Orascom CEO Sawaris sues Algeria over Djezzy’s financial losses
The CEO of Orascom Telecom, Egyptian business tycoon, Nagib Sawaris has decided to resort to legal proceedings against the Algerian government over financial losses incurred by his group’s telephone mobile operator “Djezzy” in its long-time activities in the Algerian market.
Sawaris is seeking international legal arbitration in the vexed tax issue opposing his Telecom group and the Algerian government.
The Algerian authorities have enjoined Djezzy to pay overdue taxes to the tune of 960 million dollars accrued from the period between 2004 and 2009.
In the face of Djezzy’s non-compliance with the Algerian government’s injunction, the Bank of Algeria decided to ban the telephone mobile operator from transferring any hard currency overseas until the settlement of the outstanding tax issue.
This has brought about the ire of Orascom Telecom’s CEO Nagib Sawaris who has been seeking to turn the situation around through recourse to international justice but analysts surmise that the latter is not likely to carry the day as the Algerian government is well within its rights in this financial row.
Algeria has recently appointed Shearman and Sterling LLP France, a global law firm, to advise it on the nationalization of Orascom Telecom’s local mobile phone unit.
The firm is scheduled to complete a valuation of Algeria’s largest mobile phone operator Djezzy, which is controlled by Egypt- based Orascom Telecom Holding.
The Algerian government has increased efforts to nationalize Djezzy, refusing sale of the mobile phone unit to South Africa’s MTN.
The Algerian government also said it will pay a market price for Djezzy, but has not said exactly when an offer would be made.
Shearman and Sterling LLP is headquartered in New York City with 20 offices located in major financial centers around the world.
The Paris office, established in 1963, advises on matters of French, the United States and international law and is principal part of the firm’s European network.
Djezzy is the most profitable unit of its parent company, the Egypt-based Orascom Telecom Holding, which is controlled by Russian Telecom firm Vimpelcom.
The Russian telecom giant acquired Djezzy last year as part of a 6-billion-U.S.-dollar deal to buy assets of Egyptian firm Orascom Telecom, but the Algerian government demanded a majority stake in the mobile phone unit.
The Algerian minister of Posts, information and communication, Moussa Benhamadi, ruled out the possibility of allotting a permit for a fourth mobile phone operator, saying that the existing three operators, Djezzy, Nedjma and state-run Mobilis, are currently covering the local mobile market.
He specified that the government plans to create a digital industry in Algeria, as high-speed internet service will be provided to all households, schools and enterprises in early 2014.