Lebanon’s
cell-phone saga - part II
Slicing the cake !
By Anwar Wazen
Dec 5th 2002
In his 1999 audit report ,The public auditor brought to light 24
financial wrongdoings and irregularities committed by the two cell phone
companies Celis and Libancell . By managing and monopolizing the lucrative
cell phone market, the two companies were able to overcharge their customers
and shortchange the Lebanese Treasury of hundreds of million dollars since
1994. Following the audit, Selim El Hoss’s Government claimed from the two
cell phone companies 300 million dollars each in penalties for breach of
contract . The two companies asked for arbitration . The higher judicial
council (Majlis Al Shoura) declined their request.
Mr R.Hariri was reappointed prime minister in the year 2000 . Mr Hariri
has a vested interest in the two companies. Libancell is fully owned by Mr
Dalloul , his son- in-law , and Taha Mikati who is an associate of Hariri
owns one third of Celis . The remaining two thirds of Celis are owned by
France Telecom . In order to get the two companies off the hook , Prime
Minister Hariri decided in June 2001 to cancel unilaterally the BOT
contracts of the two companies . By doing so , Hariri gave The two companies
the chance to sue the Government in international courts. Nevertheless ,
they were allowed to continue running the cell phone network and keep
siphoning government dues until the 31st of august 2002, the date
at which the Ministry of Telecom took over the sector. The two companies
were given a management mandate to continue running the network at an
overpriced sum ( a monthly 8 million US$ per company ) . The sums due until
the 31st of aug 2002 by the two companies to the Lebanese
Treasury, are conservatively estimated at 1.2 billion dollars.
Two days before Paris II , a secretive meeting related to the cell phone
privatisation was held on the 21st of November at 5 pm at the
offices of France Telecom in Montparnasse tower , Paris. Hariri was
represented by Ghazi Youssef , Secretary General of the High Council of
Privatisation, Taha Mikati ,who owns 32% of Celis ( one of the two Lebanese
cell-phone companies) and a close associate of Hariri , Samir Hanna for the
Lebanese Banque Audi group, France Telecom that owns 68% of Celis had its
own representative in this meeting . It was agreed that France Telecom’s
shares in Celis would be re-allocated as follows before liquidating Celis
and creating a third cell phone company :
55 % to Hariri group
11% to Banque audi Group
11% to T. Mikati ( who already owned one third of Celis)
11% to Michel Murr & family ( His son Elias , the minister of interior
and son in law of President Lahoud )
12% remains with France Telecom (1)
Michel Murr and Banque Audi denied their participation to this meeting
(2)
On November 28th few days after returning from the Paris II
gathering Hariri had a 90 minutes closed door meeting with President Lahoud
.The Council of Ministers was asked to approve what was agreed upon between
Hariri and Lahoud. the ministers rubber stamped the followings:
1) Against the ruling of the higher judicial consulataive council (Al
Shoura Majlis) the Government decided to refer the dispute to international
arbitration and to suspend the collection of 600million US$ from both
companies for violating the BOT contracts signed in 1994. As a result ,
Celis and Libancell agreed to sign the "Master Transfer deed" allowing the
government to take over the networks and auction the two licences and
facilities . No guarantees whatsoever were solicited from the two companies
to protect the rights of the Lebanese Treasury.
2) The government agreed to compensate in the form of dollar denominated
T.bills bearing 10% interest and maturing by june 2003 , US$ 178 million as
follows:
a) To Celis : US$ 118 million representing the book value
b) To Libancell US$ 60 million , book value
c) We are still not clear as to whether an additional amount of US $ 50
million was approved or will subsequently be approved by Hariri and Lahoud .
This amount consists of US$ 5 million to be paid to each company as
incidental costs (???) and US$ 20 million as employees’ compensation (???).
Following the cabinet decision , an uproar was voiced by the ex telecom
minister Issam Naaman who rightly questioned the lack of respect of the
current Government for the judiciary and its rulings. He also questioned the
decision to settle the amounts using T.Bills at 10% surcharge that
contradicts the results of Paris II donors conference through which Lebanon
was able to secure US$ loans at 2 to 4% interest rate. Naaman criticized
Hariri and Lahoud’s decision to guarantee the T.Bills with the operating
revenues of the cell phone operation when the two companies denied the
telecom ministry’s request for a bank guarantee in return for suspending
collection in favor of arbitration. MP G.Kassardji said the "sharing of
spoils" between Hariri and Lahoud is evident on many occasions . Kassardji
reckons that the political bickering that took place last spring and summer
over the cell phone privatisation was not intended to protect state or
public interests , " it was aimed at plundering hundreds of millions of
dollars by responsible officials"(3)
In the case of Celis and Libancell , the two companies secured US$178
million already . They will most probably be liquidated once they cash this
settlement . Thereafter,the Lebanese Treasury will be chasing ghosts .
According to Mr Qordahi, the minister of telecommunications, his efforts
in protecting the interests of the Lebanese Treasury were often thwarted by
direct interference and hindrances from Hariri’s office . Hariri blocked
payments of fees to the attorneys appointed by Qordahi to look into the
cell-phone file. Qordahi’s appointed attorneys were only paid their dues
when they accepted to relinquish the file in favor of other attorneys close
to President Lahoud (4). Qordahi has been at loggerheads with one of
hariri’s lackeys : Ghazi Youssef ,secretary general of the Higher
Privatiation Council (HPC)
The HPC is the regulatory body that oversees and sets up the terms and
conditions for privatising the public utilities . Ghazi Youssef, the
secretary general of this Council , was appointed to this highly sensitive
job by Hariri himself without going through the proper official
procedure.Ghazi Youssef represented Hariri’s interests at the secret meeting
which took place at France Telecom’s offices.Besides the cell-phone
privatisation ,other major utilities such as the electricity,water , airport
etc… will be governed by "made to measure" terms and conditions whispered by
Hariri to this official body. It seems obvious that the Prime Minister is
intending to secure a monopoly over the lucrative cell phone sector and
other important public utilities when the time comes for their privatisation.
President Lahoud , Michel El Murr and his son seem to be keen to secure
their share of the loot. Let us not forget the Syrians who are always the
first in line to claim their cut.
P.S
"Tell me how will you help Lebanon’s financial woes with your billions,"
said George W and carried on without waiting for an answer : " I heard that
your friend Fahd of Saudi Arabia spent two billion dollars on his last
European summer vacation" …After a minute of silence R.Hariri ventured :"Yes
, but that was from his private funds". "You know very well that in your
part of the world there is no such distinction between private and public
funds , isn’t it so ?"(5)
This conversation was leaked out to the Lebanese press after the meeting
of Prime Minister Hariri and President Bush at the White House a couple of
weeks ago . Mr President , you were absolutely on the mark . No wonder the
US refrained from contributing one single dollar at the Paris II donor
Nations’ gathering.
(1) Al-Anwar newspaper of the 4th Dec
2002
(2)Al-Anwar newspaper of the 5th of Dec
2002
(3) The Daily Star newspaper of the 30th
of novemer2002
(4) Ibrahim Al Amin editorial in Assafir newspaper
of dec 2nd 2002
(5) Ibrahim al Amin editorial in Assafir newspaper
of 26th november 2002
