Another Loss Expected For Uzan Family In Libananco Case

Turkey believes a favorable ruling from an international arbitration body in the appeals phase of the Libananco case, in which the Uzan family, claiming that a 2003 confiscation by Turkish authorities of assets belonging to the family had caused them financial losses, demand $10.1 billion in damages from Turkey.



Libananco, a Greek Cyprus-based company whose major shareholders include Cem Uzan and Hakan Uzan, filed an arbitration claim against the Turkish Energy Ministry in 2006 with the Washington-based International Center for Settlement of Investment Disputes (ICSID) for losses incurred after the government seized the Uzan family's companies for siphoning off company assets. The family's claim in damages amount to more than $20 billion with interest.



The family filed an appeal in the case, the final hearing of which took place before a new panel of judges at the World Bank office in Washington on Jan. 14-15, and the panel is expected to pronounce its verdict with in a couple of months. In their appeal, the Uzan family maintains that they are victims of mispleading, with Uzans' lawerys maintaining that rules of procedure were seriously broken and that their claims were not given due consideration. The panel of judges who first heard the case at ICSID found the family's claims unsound, and delivered a ruling in favor of Turkey in 2011. The ruling noted the Uzan's were unable to present solid, official evidence that the Libananco company had made any payments to the family prior to the confiscation of the family's companies in Turkey. The fact that the family's plea in the case is limited to rules of procedure is another reason the Turkish side is hopeful for a favorable ruling regarding the appeal.



"It's most likely the case will end in Turkey's favor," Rasim Kuseyri of the Kuseyri Law Office, which represents Turkey in the case, has told Today's Zaman. The optimism of the Turkish side comes from the fact that the Uzan family didn't tell the judges during the first phase of the case in what ways rules of procedures were not respected, something which was required by the regulations of the arbitration body. Moreover, the mispleading referenced in the appeal needs to be strong enough to change the course of the case, a condition that will be decided by the new panel of judges which will hear the case at the appeal phase to decide whether to annul the verdict of the previous panel of judges.



In the latest hearing of the case, which is considered to be among the top 10 cases in the world in terms of suits for damages, Cem Uzan spoke to the hall the hearing was held in by videoconference from France. In this testimony Uzan made an emotional appeal to the panel of judges by claiming that his children were also implicated in the charges by the debt and criminal charges initiated by the Turkish government .



But Uzan's claim was refuted by the Turkish side, represented presently by the Lalive Law Firm of Switzerland and Kuseyri Law Office based in Ankara, who informed the panel that children younger than 12 years of age have no criminal responsibility under the Turkish penal code. Upon the response of the Turkish side, Uzan, obviously annoyed and frustrated, was seen leaving the chair he was sitting on, to which he didn't return for around 15 minutes.



The Uzan family also lost to Turkey in some other cases heard before international arbitration bodies, and the total cost for Turkey of the lawsuits the Uzan family has filed against the country is more than $50 million. But so far, Turkey has been able to recover no more than $5 million from the family from the cost of proceedings and chances seem slim that Turkey will be able to collect from the Uzan's the cost it had to pay for the proceedings. In sharp contrast, the family is estimated so far to have paid to lawyers more than Turkey spent in all those cases. "In just the Libananco case, the fee Uzan paid to lawyers is $25 million," Kuseyri said.



More than 200 companies of the Uzan Group were seized in 2003 by Turkey's Savings Deposit Insurance Fund (TMSF) after it was discovered that the Uzan's İmar Bank sold nonexistent Treasury bonds and offered above-market interest rates for dollar deposits -- interest that was never paid. The Kepez Electricity Corporation was among the companies expropriated. Libananco holds 66 percent of both companies and is suing for losses stemming from their seizure. Moreover, a US court ruled in 2004 that five members of the Uzan family "perpetrated a huge fraud" upon Telsim -- a GSM operator that was Motorola's financing affiliate in Turkey -- and ordered them to pay more than $4 billion in damages. The court said the Uzan family had siphoned more than a $1 billion of Motorola's money "into their own pockets and into the coffers of other entities they controlled." The Supreme Court of Appeals ruled in 2009 that the Uzan Group had engaged in the fraudulent sale of company shares. Cem Uzan, facing time in prison on dozens of counts of fraud, embezzlement and similar crimes, fled to France. Uzan is facing up to 45 years in jail on charges of "falsification of documents, felonies and organizing a criminal gang."



(Cihan/Today's Zaman)