a case of a small, homogeneous society where members of the same circle don’t convict other members of crimes.
February 20 was a bad corruption day in Sweden. Besides the continuing controversy over the Telia acquittal, Swedes woke to a public television special alleging the country’s largest bank was involved in the money laundering scheme that has engulfed Danske Bank. The CEO of Swedbank convened a morning conference call which created more of a stir. After years of denying Swedbank had any involvement in the Danske Bank scandal, she said on the call she no longer stood by those denials. She did claim Bill Browder would not file a criminal action against the bank for money laundering; he quickly contradicted her. The bank’s share prices fell 14 percent over the course of the day.
The show with English subtitles, as fine a display of TV investigative reporting as I have seen, is here –
First – I am so sorry, but I am still not sure I understand the detail about the applicable law Professor Stephenson inquired about above and would really appreciate a clarification to see if I get this right now (my confusion may be due to the fact that I am still stunned by the decision – I thought this would be a clear and certain conviction and was actually already quoting the ongoing case as a proof on how foreign investigations work…). The amendment closing the loophole that had allowed Swedish companies to escape liability if their foreign subsidiary was the one that actually paid the bribe or if the money was paid through some intermediary – this was only adopted in 2012 and therefore not applicable in the case? And another problem was that prior to 2012 the circle of “bribables” was limited to those who were government employees or were in a position of trust with the government?
My main question (and even more confusion) is about the U.S. and Dutch investigations into Telia case – both countries had concluded Telia’s conduct was in violation of national laws. Quoting the DOJ: “According to the companies’ admissions, Telia and Coscom, through various managers and employees within Telia, Coscom and affiliated entities, paid approximately $331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry. The companies structured and concealed the bribes through various payments including to a shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official” (https://www.justice.gov/opa/pr/telia-company-ab-and-its-uzbek-subsidiary-enter-global-foreign-bribery-resolution-more-965)
I was 100 percent sure the “foreign official” they mentioned here was Karimova – and the facts of the case match too (“shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official” – this sounds exactly how the shell company in the Swedish court’s decision). So it would seem that during the investigation, US DOJ actually received a confirmation from TELIA itself admitting that they had done it…
Are these maybe different people that were investigated in Sweden, implying that what Telia told to the DOJ was about a completely different instance of bribery?
Finally (sorry for the long rant) – could it be that this is simply a case of a poorly prepared indictment by the Swedish prosecutors? In the press release I think the court hinted that the indictment lacked evidence, I am thinking that maybe the court actually just could not convict these people because the indictment was poorly prepared. I don’t want to point fingers, but I definitely know countries where the prosecution simply lacks resources and competence to prepare bulletproof indictments in cases where they need to apply “innovative” laws (I am looking at you, Lithuanian law enforcement – and your track record of indicting trading in influence!)
Rick, your post here mostly considers the decision from the Swedish angle (understandably). One thing I’m wondering about though is whether you think there’s anything in particular about the Uzbekistan connection, or Gulnara Karimova’s role in the case, that might have contributed to this particular result. Or, put another way, do you think if the Telia executives had been accused of bribing a family member of, say, the president of Nigeria, would the result have been the same?
I suspect the answer is yes, given what you’ve said about possible motivations for the court’s decision, and I admit I’m having a hard time thinking up some reason why the court might have wanted so badly to make Karimova seem like a legitimate businesswoman. (I believe she’s still under house arrest in Uzbekistan… could Swedish judges be concerned about—by acknowledging the extent to which she was corrupt—potentially providing international cover for an imprisonment that might violate human rights norms…? This seems like a stretch though…). But I’d be curious if you have thoughts or information on this. Thanks!
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