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Deutche Telekom and the Greek Lobbying Consultant MIZES-BRIBES to SKOPIA GOV OFFICIALS

Deutche Telekom and the Greek Lobbying Consultant MIZES-BRIBES to SKOPIA GOV OFFICIALS

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Published by ANTI300
Deutche Telekom and the Greek Lobbying Consultant MIZES-BRIBES to SKOPIA GOV OFFICIALS
Deutche Telekom and the Greek Lobbying Consultant MIZES-BRIBES to SKOPIA GOV OFFICIALS

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Published by: ANTI300 on Jun 29, 2012
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11/06/2013

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11
elV
9
4
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF
NEW
YORK
)
SECURITIES AND EXCHANGE COMMISSION,
)
Plaintiff,
))
-V.
))
Case No.
MAGYAR TELEKOM, PLC,
and
)
DEUTSCHE TELEKOM, AG,
))
Defendants.
)
'-----'--"'~
COMPLAINT
------------------------------)
Plaintiff Securities and Exchange Commission (the "Commission") alleges:
SUMMARY
1.
This action arises from multiple violations
of
the Foreign CorruptPractices Act
of
1977 (the "FCPA")
by
defendant Magyar Telekom, PIc. ("MagyarTelekom") and corresponding violations
of
the books and records and internal controlsprovisions
of
the FCPA by Magyar Telekom's parent company, defendant DeutscheTelekom,
AG
("Deutsche Telekom").2.
In
2005 and 2006, senior executives then employed at Magyar Telekom,including its Chairman and
Chief
Executive Officer, organized, approved, and executed aplan to bribe government officials in the Republic
of
Macedonia to delay or prevent theintroduction
of
a new competitor to Magyar Telekom' s subsidiaries operating inMacedonia and to obtain certain regulatory benefits. Magyar Telekom, through itssubsidiaries in Macedonia, made payments
of€.875
million during 2005 and 2006 to anintermediary under the guise
of
bogus "consulting" and "marketing" contracts that did
not
have any legitimate business purpose. The payments were made with the knowledge,
-1
 
the firm belief, or under circumstances that made it substantially certain, that all or aportion
of
the proceeds would be offered, promised
or
paid to Macedonian governmentofficials. In return, the officials would agree to adopt regulatory changes favorable toMagyar Telekom's business and prevent a new competitor from entering the market. Theformer executives also offered or promised Macedonian political party officials avaluable business opportunity in return for the party's support
of
Magyar Telekom'sdesired benefits.3.
In
2005, the same executives then employed at Magyar Telekomorganized, approved, and executed a second corrupt scheme in which they authorizedMagyar Telekom and its affiliates to make payments intended to channel and concealcorrupt payments to government officials in the Republic
of
Montenegro. MagyarTelekom and its subsidiaries in Montenegro made payments of€7.35 million to severalthird-party consultants under four sham contracts and received no legitimate value inreturn. These payments were made with the knowledge, the firm belief, or undercircumstances that made it substantially certain, that all or a portion
of
the paymentswould be offered, promised, or paid to Montenegrin officials to facilitate MagyarTelekom's acquisition
of
Telekom Crne Gore A.D. ("TCG") on favorable terms.4. During the relevant period, Magyar Telekom and Deutsche Telekomlacked sufficient internal accounting controls to prevent and detect violations
of
theFCP
A.
As a result, the contracts described above were not subjected to meaningfulreview, and substantially all
of
the amounts were paid without question, prior to theinitiation
of
an internal investigation at the direction
of
the Audit Committee
of
MagyarTelekom.
-2
 
5. Magyar Telekom recorded the payments to thirq-parties under thesecontracts on its books and records in a manner that did not accurately reflect the truepurpose
of
the contracts. The false entries in Magyar Telekom's books and records wereconsolidated into the books and records
of
Deutsche Telekom, which reports the results
of
Magyar Telekom's operations in its consolidated financial statements.
JURISDICTION AND VENUE
6.
This Court has jurisdiction over this action pursuant to Sections
21
(d),
2I(e)
and 27
of
the Securities Exchange Act
of
1934 (the "Exchange Act") [15 U.S.C.
§§
78u(d), 78u(e), and 78aa].
7.
Venue in this District is proper pursuant to Section 27
ofthe
ExchangeAct because acts or transactions constituting federal securities law violations occurredwithin the Southern District
of
New York.
8.
Magyar Telekom, directly
or
indirectly, made use
of
the mails and
of
themeans and instrumentalities
of
interstate commerce in furtherance
of
the acts, practicesand courses
of
business described in this Complaint.
9.
At
all relevant times, Magyar Telekom and Deutsche Telekom wereUnited States issuers that each filed reports on Form 20-F with the Commission pursuantto Section
13
of
the Exchange Act.
DEFENDANTS
10.
Magyar Telekom
is a limited liability stock corporation organized underthe laws
of
Hungary and headquartered in Budapest. Magyar Telekom is the largesttelecommunications company in Hungary. Magyar Telekom operates subsidiaries in-3

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