TeliaSonera Decides to Take Legal Actions Against Russia's Alfa

MOSCOW, Nov 28 (Prime-Tass) -- Swedish telecommunications operator TeliaSonera AB is initiating legal actions against Russia's Alfa Group as well as in Turkey claiming Cukurova Holding has made an unauthorized transfer of around U.S. $135 million from bank accounts of Turkcell Iletisim Hizmetleri A.S, TeliaSonera said in a press release Monday.

TeliaSonera said the proceeding against Alfa is for Alfa's tortious interference in the transaction between TeliaSonera and Cukurova. Tortious interference is a situation where a third party intentionally damages the contractual or other business relationship between two other parties. TeliaSonera said it views Alfa to have taken actions making Cukurova to breach an agreement entered into in March this year pertaining to Cukurova's sale of an effective 27% stake in the Turkish mobile operator Turkcell to TeliaSonera. The company said that according to official sources, Cukurova and Alfa have agreed on transactions relating to the shareholding and governance of Turkcell Holding and Turkcell. TeliaSonera has previously initiated legal proceedings against Cukurova for breach of an agreement to sell all its shares in Turkcell Holding to TeliaSonera and for breach of the shareholders' agreement regarding Turkcell Holding. TeliaSonera continues with full force to defend its rights in those proceedings, it said. The company said the transactions between Cukurova and Alfa have now materialized to such a degree that it has decided to take legal actions also against Alfa.

Immediately after the disclosure in March on the agreement between TeliaSonera and Cukurova about TeliaSonera's purchase of an effective 27% interest in Turkcell, Alfa confirmed its ambitions and actions to make an alternative transaction come through despite the existing agreement. TeliaSonera said Alfa has taken actions with the knowledge of the disclosed agreement between TeliaSonera and Cukurova and of the disclosed content of the shareholders' agreement between the parties, including inter alia a right of first refusal should any of the parties desire to sell shares in Turkcell Holding. Alfa has thereby according to TeliaSonera's view intentionally interfered with the relationship between Cukurova and TeliaSonera and made Cukurova to breach the March agreement and the shareholders' agreement. TeliaSonera will sue Alfa for tortious interference as Alfa in TeliaSonera's view, despite knowledge of TeliaSonera's agreement with Cukurova to purchase all Cukurova's Turkcell Holding shares and the shareholders' agreement regarding Turkcell Holding, interfered in those contractual arrangements in such a way that Alfa legally becomes liable for damages, it said.

TeliaSonera also said it has decided to take legal actions in Turkey following an unauthorized transfer from bank accounts of Turkcell Holding. TeliaSonera has reason to believe that the funds has been taken out by Cukurova to fund parts of Cukurova's payment obligation to the Turkish government, it said. TeliaSonera has been informed by a statutory auditor in Turkcell Holding that funds amounting to around $135 million have been transferred from the bank accounts of Turkcell Holding without proper authorization. TeliaSonera said it has reason to believe that the funds were taken out by Cukurova representatives to fund parts of Cukurova's payment obligation to the SDIF earlier this autumn. The company said the funds have been transferred without approval or knowledge of the board in conflict with the company's corporate governance rules. The transfer has been done to the detriment of the other shareholders in Turkcell Holding, mainly TeliaSonera and Yapi Kredi Bank. TeliaSonera will request the courts to secure evidence regarding the transaction and take other available legal actions, including a filing with the Turkish law enforcement authorities to investigate the matter. TeliaSonera's concerns remain about the implications for transparency and corporate governance in Turkcell, it said. It is TeliaSonera's view that the uncertainties around Turkcell ownership and corporate governance should be cleared before any further approvals of the planned transaction concerning shareholder interest in Turkcell between Cukurova and Russian Alfa Group, or the division of board seats between them, are given. TeliaSonera said it will continue to fight for its minority rights and for improvement of the corporate governance in Turkcell.

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Posted to the site on 28th November 2005