Ewan Sutherland presented at the International Association for Media & Communication Research conference in Dublin in June 2013. He discussed issues of corruption in the telecommunications industry, including a lack of transparency around ownership. He provided examples of corruption involving TeliaSonera in Uzbekistan and unclear ownership structures of telecom companies in Kenya. Sutherland argued that greater transparency is needed regarding beneficial owners, and that national governments and international treaties should work to curb corruption in telecom licensing and ensure disclosure of corporate holdings and partners.

1. Ewan Sutherland
LINK Centre, Wits University
CRIDS, University of Namur
International Association for Media & Communication Research
25-29 June Dublin

2.  Talking about corruption
 A framework of treaties
 A lack of transparency
 Examples of TeliaSonera and Kenya
 Possible actions to identify beneficial owners
Ewan Sutherland, June 2013, IAMCR, Dublin 2

3.  First requirement is just to talk
 Make clear it will not be tolerated
 Bribery
 Cronyism
 Nepotism
 Licensing of operators:
◦ Global best practice to open market to new players
◦ Very vague on who can be licensed:
 Cousin of President
 Son-in-law of President
 The King himself
Ewan Sutherland, June 2013, IAMCR, Dublin 3

4.  National and extraterritorial provisions
 OECD Convention on Combating Bribery of
Foreign Public Officials in International
Business Transactions
 United Nations Convention against
Corruption (UNCAC)
 Regional anti-corruption treaties:
◦ Organisation of American States
◦ African Union
◦ Council of Europe:
 Criminal Law Convention
 Civil Law Convention
Ewan Sutherland, June 2013, IAMCR, Dublin 4

5.  Ownership is often incomplete:
◦ Someone owns 2.7% of Orange Moldova
 Purchase and sale is often not mentioned in
financial reports
 Shares held through offshore tax havens:
 e.g., Chinese govt owns shares in China Mobile via
subsidiary in British Virgin Islands
 Operator groups:
◦ Do not disclose all holdings
◦ Have undisclosed “local partners”
 Manufacturers:
◦ Hold shares in some operators
Ewan Sutherland, June 2013, IAMCR, Dublin 5

6.  Merger of two incumbent operators
 Still partially owned by:
◦ Government of Sweden
◦ Government of Finland
 TV investigative journalism
 Independent lawyers investigated
◦ Devastating report
◦ Management had not asked questions
◦ Board had not been told
 Lost group CEO in January 2013
 Uzbekistan partner could not be identified
 Allegedly bought 3G licence from friend of the
daughter of the President
Ewan Sutherland, June 2013, IAMCR, Dublin 6

7. Ewan Sutherland, June 2013, IAMCR, Dublin 7
Who is the Visor Group?
Who owns 20% of Spice Nepal?
Government of Finland
11.7%
Government of Sweden
37.3%

8.  In 2012, initiated a dialogue with
Transparency International (TI) regarding the
company's internal anti-corruption work.
 The dialogue will continue in 2013.
 Prepared a new Group Anti-Corruption
Policy, which was finalized in February 2013
 To further ensure compliance with Code of
Ethics and Conduct created an e-learning tool
Ewan Sutherland, June 2013, IAMCR, Dublin 8

9.  Strange patterns of ownership:
◦ Safaricom
◦ Telkom Kenya
 Alcatel admitted being asked to add USD 20
million to an equipment invoice for Kencell
◦ Paid USD 20 million into an account in Mauritius
Ewan Sutherland, June 2013, IAMCR, Dublin 9

10. Ewan Sutherland, June 2013, IAMCR, Dublin 10
Safaricom Ltd
Vodafone Kenya
Ltd
Government of
Kenya
40%60%
Vodafone Group
plc
Mobitelea Ventures
Ltd
Guernsey
87.5%12.5%
Cabot Ltd
Antigua
Anson Ltd
Anguilla
Vodafone has since bought out Mobitelea.

11. Ewan Sutherland, June 2013, IAMCR, Dublin 11
Telkom Kenya Ltd
Government of
Kenya
Alcazar Capital Ltd
UAE
Orange
Participations
Orange East Africa
France Telecom
51%
78.5%
49%
21.5%
Agility Logistics
UAE
100%

12.  National licensing framework:
◦ Licensor to require full disclosure of beneficial
ownership
 Extraterritorial provisions:
◦ Voluntary corporate disclosure through:
 UN Global Compact
 WEF Partnership against corruption initiative (PACI)
◦ Home country registry to require firms to disclose:
 Foreign holdings
 Foreign business partners
Ewan Sutherland, June 2013, IAMCR, Dublin 12

13.  Liberalisation was extremely loosely defined
 Licences issued to:
◦ Highest briber
◦ Relatives
◦ Heads of state themselves
 Need to set tone against corruption
 Need to identify beneficial owners:
◦ Extraterritorial actions needed since high level
politicians involved in many countries
Ewan Sutherland, June 2013, IAMCR, Dublin 13

14.  Ewan Sutherland
 sutherla [at] gmail.com
 http://anti-corruption-telecoms.blogspot.com/
 http://www.ssrn.com/author=927092
 +44 141 649 4040
 skype://sutherla
Ewan Sutherland, June 2013, IAMCR, Dublin 14