Djezzy to face $193mln central bank demand-source

Djezzy to face $193mln central bank demand-source

Djezzy violated Algeria's foreign exchange rules.

October 8, 2010 10:37 by Reuters

Algeria’s central bank has decided to demand $193 million in compensation from Orascom Telecom’s local unit Djezzy because it violated foreign exchange rules, an Algerian telecoms official source said.

The fate of Djezzy is seen as a potential hurdle to Orascom owner Naguib Sawiris closing a $6.6 billion deal announced this week to sell his telecoms assets to Russia’s Vimpelcom .

“The Banque d’Algerie is to demand $193 million from Djezzy because it violated Algeria’s foreign exchange rules,” the source said.

The demand, which should be notified to Djezzy “in the coming days”, comes after Russian President Dmitry Medvedev failed during a visit to Algiers this week to persuade Algeria to allow a sale of the Egyptian firm Orascom Telecom’s Algerian unit.

The source said that Djezzy will also have to pay a fine in addition to the $193 million, which is considered to be the loss suffered by the central bank as a result of the alleged breach of foreign exchange rules.

“Banque d’Algerie will also take legal action against Djezzy,” the source said.

No one at Banque d’Algerie was immediately available to comment.

Orascom Telecom said a week ago that Djezzy’s chief executive had been called in by police for questioning over allegations that the firm violated Algerian foreign exchange rules.

“We answered all the questions which the investigator raised, and hope to have cleared any doubts on the part of the third-party investigator,” Orascom Telecom’s spokeswoman Manal Abdel-Hamid said.

She said the case would be referred to the court if the investigator failed to decide, and that it was up to the court not to the Banque d’Algerie to solve the dispute.

(Reporting by Lamine Chikhi; Additional reporting by Dziadosz Alexander in Cairo; Editing by Greg Mahlich)