4 Min Read
* Prosecutors launched investigation into Uzbek deal in Sept
* Latest probe by lawyers did not establish proof of bribery
* Shares fall nearly 2 percent (Adds quotes, background, byline)
By Simon Johnson and Patrick Lannin
STOCKHOLM, Feb 1 (Reuters) - The chief executive of Nordic and emerging markets telecoms group TeliaSonera resigned on Friday after an in-house investigation into its purchase of an Uzbekistan 3G licence harshly criticised the deal.
The report, which TeliaSonera had commissioned from a law firm, found no evidence of bribery or money laundering as alleged by Swedish prosecutors, but said a lack of diligence by the company made it difficult to rule out corruption somewhere along the line.
A push into emerging markets has been the main profit driver for TeliaSonera, whose reputation is particularly sensitive because the Swedish state is a 37 percent shareholder and Finland owns almost 12 percent.
The company has said the Uzbek scandal and criticism of its activities in other markets such as Azerbaijan won't knock its growth strategy off course.
But Chief Executive Lars Nyberg acknowledged criticism that TeliaSonera had not dug deep enough to know its Uzbek partner or how it had come by assets in a country ranked by Transparency International as one of the most corrupt in the world.
"Even if this transaction was legal, we should not have gone ahead without learning more about the identity of our counterparty. This is something I regret," he said in the statement announcing his resignation.
Nyberg had staked his job on the company being exonerated. His contract as chief executive had been due to end in December this year.
The company appointed Chief Financial Officer Per-Arne Blomquist as acting CEO.
Two executives have already been named as suspects by the prosecutors, but are still working at TeliaSonera.
Nyberg said he expected more changes in the board of directors, whose chairman has already said he would step down.
TeliaSonera shares were down 1.85 percent at 45.04 crowns.
The law firm pinpointed a failing by TeliaSonera's board to look properly into the Uzbek deal and how it was structured.
"If one does deals in a corrupt country, one simply has to be more careful than TeliaSonera was," lawyer Biorn Riese said in the 150-page report.
An investigative television programme has said the deal had links to a daughter of Uzbek President Islam Karimov, Gulnara Karimova. Riese said he had found no such link.
"If one does not know the counterparty or how the counterparty has obtained the acquired assets, it seems difficult to ensure that corruption was not present at some stage," he added.
The upshot, said Riese, was that the allegations of graft from Swedish prosecutors could not be dismissed.
Analysts have been keeping a close eye on the case.
"The share is down because Lars is well regarded. He has a good record of cutting costs and is a well-liked CEO. It's more a case of watch this space," said Berenberg Bank's Barry Zeitoune.
"Eurasia has been significant for their growth. Earnings would look far worse without the region," he added.
The TV programme raised questions about how the deal was structured, for instance that it took place via a formerly unknown company based in Gibraltar. A Swedish court has already frozen assets belonging to the Gibraltar company, Takilant.
The programme also alleged that Takilant's director, Gayane Avakyan, was an aide to Gulnara Karimova. Riese said in his report that he had received a letter from Avakyane denying the connection and that he had been unable to confirm a link between Takilant and Karimova.
He concluded that even if there was an intention to enter an agreement with Karimova's investment group, "the investigation has not been able to confirm that there is a legal or financial connection between Takilant and Goulnara Karimova". ($1 = 6.3631 Swedish crowns) (Editing by Tom Pfeiffer)