The board of Hungarian telecommunications company Magyar Telekom on Friday approved an agreement in principle regarding the conclusion of a negotiated settlement with the staff of US Securities and Exchange Commission (SEC) on the latter agency's ongoing investigation whether the company's Montenegrin unit violated the US Foreign Corrupt Practices Act in the course of signing €31 million in consultancy contracts in 2005, Magyar Telekom announced on Friday.
The SEC launched an investigation to determine if the contracts violated the act, which prohibits US-traded companies from paying bribes abroad, in 2007.
Magyar Telekom noted that the proposed second-quarter 2011 settlement entails neither admission or denial of alleged corruption in connection to the contracts and is subject to final approval from the company board, the SEC and US district court.
As part of the agreement in principle, Magyar Telekom said it will recognize a provision of HUF 11.7 billion ($61.5 million, €43.5 million) in connection with these investigation in the second quarter of 2011.
Magyar Telekom acquired a 73% stake in the unit, then known as Telekom Montenegro, in March 2005. The company started its own internal investigation into the contracts in March 2006.
Magyar Telekom's predecessor Matáv was listed both on the Budapest and on the New York Stock Exchange in 1997. Magyar Telekom delisted from the New York exchange on November 11, 2010.