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French Version

Lahoud refuses to bend to cell firms' demands - Daily Star

President Emile Lahoud rejects giving in to the cellular companies' demands on their arbitration with the state, backing some of the proposed amendments by Telecommunication Minister Jean-Louis Qordahi to the arbitration files.
A source close to Baabda Palace told The Daily Star on Sunday that "President Lahoud simply refuses to set a deadline for the arbitration or compromise on the new venues for the court hearings.

" The source argued that some media have given the wrong impression that the president gave up the state's rights regarding arbitration. "It should be clear to everyone that Lahoud always backed Qordahi in his decision to obtain the best conditions for the state in its long-running dispute with the companies," the source said. The source was alluding to Qordahi's stand on the original transfer agreement that was reached by the Cabinet.

Lahoud and Qordahi, the source continued, were surprised when the Higher Privatization Council submitted a document to the president calling for a date for arbitration and also proposing the venues of the hearings. "When Qordahi received the new document from the Higher Privatization Council, the minister wrote down some remarks," the source said. He added that the Telecommunications Ministry planned to add new evidence in the state's case against the companies, including information on prepaid cards. "The companies did not disclose the true revenues from prepaid cards, which some estimate at over $1 billion," the source said.

The government gets a certain percentage of the gross revenues of Cellis and LibanCell each year. In 2002, the government is expected to get more than $300 million from both companies. The assurances from Baabda came amid reports that the companies are likely to accept the terms set by the minister despite initial reservations.

The chairmen of both Cellis and LibanCell refused to sign the amendments made by Qordahi on Wednesday, asking for more time to consider the proposals. According to the new agreement accepted by both parties, Cellis, which is mainly owned by FranceTelecom, will be entitled to defend its case in Geneva under international arbitration rules. LibanCell, the fully owned Lebanese company, will defend its case in Beirut.

Some telecom experts argue that Cellis and LibanCell do not want to "rock the boat" now because they will have too much to lose, adding that even Prime Minister Rafik Hariri seemed ready to back the president in his decision on arbitration. "The companies will probably be persuaded by some influential politicians to accept the new amendments or risk new measures by the state," said the chairman of Sodetel, Louis Hobieka. Qordahi, who added some amendments to the original agreement, stressed that the firms have no right to set a date for the arbitration nor to choose the venue for the court hearing. "With the help of a team of experts and lawyers, Qordahi made these amendments … to ensure the rights of the state," the source said. Lahoud and Qordahi fear that the state will be unable to build a new case against the companies if they agree on a quick date for arbitration.

The Telecommunication Ministry is pressing the companies to sign the new amended arbitration deal in order to proceed with both the auction and tender of the two cellular licenses. The ministry also wants the companies to sign the Master Transfer Agreement, which allows the state to repossess all the networks. Cellis and LibanCell will both get around $180 million from the state in return for the net value of the equipment. The transfer agreement is crucial if the state wants to offer the licenses for new companies.

The former government of Salim Hoss had asked the two operators to pay $600 million for allegedly violating the build-operate-transfer contract that was signed in 1994. Hoss' government claimed that both companies have exceeded the number of subscribers allowed. Cellis and LibanCell share 800,000 subscribers between them.

In an interview with a television station over the weekend, Qordahi vehemently denied that the new amendments would deal a blow to the "Paris II" donor conference, which secured over $4.3 billion in soft loans for Lebanon. He also denied rumors that he would resign. "The decision to stay in the Cabinet or not is in the hand of the president only," the minister said. "We want to start a new arbitration procedure to allow us more time to build a new case," Qordahi said.

But the minister refused to speculate on the possible verdict of the arbitration.

Beirut 16-12-2002
Osama Habib
The Daily Star

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