Magyar Telekom Plc and its majority owner Deutsche Telekom AG have agreed to pay a total of approximately $95 million in penalties arising from alleged violations of the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act (“FCPA”) stemming from conduct in Macedonia and Montenegro.


  • Between 2005 and 2006, former executives of Magyar Telekom allegedly entered into sham contracts with third parties, including a Cypriot shell company, with the intent of funneling such contracted funds to Macedonian government officials in exchange for business and operating advantages in the country.  Such contracts were recorded as legitimate expenses in the company’s books and records.  Specifically, the company purportedly induced government officials to delay the introduction of a competitor into the Macedonian market and reduced tariffs imposed on one of its subsidiaries.
  • Magyar Telekom is similarly alleged to have entered into erroneously-recorded sham contracts with the intent of forwarding bribes to Montenegran government officials, in exchange for which it received government assistance in facilitating its acquisition of a state-owned telecommunications company.


  • Magyar Telekom agreed to pay $59.6 million pursuant to a two-year deferred prosecution agreement with the Department of Justice (“DOJ”) and $31.2  million to resolve a civil complaint brought by the Securities and Exchange Commission (“SEC”) arising from these transactions.  Deutsche Telekom entered into a two-year non-prosecution agreement with the DOJ pursuant to which it agreed to pay a $4.4 million penalty.


  • The DOJ pursued charges against Deutsche Telekom in spite of the fact that it arguably had no direct involvement or oversight in the actions of the Magyar Telekom executives implicated in the conduct at issue.
  • The SEC has brought a civil action against several former Magyar Telekom executives in connection with this purported conduct, which remains ongoing at this time.