T-Mobile gets dragged into Polish phone fray

PARIS — After clattering through European courtrooms from London to Warsaw, a brawl between France's Vivendi and Germany's Deutsche Telekom burst into the United States on Tuesday — also bringing Bellevue's T-Mobile USA into the fray — as the seven-year fight over Central Europe's leading mobile operator got dirtier.

Vivendi announced it had filed a $7.5 billion suit in U.S. court in Seattle to press accusations that Elektrim, its former investment partner in Poland, conspired with Deutsche Telekom to cheat the Paris-based entertainment and telecommunications company out of a multibillion-euro investment in Polish cellular network PTC.

In a rare step, the suit against Deutsche Telekom, its T-Mobile subsidiary and controlling Elektrim shareholder Zygmunt Solorz-Zak was filed under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act — a law enacted to combat organized crime.

The ownership dispute goes back to 1999, when Vivendi began investing a total of more than $2.5 billion in a joint venture with Elektrim intended to control PTC through a 51 percent stake. At that stage, Deutsche Telekom already owned just less than a quarter of mobile operator PTC.

But the French company has been left empty-handed after billionaire Solorz-Zak declared the agreement void without refunding the cash — a decision Vivendi has failed to overturn in dozens of court and arbitration hearings since.

Deutsche Telekom now claims to own 97 percent of PTC after making an initial $753 million payment to Elektrim as part of an agreement to acquire the disputed holding from the near-bankrupt Polish conglomerate.

"The takeover of PTC is the result of a scheme of fraud and collusion initiated by T-Mobile and Elektrim to deprive us of a huge amount of money," Vivendi CEO Jean-Bernard Levy said at a news conference in New York.

Deutsche Telekom dismissed Vivendi's new lawsuit as an "absurd and desperate" publicity exercise.

"The company is repeating old accusations with which it has been unsuccessful before courts in Poland and Austria, as well as an international court of arbitration," Deutsche Telekom said in a statement.

Vivendi and Deutsche Telekom disagree over a 2004 arbitration-panel ruling that annulled the agreement underpinning the Vivendi-Elektrim joint venture. Vivendi believes subsequent court decisions have annulled the Vienna panel's decision, but Deutsche Telekom maintains that it stands.

The German telecoms operator successfully argued at arbitration that Elektrim had broken a pre-existing shareholder pact by seeking to sell PTC shares to Vivendi without first offering them to Deutsche Telekom.

"The shares belonged to Elektrim the whole time," said Deutsche Telekom spokesman Andreas Leigers in a telephone interview. "They [Vivendi] paid money for something and in the end were left with nothing. But in the end, is that our problem?"

Elektrim has filed for bankruptcy protection in the Polish courts. Company spokeswoman Ewa Bojar said a decision was expected on Friday.

Vivendi's U.S. lawsuit centers on the role of Elektrim and its chief representative on the PTC board, Solorz-Zak, who switched sides in 2004 to back Deutsche Telekom against Vivendi.

Seeking damages of three times its PTC investment, as allowed under RICO, Vivendi accuses Solorz-Zak and Deutsche Telekom of conspiring to corrupt Elektrim and unlawfully hijack PTC — all the while stalling for time by repeatedly entering talks on a settlement that Deutsche Telekom never intended to conclude.

"We believe that T-Mobile has induced Elektrim to betray us to help T-Mobile take over our investment, and we believe this is illegal," Levy said.

The company is seeking a "very simple remedy," he added. "Give us back our money or our shares."

Vivendi attorney Lanny Davis said the suit cites "at least 10" telephone calls and e-mails as evidence of a conspiracy among Deutsche Telekom and Elektrim officials. The latest suit was filed in the United States, he said, because many of the conspiratorial contacts were made over U.S. communications networks and because T-Mobile has a significant U.S. commercial presence and a New York share listing.

A decision by the U.S. court to hear the case would also hand Vivendi greater powers to subpoena witnesses, documents, phone records and e-mails than it has hitherto enjoyed under weaker European discovery powers. That process would likely take a year, Davis said.