By Miranda Patrucic 

International mobile phone companies jumped at the chance to invest in the fast- growing Uzbekistan market but little did they know they would instead be funding the unlimited financial ambitions of the President’s daughter.

Gulnara Karimova, the elder daughter of Uzbek President Islam Karimov, is being investigated for taking bribes for allowing Scandinavian and Russian telecom companies TeliaSonera and VimpelCom to operate in Uzbekistan. The Organized Crime and Corruption Reporting Project (OCCRP) has found new records that show she was far greedier and the scale of her alleged corruption was far wider than has been reported.

Financial documents OCCRP has obtained detail that Karimova received more than US$1 billion worth of payments and ownership shares out of international telecom-related companies. Meanwhile, telecom users in her impoverished country pay among the highest rates in the world for mobile phone service.

OCCRP found that Karimova used similar schemes on at least six telecom-related groups of companies, including those that ran fiber optic lines and provided WiFi and WiMAX services -- a high-speed, long-range version of WiFi. She helped companies obtain operating licenses that agreed to meet her payment demands and she squashed those that did not, including three US companies.

Her audacious schemes may have cost the people of Uzbekistan money that could have paid for pensions or healthcare but instead went into banks, an offshore hedge fund andl uxurious real estate around the world including a castle in France and a penthouse in Hong Kong. Even the US$ 1 billion figure likely underestimates the true magnitude of the alleged extortion and bribery she received because most records of her business records have not been released.

While the international companies involved claim to have been innocent or unwilling dupes of her maneuvers, the blatant means by which Karimova allegedly operated made it virtually impossible for those involved not to realize they were giving in to extortion and bribery.

The Bad Seed

Karimova has appeared regularly in the news over the years. Once anointed as the heir apparent to her ailing father, she has fallen from favor and is now under house arrest. Uzbek prosecutors have said she operated an organized crime group that stole US$ 53 million from the state and state businesses through forgery, blackmail and extortion in running her businesses, including Uzbekistan Airways, Coca Cola, a refinery and others. Since then, her businesses have been closed and several of her proxies arrested and given short sentences.

Karimova, educated in the US, fashioned herself at times as a pop star, fashion designer, international celebrity, diplomat and a successful entrepreneur, although her true skill seems to be a ruthless brand of political corruption. Former aides said she used extortion and selling her influence as the President’s daughter to get what she wanted and what she got in return was huge payments and her own share of companies. But payment records show that much like a blackmailer, she wouldn’t go away -- coming back over and over again to bleed companies every time a new license was required. One US Embassy cable disclosed by Wikileaks described her as the most hated person in Uzbekistan.

Karimova preferred not to run businesses but instead to take her cut and run before attracting too much attention, a former aide said. In fact, Karimova, despite her public relations image, never really started a successful business.

She has yet to be charged for her activities in the telecom industry, which in terms of money, dwarf all of her current alleged crimes.

Karimova’s telecom dealings first came to light in a 2012 story by Swedish Public Broadcaster Sveriges Television (SVT), followed by stories from The TT News Agency, and the Norwegian weekly Klassekampen -- all working with OCCRP. They showed how Swedish-Finnish operator TeliaSonera and Russian-Norwegian operator VimpelCom paid millions to Karimova which allowed them to secure mobile phone licenses in Uzbekistan. TeliaSonera and VimpelCom are being investigated in Sweden, the Netherlands and the US.

Financial documents OCCRP has obtained detail that Karimova squeezed more than US$ 1 billion worth of payments and ownership shares out of international telecom-related companies. TeliaSonera paid US$ 381 million and promised an additional US$ 75 million; VimpelCom and its Russian mother company Alfa Telecom paid US$ 176 million; the Russian giant MTS paid US$ 350 million. She also received nearly US$ 90 million from two other companies that ran fiber optic lines and provided WiMAX and WIFI services in Uzbekistan.

Gunnar Stetler, a prosecutor at the Swedish Prosecutor Authority, told OCCRP a criminal indictment will be brought against one or more of the parties in the TeliaSonera case before the end of the year.

How She Worked

Karimova used three main techniques to enrich herself, according to financial records and to people who worked with her. Sometimes she’d demand a percentage of a target company as a gift or dressed up as a fake investment in a local partner. Sometimes she demanded premium money for her personal services and lobbying efforts in getting required licenses. She also allegedly bullied executives to either go along with her plans or to risk arrest or being shut down by Uzbek regulators. She demonstrated a ruthless ability to acquire a share of ownership (her preferred rate was 26 percent) of lucrative telecom-related companies – without actually putting up any money for doing so. Language was inserted into contracts forcing companies to buy back her shares at a future date at an exorbitant profit.

The Beginning

In late 2001 she met with Shahid Feroz, president of International Communications Group (ICG) of Atlanta. A decade earlier, ICG had set up the Uzbek mobile phone carrier Uzdunrobita through a joint venture with the Uzbek government. It became the first mobile operator in Central Asia.

Her proposal to him was straightforward: give her a 20 percent stake in the mobile operation or be destroyed.

2001 was a good time for Karimova to insert herself into the telecom market in Uzbekistan. With a population of 29 million and only 128,000 mobile subscribers, the market was one of the few areas left in all of Europe and Eurasia with fast-growth potential. Russian and European companies that had grown rapidly for years were slowing down. Everyone wanted a piece of the Uzbek market, which eventually grew to 25 million subscribers by 2012.

“She made it clear that, without her support, Uzdunrobita would be destroyed,” ,” Farhod Inogambaev, once one of Karimova’s closest advisors, said in an affidavit filed with a US court. She pressured the American investors to accede to her demands by getting Uzbek authorities to withhold its telecom license.

Between 1994 and 2001, Inogambaev had worked in Dubai for Karimova’s former husband, Mansur Maqsudi, a naturalized American businessman of Afghan origin. Karimova had lived with Maqsudi in the US, but when the marriage foundered, she returned to her homeland in 2001. Upon her return to Uzbekistan, she had Inogambaev’s brother detained to allegedly coerce his return from Dubai to Tashkent and to ensure his allegiance to her. Until he escaped to the US in 2003, he was intimately involved in her business and personal activities. Together they set up bank accounts, established proxies and took over controlling interest in a host of companies.

ICG, taking the threat to heart, agreed to transfer 20 percent of ownership in Uzdunrobita to Revi Holdings. That was a Dubai company Inogambaev set up in November 2001 in the Sharjah Free Trade Zone of the United Arab Emirates as an offshore holding company over all Karimova’s other firms. It was one of many companies the two set up as she got rolling.

Read more