Turkish family accused of $4.7bn fraud by telecoms

The Uzans, who were not available for interview, have argued that the entire conflict reflects their suppliers’ unwillingness to face up to the losses stemming from the global crash in the telecommunications markets, recession in Turkey and a large devaluation of the Turkish lira. They say the main issue is whether Telsim’s problems were beyond their control and say that the terms of the agreements call for arbitration of such issues in Switzerland. But the Uzans are being sued in New York under state fraud laws and the federal racketeering law originally designed to attack organised crime. If Motorola and Nokia win, they will ask that the damages be tripled, as the racketeering law allows.
The problem, the phone companies say, is not one of contract interpretation but of deliberate deception, manipulation of the Turkish courts and financial skulduggery.
Although American courts tend to support arbitration clauses strongly in business contracts, Federal District Judge Jed Rakoff in Manhattan has ruled that Telsim’s contracts do not apply because the suits are against the people who control Telsim and not the company itself. Judge Rakoff also ruled that the contract allowed the suppliers to go to court rather than arbitration. The trial is expected to end quickly and decisively in the companies’ favour. Last May, when Judge Rakoff froze the Uzans’ New York assets, including eight apartments, he said "every preliminary indication" pointed to "repeated acts of fraud and chicanery", adding up to "a rather massive swindle". Since then, the Uzans have defied additional orders by Judge Rakoff. They have obtained a Turkish court ruling ordering that the New York suit be halted. None of the defendants or their lawyers plan to attend the trial. Judge Rakoff last year imposed contempt fines starting at $US100 million a month and doubling each month, but that ruling was stayed on appeal.