Weather Investments II, the investment company headed by Egyptian billionaire Naguib Sawiris, said it filed a $5 billion claim against Algeria for allegedly damaging its investment in Djezzy, the country’s largest mobile operator.
“The Algerian government committed to a number of protections, including a promise to refrain from arbitrary interference in our operations, but has since 2008 pursued a campaign of interference and harassment which has cost Weather Investments over $5 billion in damages,” Sawiris said in a statement from Luxembourg, where the company is based.
Algeria’s government is in talks to buy the 51 percent stake in Djezzy held by Russian telecommunications company VimpelCom Ltd. (VIP:US), which became the world’s sixth-largest wireless operator by subscribers after merging with Sawiris’s Orascom Telecom Holding SAE (OTLD) last year. VimpelCom has been in dispute with the Algerian government over the unit for more than year.
Among the alleged breaches is the imposition of $950 million in “unjustified tax reassessments and penalties” on Djezzy from 2004 to 2009 and an injunction by the Bank of Algeria blocking Algerian lenders from “engaging in any foreign banking transactions on behalf of Djezzy,” Sawiris said.
Algerian Finance Minister Karim Djoudi declined to comment on the latest filing, telling reporters in parliament that Sawiris went to international arbitration a year ago and “this is not new.” He said discussions on Djezzy were ongoing.
Emmanuel Gaillard, head of Shearman & Sterling’s international arbitration practice, which represents the Algerian government in the dispute, said in an e-mail that his firm would “defend the case vigorously, including by showing that Weather Investments’ claim cannot proceed due to a lack of jurisdiction.”
Orascom Telecom won the bid to build Algeria’s telecommunications infrastructure in 2001 and invested $3 billion, Weather Investments said.
“This is a bad development not just for us, but for all foreign investors in Algeria,” Sawiris said in the statement. “The Algerian regime stands as a stark exception to the region which, on the whole, is beginning to engage global investors” and implement reforms.
Weather Investments said its claim has been registered by the International Center for the Settlement of Investment Disputes, a resolution branch of the World Bank based in the U.S.
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