31.01.2012 In the period of 2000 and 2006 a small group of former high executives of the Company and it’s subsidiaries in Macedonia authorized spending of about 24 million euro through over 20 suspect consultancy, lobbying and other contracts between the Company and its subsidiaries and Cyprus based consulting company on the other hand. Were this funds indeed transferred to Cyprus shell companies to be fully or partially used to bribe high governmental officers with in the Government of Macedonia, as it is stated in the White & Case final report and document of the USA institutions, that is to be answered by the authorities that may make and audit on the route of the made transactions to their final destination.
Findings and conclusions based on the evidence available to the internal auditor of the Magyar Telecom and their counsel White & Case, are contained in the Annual Report of activities for the Group of the Makedonski Telecom AD – Skopje for the 2009, as well as the statement that some former employees of Magyar Telecom Plc. deliberately destroyed documents related to the investigation.
Following the opening of the epilogue of the investigation about the activities of Magyar Telecom, in the period 2000 – 2007, Transparency International – Macedonia produced a Report based on relevant and through Internet available public document and information.
Our interest emerged as a result of the fact that some of those corruptive contracts are tightly connected to Magyar Telecom subsidiaries in Macedonia as Makedonski Telecom AD – Skopje and related firms. The interest was supported with information provided to the media by official authorities, claiming that they did everything to resolve the case, but it was impossible to reach precise information about the owners of the named Cyprus firms and the flow of the money.
The Report we have made is based on the publicly available official document, mainly Annual reports of Makedonski Telecom for 2009, court and other publicly available documents of the USA Ministry of Justice and SEC dated 29 December 2011, submitted due violations of the Foreign Corrupt Practices Act (FCPA) and Securities Exchange Act, 1934, against legal entities Magyar Telekom and Dojce Telecom, and 3 individuals: Elek Straub, Andras Balogh and Tamas Morvai; as well from information for activities of Macedonian bodies mandated for criminal prosecution.
On initiative by the internal revision of the company, doubting the legality of certain executed and paid agreements, the investigation was performed by White & Case.
In their Final Report, White & Case state reasonable doubt for corruption of functionaries and leaders of political parties in Macedonia by executives of Makedonski Telecommunications AD, aimed to obtain benefits on the market of telecommunication services in 2005 and 2006. In the report, White & Case among the rest, state that there are: … facts and circumstances arising out of or related to, among other things, privatization of Macedonian Telecommunications AD, certain contracts for consulting and lobbying associated with, and consecutive actions of Makedonski Telecommunications AD, including agreements with Cosmotelko Added Value Services SA (aka Cosmotelco Telecommunication Services SA), Chaptex Holdings Limited and / or their subsidiaries and interactions with government officials associated with the activities of Makedonski Telecommunications AD. Investigation and the results are justified interest in the Company. … Evidence shows that, contrary to the rules, many of these contracts were undertaken to obtain specific regulatory incentives from the Government of Macedonia. Generally Companies received benefits that were sought and then made payments under one or more suspect contracts. There is evidence that the remaining contracts were also illegal and formed a pool of funds vailable for purposes other than those specified in the contracts.
In the Agreements with the criminal authorities in the USA, Magyar Telecom Plc. … recognizes, accepts and confirms that it is responsible and that the allegations in the Criminal Information about what happened between 2005 and 2006 are accurate, truthful, and that the Company neither is, nor would argue with in possible future litigation.
After the analysis of the documents stated above TI-M accepted the following general conclusion:
1) The case covers a wider range of activities, persons, period and money amounts than it is the task of prosecution institutions in Macedonian
a) The investigation conducted by White and Case covered the period from 2000 to 2007. More than 20 questionable contracts were found with aggregate amount exceeding 24 million euro.
2) In this case three phases may be recognized and can distinguished
a) Preparation – organizing, devising
i) Straub, Balogh and Morvai to ensure delayed entry of a third competitor in the market for telecommunications and in order to reduce radio frequency fees, initially threatened the Government of the Republic of Macedonia that will not distribute dividends for 2005 then through an intermediary explicitly made it clear that some solutions of the new Law on electronic communications are unacceptable
b) Mediation, negotiation
i) Using the same intermediary made a selection of companies located in Cyprus that could be contracted with illegitimate contracts, for which more than 4 million euro should be transferred
c) Execution – contracts and transactions
i) Then between 2005 and 2006 instructed the executives in Makedonski Telecom AD to conduct more than seven agreements with aggregate amount of 4,875,000 euros. Although the purpose of the agreements was not fulfilled or economically justified. All arrangements were under the census of one million euro by which they must be approved by the Board of Makedonski Telecom AD. Some of the contracts were anti dated for further bypassing of internal controls at Magyar Telekom.
3) Macedonian persecution authorities enter only the third stage
a) organizers, intermediaries and some transactions are not covered by their procedures
i) agreements only between 2005 and 2006 are covered where as the period investigated by White and Case covers the period from 2000 to 2007
ii) Official authorities claim that the names of intermediaries are unknown even for the authorities in the U.S., otherwise if they were known, than the Public Prosecutor of the Republic of Macedonia would know them too.
b) Many of the actions covered by the provisions of the Criminal Code and the people there are grounds for suspicion that committed them, are not covered by the procedures
i) Organizing in criminal association by Straub, Baloh and Morai
From the records of proceedings in the U.S. and report White and Case it is clearly stated that they observed contracts with the firm Cosmotelco Telecommunication Services SA (whose principal was Mr. D. Kontominas) and Chaptex Holding Company Limited made in the investigated period.
TI-M collected a certificate from the Central Registry of Companies in Cyprus for the Chaptex Holdings Limited. The record recognizes that co owner is Mr. D. Kontominas along with the company Demko SA.
Mr. Kontominas is a powerful businessman in Greece and in United States, who is constantly present in the Macedonian media in the period after 2000, due to his business interests in Macedonia, and because of its very frequent contacts with Macedonian politicians from all provenances and coalitions. Transparency International Macedonia was able to provide information which the public prosecutor stated is impossible to obtain. We also provided other information on indirect clues such as the previously concluded business agreements. What remains is to be seen how the Macedonian criminal legal practice shell respond to the challenge Magyar Telekom affair established.