US Firm Quits ArmenTel Litigation

YEREVAN (RFE/RL)–The Armenian government and the Greek owner of ArmenTel said on Wednesday they are close to reaching agreement on ending a tax dispute related to the telecommunication monopoly’s 1998 sell-off and currently considered by a Yerevan court.

However–it was announced that the main target of the government’s lawsuit–ArmenTel’s former US shareholder–will not attend the ongoing proceedings anymore–saying that the $17 million case could only be settled by an international court.

Lawyers representing the government and Greece’s state-controlled firm OTE told the judge that they are in the "final stage" of settlement negotiations and are about to announce their results. Vahe Yacoubian of the California-based Manatt–Phelps & Phillips–which helps Yerevan with legal counseling–told RFE/RL that talks with the US Trans-World Telecom have yielded no results.

The Armenian ministry on state revenues claims that TWT–which had a 49 percent stake in ArmenTel–has failed to pay roughly $8 million profit tax on proceeds from the sale of its shares to OTE. The sum in question has since risen to $17 million–including fines and other sanctions. TWT lawyers have made the case that under the terms of the 1998 deal with the Greek firm–it is the buyer’s responsibility to pay any taxes and duties. The government counters that tax issues in Armenia are regulated by its legislation and judiciary only.

Elaborating on details of the likely agreement with OTE–Manatt’s Yacoubian said the Greeks will pay an unspecified "substantial sum" to the government. The deal is expected to be unveiled at the next court session on Thursday.

It remains to be seen what action will be taken with regard to TWT–which has informed the judge hearing the case about its refusal to further participate in the proceedings. The judge told RFE/RL that the absence of TWT lawyers will not disrupt the hearing. According to Yacoubian–TWT has refused to make any concessions to other litigants. He earlier hinted that Yerevan would settle for repayment of the $8 million base sum and renounce other claims.

TWT lawyer Van Krikorian has pointed before to a provision in ArmenTel’s sell-off deal whereby the parties shall "submit to the exclusive jurisdiction of the Arbitration Court of the International Chamber of Commerce in London for the resolution of any claim dispute or difference." The offshore-registered American company appealed to the London court last February after OTE–under pressure from Yerevan–froze paymen’s of $62 million to TWT for the purchase of the latter’s ArmenTel shares.

In 1998–OTE paid $142 million to buy a 90 percent stake in ArmenTel–then a joint venture between the government and TWT. The deal marked the biggest yet purchase of an Armenian company by a foreign investor.

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