SEC Goes After Deutsche Telekom

The Securities and Exchange Commission sued Deutsche Telekom and its Hungarian telecommunications unit Magyar Telekom in federal court in Manhattan on Wednesday, alleging violations of the Foreign Corrupt Practices Act, which prohibits paying bribes to foreign officials. Three former officials of Magyar were also charged in a separate filing with bribery under the act.

Bloomberg reported that former CEO Elek Straub, former Director of Central Strategic Organization Andras Balogh, and former Director of Business Development and Acquisitions in the Central Strategic Organization Tamas Morvai, all three Hungarian citizens, were charged with executing a plan in 2005 and 2006 to bribe government officials in Macedonia to delay or prevent a new competitor from operating in that country and to obtain regulatory benefits.

The complaint stated that Magyar Telekom paid $4.88 million euros ($6.3 million) during that period to an intermediary under the guise of consulting and marketing contracts. In the filing, the SEC said, “The former executives also offered or promised Macedonian political party officials a valuable business opportunity in return for the party’s support of Magyar Telekom’s desired benefits.”