Business | Telecoms
US presses Turkcell to drop Syria deal
The United States is putting pressure on Turkish mobile phone operator Turkcell to abandon a $1 billion takeover of a cellphone company owned by a Syrian tycoon targeted by US sanctions, diplomats and Arab financiers said yesterday.
- Reuters
- Published: 21:43 April 30, 2008
Damascus: The United States is putting pressure on Turkish mobile phone operator Turkcell to abandon a $1 billion takeover of a cellphone company owned by a Syrian tycoon targeted by US sanctions, diplomats and Arab financiers said yesterday.
The US Treasury Department is warning American investors in Turkcell, which is listed on the Istanbul and New York bourse, about the company's plan to buy the leading Syrian operator Syriatel, they said.
Syriatel is at least 69 per cent owned by Rami Makhlouf, the cousin of President Bashar Al Assad. Washington imposed sanctions on Makhlouf in February for alleged involvement in public corruption in Syria as relations between the Damascus government and the United States plummeted.
"The US Treasury communicated indirectly with US investors in Turkcell to reconsider the deal and hinted that there could be legal implications of doing a business transaction involving a huge amount of dollars upfront with Rami Makhlouf," one of the diplomats said.
The sanctions explicitly state no US citizen can do business with Makhlouf. Several Turkcell executives have American citizenship and hold shares in the company, industry sources said.
Denial
Makhlouf, 39, has denied the US charges, saying he does not have assets in the United States and his businesses that employ thousands of Syrians are legitimate.
"America is serious about making the sanctions against Rami stick. The way the Treasury is applying the pressure is through whispering to investors' ears," said the diplomat.
Makhlouf, Syria's most powerful businessman, stands to receive close to an estimated $1 billion in cash if the deal for Turkcell to buy most of his shares goes ahead. The US pressure has contributed to the delay in the deal, the sources said.
Turkcell said last month that "any possible US citizenship" by its management would not affect the talks, despite the sanctions against Makhlouf, which were imposed while the deal was being negotiated.
"We are aware of the situation between the United States and Syria. But since Turkcell is a Turkey-based company and there is no legal restriction on the purchase of Syriatel, the situation does not have any impact on the talks," Turkcell said.
Sureyya Ciliv, Turkcell's chief executive, said in late February that he had expected to complete talks with Syriatel in a month.
An Arab banker said the deal could still be signed after Turkcell negotiated a lower price following the sanctions on Makhlouf.
"The Americans have succeeded in delaying the deal, but it is still on," the financier said.
Gulf mobile operator Zain has said it was also interested in buying Syriatel. Sa'ad Al Barrak, Zain's chief executive, last week described competition to acquire Syriatel as strong but he could not be drawn on the status of any talks.
A Turkcell-Syriatel deal would be one of the largest in the region's telecom sector.
The Americans have succeeded in delaying the deal, but it is still on."
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