Vimpelcom threats to resort to international arbitration

Algerian judiciary postpones Orascom Djezzy appeal to May 6

GMT 10:53 2012 Tuesday ,01 May

Arab Today, arab today Algerian judiciary postpones Orascom Djezzy appeal to May 6

Orascom Telecom Djezzy
Algiers – Sofiane Siyoucef

Orascom Telecom Djezzy Algiers – Sofiane Siyoucef An Algerian court on Sunday postponed an appeal hearing into a $1.25 billion fine imposed on Djezzy, the local mobile phone unit of Russian telecoms firm Vimpelcom, until May 6 .
Orascom Telecom Djezzy is accused of financial irregularities totalling $189 million during the period 2007 to 2009 through transferring capital abroad.
Djezzy chief executive Tamer El Mahdy, who has been convicted in the case and faces jail if the conviction is upheld, also failed to appear for the hearing at the Ruisseau court in Algiers.
The court decided to postpone hearing the appeal in response to a request from the defence, said defence lawyer Abdul Majeed Slena. The Court of First Instance of Sidi Mohamed had sentenced Djezzy in March to pay a fine of DA 93 billion, and Mahdy to two years in prison and a fine of DA 6 billion ($1.3 billion) while acquitting Citibank where Orascom Telecom deposited its funds.A lower court ruled last month that Djezzy and its CEO were guilty of violating foreign exchange regulations. Djezzy's parent company denied the allegations against it and its chief executive, and lodged an appeal.
Djezzy has been the subject of a long-running dispute with the Algerian government, during which the firm has been hit by back-tax demands, threatened with nationalisation, and put under criminal investigation.
The Bank of Algeria in 2011 raised a judicial complaint against Orascom Telecom accusing it of violating the Algerian foreign exchange laws. The case unravelled from there on.Vimpelcom acquired Djezzy last year when it bought the assets of previous owner, Egyptian firm Orascom Telecom .
Under pressure from the Algerian government, Vimpelcom agreed to talks on selling a controlling 51 percent stake in Djezzy to the Algerian state.
However, the decision to impose the $1.25 billion fine soured those talks and prompted Vimpelcom to announce it was going to international arbitration against Algeria.
Orascom Telecom, now a Vimpelcom subsidiary, said earlier this month that El Mahdy, an Egyptian national, was on medical leave. Asked to comment on his no-show in court on Sunday, an Orascom representative said the firm had no immediate comment.
Algerian sources close to the Djezzy case said that ties between Vimpelcom and the Algerian government had worsened after the fine imposed on El Mahdy, saying that Vimpelcom was now studying whether to resort to the international arbitration to resolve the dispute.

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