Telsim seeks $300 m from Motorola in arbitration

CHICAGO: Turkey's No. 2 wireless operator Telsim said on

Wednesday that it was seeking almost $300 million in damages from wireless

technology giant Motorola Inc., claiming the company had supplied it with bad

equipment. 

Telsim, whose owners -- Turkey's Uzan family -- are being sued by Motorola and its Finnish rival Nokia for almost $3 billion in U.S. federal court on fraud charges, said it had initiated arbitration proceedings with the International Chamber of Commerce's arbitration court in Paris. Telsim said the arbitration would be conducted in Zurich as stipulated by the 1998 contract between the two companies. It said it is seeking damages as well as replacement equipment and software from Motorola affiliates in the United Kingdom and Turkey.

Motorola called the action by Telsim a "ploy" to distract attention from the Uzans. "This is but one of many attempts by the Uzans to deflect attention from the fact that they have defrauded Motorola of more than $2 billion," Motorola spokesman Scott Wyman said in a statement. He said the claims that the equipment had problems were "either without merit...had been corrected in the ordinary course of business or were part of routine system maintenance or system enhancements."

In January, Motorola and Nokia sued several members of the Uzan family, charging them with borrowing almost $3 billion from the companies with no intention of paying it back. In their lawsuit, they allege fraud under U.S. anti-racketeering laws and seek repayment of their loans plus damages.

On Wednesday, Telsim, repeating claims it made in filings relating to the U.S. lawsuit, said Motorola supplied "sub-standard equipment" and repeatedly failed to address network failures that caused the damages. "Despite repeated assurances from Motorola that the problems would be resolved, they were not," Telsim Chief Executive Hakan Uzan said in a statement. "Despite assurances from Motorola that the equipment conformed to the contract standards, it did not."

Motorola recently wrote off the last of the $2 billion loan it made to Telsim, but Wyman repeated on Wednesday that the company would continue trying to recover the money.



© Reuters