OTE to Settle ArmenTel Case

YEREVAN (RFE/RL)–The Armenian government would net a compensation from the Greek owner of ArmenTel under the terms of a tentative agreement to settle a tax dispute involving the telecommunication monopoly–it was announced on Thursday.

Lawyers for the two parties told the court in central Yerevan that they are now awaiting a formal endorsement of the deal by their clients. The content of the likely settlement has yet to be made public.

The government last June sued Greece’s OTE firm and ArmenTel’s former shareholder–the offshore-registered Trans-World Telecom–for $17 million in damages stemming from allegedly unpaid taxes.

The primary object of the government’s lawsuit–TWT is accused of failure to pay corporate tax on proceeds from the sale of its shares to OTE in early 1998. TWT–which is owned by US citizens and had a 49 stake in ArmenTel–has rejected the claims on the grounds that it is the Greek firm’s responsibility to pay any tax or duty.

Vahe Yacoubian–a US lawyer representing the government’s interests–told RFE/RL that according to the would-be agreement with OTE–Yerevan is to drop all its claims with regard to the Greeks in exchange for the unspecified compensation. He said the government would then deal with TWT only.

Under Armenian pressure–OTE late last year froze the payment of $62 million to TWT for the purchase of its ArmenTel shares.

As a result–the American-owned company in February filed a lawsuit against OTE and the Armenian government to the Arbitration Court of the International Chamber of Commerce in London. Yacoubian said if the settlement deal is sealed–lawyers from his California-based Manatt–Phelps & Phillips firm will petition the London court to declare Yerevan’s further involvement in the litigation irrelevant.

Whether the Armenian-Greek settlement takes effect will be known at the next Yerevan court session on Wednesday. For its part–TWT has written to the Armenian judge informing that its counsels will no longer show up for the proceedings.

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