Motorola, Nokia sue Turkish telecom

January 28, 2002 Posted: 1917 GMT

NEW YORK (CNN/Money) -- Mobile phone leader Motorola and Nokia on Monday sued a Turkish telecommunications company and its controlling family, hoping to reclaim more than $3 billion.

In a joint lawsuit filed in a federal court here, the two companies said they lent more than $3 billion to Telsim Mobil, a Turkish telecommunications company controlled by the Uzan family, which they claim never had any intention of paying it back.

The money was intended as a business loan to be used for the purchase of base stations, switching equipment, telephones and other equipment needed for the development of a wireless communications network in Turkey, as well as payment toward the acquisition of a license from the Turkish government to develop this network.

Instead, the suit alleges that some of these funds were diverted for other purposes and to other entities controlled by the Uzan family. It also claims that the family intentionally devalued the collateral it put up for the loan, which the companies claim proves it never intended to pay it back.

The complaint says the loans were secured by pledges of Telsim shares in the event of a default.

Motorola (MOT: up $0.06 to $13.56, Research, Estimates), which is seeking more than $2 billion in compensatory damages, was pledged shares representing 66 percent of Telsim equity. Nokia (NOK: down $0.09 to $23.03, Research, Estimates), which seeks more than $700 million in compensatory damages, was pledged shares representing 7.5 percent of Telsim equity.

The lawsuit alleges that the Uzans manufactured transactions that allowed them to shift assets from Telsim to other Uzan entities over which Motorola and Nokia have no interest, substantially diluting the value of the pledged stock.

The complaint states that the "Uzans' true intentions were exposed when they stole the collateral for Motorola's and Nokia's loans by intentionally and illegally diluting the value of stock pledged as collateral for the loans."

It also says that in a recent act designed to further ensure that the money would never be recovered,  the Uzans "staged a meeting of the Telsim shareholders in which they eliminated the control rights of the shares pledged as collateral for the loans and took actions that would permit the transfer of Telsim's illegally obtained assets to a Turkish foundation, seemingly beyond the reach of Motorola, Nokia and the other creditors of Telsim."

The suit also claims that the Uzans have engaged in extortion and intimidation to avoid their obligations -- "including issuing threats, filing baseless criminal charges in Turkey against several Motorola and Nokia executives, and hacking into Motorola's computer system."