Turkish nationals seek at least $750 million from Switzerland

Businessman-turned-politician Cem Uzan in a photo taken in 2004 Keystone

Swiss authorities say two Turkish nationals are determined to press claims against the Swiss government, demanding compensation for alleged damages of at least $750 million (CHF757 million).

It’s a long-running, complex tale that goes back decades earlier. Between 1998 and 2003 the pair and others allegedly embezzled some $6.5 billion of investors’ money from a Turkish bank run by the powerful Uzan family and fraudulently obtained some $2 billion in credits from Motorola and Nokia, according to Turkish prosecutors pursuing charges of fraud, embezzlement and money laundering.

The latest dispute with the Swiss government revolves around a bilateral investment protection agreement concluded in 1988 between Switzerland and Turkey, according to a statement from the Swiss justice ministry, which did not name the two Turkish nationals.

But the justice ministry, responding to a request from swissinfo.ch for information about Cem Uzan after several news media outlets had reported on the arbitration case, said on Monday that the pair claim that Switzerland “illegally disposed of the contents of bank accounts in Switzerland” that should have been under their control.

In 2009, Motorola and Nokia, two of the world’s biggest mobile phone makers, won a $4.8 billion judgment against members of the billionaire Uzan family in a lawsuit filed in New York. The Uzans, who built a fortune out of a small construction company more than 50 years ago, had denied wrongdoing and claimed the case should have been handled through arbitration in Switzerland.

Turkish and Swiss authorities have been cooperating on the investigation. But last year, Turkish businessman and former media mogul Cem Uzan and another of his business associates filed a dispute notice with a US-based international arbitration board.

The one-year period for consultations before the International Centre for Settlement of Investment DisputesExternal link expires this coming April 7, when Uzan can take the next step against Switzerland. In November, the Swiss cabinet instructed the justice ministry to represent Switzerland in the case.

The American-educated Uzan also has used the arbitration board, which is based in Washington, to seek $38.5 billion in compensation claims against the Turkish government, which seized his family’s money and hundreds of their companies in 2004 because of billions of euros worth of unpaid debts.

Political asylum

Uzan, as head of the nationalist Youth Party, also was a leading challenger to Recep Tayyip Erdogan, who rose to prime minister in 2002 with a party rooted in Turkey’s Islamic movement. But Uzan’s political star rose just as his family’s business empire collapsed with Erdogan’s government revoking the family’s right to run two power plants and taking control of two of the family’s banks.

Erdogan had forced Uzan to flee for France, where he was given political asylum. Turkish authorities later indicted Uzan in absentia on racketeering charges and sentenced him to 23 years in prison.

The arbitration case filed in Washington by Uzan – which some Swiss newspapers referred to as a clash between Switzerland and the “Berlusconi of the Bosphorus” – had not been previously disclosed. Uzan’s French lawyer did not immediately respond to a request for comment on Monday.

“They demand compensation for damages of a minimum amount of $750 million,” justice ministry spokesman Folco Galli said in a statement to swissinfo.ch on Monday.

“Switzerland cannot unilaterally reject the request for arbitration,” he said. “If it wants to oppose the objections raised, it must do so before the arbitration tribunal. Until now, there has been no discussion with the applicants.”

He added that Switzerland believes the case falls outside the scope of the bilateral investment protection agreement, but is preparing for several scenarios that include the possibility of the case going on for an additional “process of several years”.