Magyar Telekom and Deutsche Telekom Settle FCPA Cases with $95 Million of Penalties

On December 29, 2011, the U.S. Justice Department announced that Magyar Telekom Plc., a Hungarian telecommunications company, and Deutsche Telekom AG, a German telecommunications company and majority owner of Magyar Telekom, agreed to pay a combined $63.9 million criminal penalty to settle a Foreign Corrupt Practices Act (FCPA) investigation into activities by Magyar Telekom and its subsidiaries in Macedonia and Montenegro.  

Magyar Telekom entered into a two-year deferred prosecution agreement in the U.S. District Court for the Eastern District of Virginia, where a three-count information was filed, charging Magyar Telekom with one count of violating the the anti-bribery provision of the FCPA and two counts of violating the books and records provisions of the FCPA.  At the time of the alleged misconduct, Magyar Telekom's American Depository Receipts (ADRs) traded on the New York Stock Exchange (NYSE).  Magyar Teleklom agreed to pay a $59.6 million penalty for its illegal activity, implement an enhanced compliance program and submit annual reports concering its efforts in implementing the enhanced compliance measures and remediating past problems.

Deutsche Telekom, Magyar's parent company, entered into a two-year non-prosecution agreement for its failure to keep books and records that accurately detailed the activities of Magyar Telekom.  Deutsche Telekom agreed to pay a $4.36 million pnealty in connection with the inaccurate books and records and to strengthen its compliance program.  At the time of the conduct, Deutsche Telekom's ADRs traded on the NYSE.

SEC's complaints can be seen here and here.

 

 

 

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