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US competition office investigates Magyar Telekom

Hungary's Magyar Telekom, a unit of Germany's Deutsche Telekom is under investigation by US authorities, the Financial Times reported on Thursday.

The Securities and Exchange Commission is investigating whether Magyar Telekom violated the Foreign Corrupt Practices Act in the case of several consultancy contracts at its foreign subsidiaries, the paper said citing sources at the Hungarian financial competition office PSZÁF. Magyar Telekom officials in Budapest could not immediately comment to Reuters on the report. CEO Christoper Mattheisen told the FT „the independent investigators have been unable to determine definitively the purpose of the contracts, and it is possible that the purpose may have been improper.”

The firm launched an internal investigation more than a year ago after its auditor expressed concern over several consultancy contracts worth a combined Ft 1.98 billion ($10.95 million). The investigation delayed Magyar Telekom's 2005 annual report and dividend payment for more than half a year and the investigation has cost billions of forints. The company's CEO at the time, Elek Straub, as well as several of his deputies resigned or retired from the firm during the investigation. (reuters.com)