Motorola settles Telsim lawsuit

19 Apr 2007

Motorola, the world’s second largest mobile handset manufacturer, has agreed a settlement of USD190 million in a class action lawsuit related to investments in Turkish mobile operator Telsim between February 2000 and May 2001. Shareholders of the US vendor alleged that it misled them about its business dealings with Telsim (which is now owned by the UK’s Vodafone Group). The lead plaintiff in the case, New Jersey’s state pension fund, which once held 2.7 million Motorola shares, alleged it was defrauded of USD7 million because Motorola inflated sales and income based on a deceptive relationship with Telsim. According to state Attorney General Stuart Rabner, Motorola touted its ‘lucrative equipment contracts’ with Telsim but failed to disclose that it loaned the Turkish company billions of US dollars to buy its phones and other communications equipment. Telsim defaulted on USD2 billion in loans in 2001, Motorola said in a filing with the Securities and Exchange Commission. As a result of a settlement with Telsim and Turkey’s government in 2005 it has so far collected USD910 million, according to the filing. Motorola continues to seek compensatory damages from the Uzan family, which owned Telsim before selling it to the government, which sold it on to Vodafone last year.

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