By Maria Kiselyova
MOSCOW, March 12 Russian mobile phone operator Vimpelcom has become the latest company to come under scrutiny over its operations in Uzbekistan, an authoritarian country where rival MTS had its assets confiscated.
U.S.-listed Vimpelcom, Uzbekistan's biggest mobile operator by subscribers, said on Wednesday that it was being investigated by the U.S. Securities and Exchange Commission (SEC) and Dutch authorities.
The case follows an investigation by Swedish prosecutors of TeliaSonera's operations in Uzbekistan which centres around allegations that it had paid around $350 million for its Uzbek 3G licence to a company it knew was a front for the daughter of Uzbek president Islam Karimov, Gulnara Karimova.
President Karimov has ruled the gas-rich republic, central Asia's most populous country, with an iron hand since it gained independence from the Soviet Union in 1991 and several foreign companies have had problems there.
The investigation into Vimpelcom comes as Russia and the U.S. have the worst crisis in relations since the end of the Cold War following Russia's military incursion into Ukraine's Crimea region. U.S. President Barack Obama has called for sanctions against Moscow.
"People are wondering what form financial sanctions will take in the U.S. (and trying to) connect the dots that way... whether the U.S. regulators will tighten up the environment around former Soviet corporates," said Standard Bank analyst Timothy Ash.
The SEC was not immediately available to comment.
Sberbank analyst Anna Lepetukhina said the probe into Vimpelcom, in which Russia's Alfa Group and Norway's Telenor are the biggest investors, was likely a sequel to the investigation into TeliaSonera.
In 2012, Vimpelcom said it did not rule out that it may become subject to investigations due to its relationship with Gibraltar-based Takilant Ltd from which TeliaSonera bought the Uzbek licence.
Takilant held a minority interest in Vimpelcom's business in Uzbekistan from 2007 until 2009, and Vimpelcom had worked with Takilant to acquire frequency spectrum in Uzbekistan.
On Wednesday, Vimpelcom said it had received a letter from the SEC on March 11 stating that it was conducting an investigation related to the company and requesting documents.
The company also said its headquarters in Amsterdam was visited on March 11 by representatives of Dutch authorities including the public prosecutor's office, who took documents and informed Vimpelcom it was the focus of a criminal investigation in the Netherlands.
"The investigations appear to be concerned with the company's operations in Uzbekistan. The company intends to fully cooperate with these investigations," Vimpelcom said in a statement. A spokesman declined to elaborate.
Dutch prosecutors confirmed the criminal investigation into Vimpelcom but declined to give any details.
Separately, Switzerland's public prosecutor said the Uzbek president's daughter is being investigated on suspicion of money laundering in connection with funds held in Switzerland allegedly linked to irregularities in Uzbekistan's telecom market..
The Vimpelcom investigation follows poor results at the telecoms operator and its decision to slash dividends that have knocked a third off its stock market value since the beginning of this year. Its Nasdaq-listed stock was down 2.4 percent in early New York trading on Wednesday, taking the drop since the start of the year to 32.5 percent.
Last year, Uzbekistan's tax authorities investigated Vimpelcom's mobile unit, Unitel, but the probe did not reveal any major violations, a Vimpelcom spokesman said.
That investigation followed the confiscation of all assets owned by the Uzbek subsidiary of its bigger Russian rival MTS in a criminal case against its local staff.
MTS took a $1.1 billion write-off in 2012 after an Uzbek court revoked its local operating licence in a case that MTS called a "classic shakedown" of foreign investors.
Vimpelcom has 10.5 million subscribers in Uzbekistan, out of 220 million in total across Russia, Italy and various emerging markets.
VTB Capital analyst Ivan Kim said he did not expect the investigation to have a significant direct financial impact although he did not rule out the possibility of a fine or management changes.
"The investigation will indeed distract management, which is currently trying to fix the business... The story is set to further weaken sentiment towards the name around equity and bondholders," Kim said.