A Short Note on Corruption in Telecommunications in the Balkans

In December 2011, prosecutors in the United States of America announced the settlement of cases against Magyar Telekom and Deutsche Telekom in respect of bribery of officials in two countries in the Balkans. In the Former Yugoslav Republic of Macedonia (FYROM) they had obtained a delay in a competitor entering the mobile market, reduced spectrum fees and other benefits for their subsidiary MakTel. Illegal payments of €4.875 million were disguised as consulting and marketing contracts. In Montenegro payments of €7.350 were made to government officials to assist in obtaining control of Telekom Crne Gore (TCG), the incumbent operator. Magyar Telekom agreed to settle charges by the US Securities and Exchange Commission (SEC) by paying USD 31.2 million in disgorgement and pre-judgment interest. It also agreed to pay a criminal penalty of USD 59.6 million as part of a deferred prosecution agreement with the U.S. Department of Justice. Deutsche Telekom settled SEC charges and as part of a non-prosecution agreement with the Department of Justice agreed to pay a penalty of USD 4.36 million. Three former officials of Magyar Telekom – Elek Straub, András Balogh & Tamas Morvai – are also being prosecuted in the USA, with claims against them for disgorgement