Uzan case could soon see closure as deliberations begin

Uzan case could soon see closure as deliberations begin

Cem Uzan and Hakan Uzan will testify this week at the International Center for Settlement of Investment Disputes over an arbitration claim filed by Libananco against the Energy Ministry in 2006 for losses incurred after the government seized the Uzan family’s companies.

March 24, 2010, Wednesday/ 16:32:00
A decision on a four-year-old $21.5 billion arbitration claim involving the Uzan family, their partners in Libananco Holdings Co., Ltd., and Turkey’s Ministry of Energy could see a resolution in the near future, as the involved parties, including Hakan Uzan and Cem Uzan, are to testify this week before an international arbitration tribunal.

According to an article published yesterday in the Vatan daily, Cem Uzan’s brother Hakan Uzan was given a special eight-day permission to visit Paris to testify at the International Center for Settlement of Investment Disputes (ICSID). Interpol has issued a red notice for Hakan Uzan, and he has been at large for the last six-and-a-half years. The red notice was frozen so he could testify to ICSID’s arbitration tribunal regarding the Libananco case filed against the Ministry of Energy. Under normal conditions, Uzan would be extradited to Turkey if caught.

Libananco, whose major shareholders include Cem Uzan and Hakan Uzan, filed an arbitration claim against the Energy Ministry in 2006 in ICSID for losses incurred after the government seized the Uzan family’s companies for siphoning off company assets. The Çukurova Electricity Corporation (ÇEAŞ) and the Kepez Electricity Corporation were among the companies expropriated. Libananco holds 66 percent of both companies and is suing for losses stemming from their seizure.

The firm, which is based in Greek Cyprus, is asking the tribunal for $10.1 billion in damages -- or $21.5 billion with interest.

The tribunal started proceedings yesterday, expected to continue through Thursday. Cem Uzan is also in Paris to testify. Cem Uzan, who had a brief political career in the 2002 general elections in Turkey, is also a fugitive at-large, though he has applied for political asylum in France. Interpol cannot currently extradite him due to the asylum proceedings.

According to Vatan’s report, the two brothers met at the Plaza Athenee Hotel in Paris and booked a 20,000 euro per night room to stay during the case proceedings. The brothers are expected to testify in support of Libananco, stating that the seizures of their companies were for political reasons and that they were forced to establish Libananco outside of Turkey due to political pressure. The Turkish government challenged the Uzans’ request to testify for Libananco, but the court stood behind its Dec. 18 ruling and granted their request.

If the tribunal rules against the Turkish side, the government will be forced to hand over either the companies themselves or alleged damages totaling $21.5 billion. The government will not have the luxury of ignoring the ruling and not paying, as the central bank’s gold and foreign exchange holdings in international banks will be blocked, and any government assets abroad will be frozen. The two parties are in Paris testifying to ICSID, and the tribunal will decide whether or not to hear the case “on merit.”

Energy and Natural Resources Minister Taner Yıldız, commenting to reporters in Ankara on the commencement of the hearings yesterday, stated that this case was one of the most “extraordinary” cases in Turkey’s economic and political history. “I see this Libananco case as an extension of the 2003 court decision regarding ÇEAŞ and Kepez. … I have high hopes that we will win,” said Yıldız.

ÇEAŞ and Kepez, subsidiaries of the Uzan Group, were seized along with 200 other companies in 2003 by the Savings Deposit Insurance Fund (TMSF) after it was found that the Uzans’ İmar Bank sold nonexistent Treasury bonds and offered above-market interest rates for dollar deposits – interest that was never paid. The Supreme Court of Appeals ruled in 2009 that the Uzan Group had engaged in the fraudulent sale of company shares.

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