Deutsche Telekom AG, a Hungarian unit and three former executives were charged by a US regulator in a corruption case involving bribery of government officials in Macedonia and Montenegro. The US Securities and Exchange Commission said executives at the company's Magyar Telekom unit arranged payments in 2005 and 2006 of 4.88 million euros to Macedonian officials, under the guise of bogus consulting and marketing contracts, to keep a rival out of the market and win regulatory benefits.
According to the regulator, the same executives in 2005 arranged a second scheme in which 7.35 million euros were paid to third-party consultants under four sham contracts, expecting some of the funds to be funnelled to Montenegrin officials to help Magyar complete the purchase of Telekom Crne Gore AD.
The SEC also filed charges against the three former Magyar Telekom executives: former Chief Executive Elek Straub, and strategy executives Andras Balogh and Tamas Morvai. It alleged violations of the Foreign Corrupt Practices Act, saying that the payments were recorded improperly on Magyar Telekom's books, and that those false entries were incorporated into Deutsche Telekom's financial statements, which are filed with the SEC. The SEC filed its charges in a federal court in New York. It is unclear whether the matter has been settled, or whether the US Department of Justice is filing parallel charges, as it often does in FCPA cases.
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