MTS Uzbekistan is facing a range of criminal charges including tax evasion, as investigators continue to scrutinise the company’s financial records. According to local news reports the prosecutor general’s office said in a statement: ‘Investigation … has revealed additional evidence of flagrant violations of law involving illegal cashing, money laundering, operating a business without a licence, tax evasion and others’. MTS has been accused of using a number of ‘shadow’ companies to avoid tax payments: in one example MTS reportedly paid UZS30.2 billion (USD16.02 million) to one of its shell companies between 2009 and 2011 for ‘alleged performance of works and services.’
As part of the investigation, documents have been seized from MTS and the company’s managers have been arrested for interrogation. As previously reported by CommsUpdate, MTS has protested against the inquiry and its methods, describing them as ‘groundless’ and accusing them of disrupting the cellco’s operations. The Russian-backed company added that regulatory and law enforcement agencies were acting in conflict with laws protecting the rights of foreign investors and called on the government to ensure that the investigation was unbiased and lawful. In addition to charges of tax evasion, MTS has been accused of operating without proper licences for its infrastructure, and failing to meet quality of service obligations.
Uznews adds that the MTS case is not the first ‘raid’ on a successful foreign company: similar witch-hunts reportedly saw the closure of Newmont Mining, Oxus Gold, Metal-Tech Ltd, Zeromax, Wimm-Bill-Dann, Spentex and Turkuaz, with their assets then passed on to members of Uzbekistan’s notoriously corrupt ruling elite (Transparency International’s Corruption Perceptions Index ranked Uzbekistan as the fifth worst country in the world for corruption). This most recent ‘raid’ on MTS is believed to have been orchestrated by Gulnora Karimova, the daughter of Uzbekistan’s President Islam Karimov.