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Gulnara Karimova Charged With Conspiracy to Commit Money Laundering

 
 

Gulnara Karimova is having a bad week: Not only has she been taken back to prison in Uzbekistan for allegedly violating the terms of her house arrest, but on March 7 the U.S. Department of Justice unsealed a single count charge of conspiracy to commit money laundering against Karimova.

Let’s unpack these two developments chronologically (though I must stress that their relation to each other is absolutely unclear at this juncture).

Karimova, the eldest daughter of former Uzbek President Islam Karimov, is a central node in a still unfolding, wide-ranging corruption saga. In less than a decade, Karimova fell from a bright spot at the top of the Uzbek elite, where she dabbled in pop music, fashion design, and diplomacy, into the shadows. As a multinational corruption scandal broke, her own father pulled her from the public eye with numerous reports of her being under house arrest as far back as 2014. In 2016 a rumor spread that she’d died.

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Earlier this week, Karimova was reportedly taken back to prison in Uzbekistan. She’d been living under house arrest in her daughter Iman’s Tashkent apartment since June 2018 following a December 2017 sentence to 10 years in prison that was subsequently converted to five years of house arrest.

According to RFE/RL, on March 5 Iman Karimova posted several blurry pictures to Instagram, allegedly showing her mother being taken away by the authorities. Karimova’s house arrest terms limited her to her daughter’s residence.

Gregoire Mangeat, a Swiss lawyer who has served as defense counsel for Karimova, posted one of the pictures to Twitter and said Karimova had been “forcibly removed from the apartment in which she was held in Tashkent” and “taken to an unknown place.”

The next day, the Uzbek Prosecutor General’s Office posted a statement citing a March 5 court order to take Karimova back to prison. According to the statement, on November 22 Karimova violated the terms of her house arrest by leaving her daughter’s apartment. The statement also said that despite warnings, Karimova had violated other terms, including a restriction on using the internet.

Why return Karimova to prison now if the breach of the house arrest terms occurred more than four months ago? Officially, that remains unclear.

But on March 7 the U.S. Department of Justice dropped a bomb that may shed some light (or just be one hell of coincidence).

In a press release about Russian telecom MTS agreeing to pay $850 million in relation to the bribery of Uzbek officials, the DOJ announced the unsealing of charges against Karimova and Bekhzod Akhmedov, the former CEO of an Uzbek MTS subsidiary, “for their participation in a bribery and money laundering scheme involving more than $865 million in bribes from MTS, VimpelCom Limited (now VEON) and Telia Company AB (Telia) to the former Uzbek official in order to secure her assistance in entering and maintaining their business operations in Uzbekistan’s telecommunications market.”

Karimova has been charged with one count of conspiracy to commit money laundering, while Akhmedov is facing one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), two counts of violating the FCPA, and one count of conspiracy to commit money laundering.

In the DOJ’s press release, Assistant Attorney General Benczkowski is quoted as saying, “Gulnara Karimova stands accused of exploiting her official position to solicit and accept more than $865 million in bribes from three publicly traded telecom companies, and then laundering those bribes through the U.S. financial system.”

This will reflect poorly on Sweden, perhaps, where last month three former Telia executives were acquitted of providing bribes to Karimova, on account of Karimova not having an official position in the Uzbek telecom sector.

This particular mess broke back in 2012, when allegations of corruption surfaced on Swedish television involving a Nordic telecom and the ripe and risky Uzbek market. It has taken years to unfold. As I noted in an article in 2017, “The problem with unraveling grand corruption is that once you begin to tug on a string — a specific individual, perhaps — the whole tapestry could come off the wall.”

The tapestry continues to unravel.

In the United States, which claims jurisdiction on aspects of this case given the use of the U.S. financial system by the entities involved, has so far settled three major resolutions: In 2016 with VimpelCom and its Uzbek subsidiary Unitel LLC; in 2017 with Telia; and now with MTS. The DOJ’s investigations have “thus far yielded a combined total of over $2.6 billion in global fines and disgorgement, including over $1.3 billion in criminal penalties to the United States.”

The 2016 VimpelCom resolution featured related civil complaints seeking an $850 million forfeiture in proceeds of illegal bribes, or property involved in the laundering of payments. These funds and assets were frozen, scattered across Swiss bank accounts and in Belgium, Luxembourg, and Ireland. A big question since has been how the United States will manage the return of the funds. The Uzbek state has been in negotiations since 2016 to recover those funds. That process has been quiet, deadlines kicked down the road as negotiations continued in light of a new Uzbek regime intent on proving its reforms are genuine.

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