(Adds Dutch parent's plan to tender for OCI shares, background,
CAIRO, April 30 Egypt's Orascom Construction
Industries (OCI) said on Tuesday the tax authority had
exonerated it of wrongdoing after it agreed to pay 7.1 billion
Egyptian pounds ($1.02 billion) to resolve a tax dispute.
The settlement with the Egyptian Tax Authority (ETA) should
pave the way for OCI to go ahead with a plan for its
Dutch-listed parent company to publicly tender for OCI shares
listed on the Egyptian stock exchange, OCI said.
Egyptian authorities had been investigating claims the
company failed to pay some 14 billion pounds of taxes on the
2007 sale of Orascom Building, an OCI subsidiary, to French firm
OCI said it had agreed to pay the 7.1 billion pounds in 10
installments over five years.
Authorities had also lifted a travel ban on the firm's chief
executive officer, Nassef Sawiris, and his father, which the
government imposed in March as part of the investigation, it
"The settlement amount was reached following months of
challenging negotiations," OCI said in a emailed statement.
"In conjunction with this agreement, the ETA has determined
that there was no tax evasion by the company and is exonerating
management and the company from any wrongdoing related to the
Dutch-listed parent company OCI NV announced an acquisition
deal in January under which holders of OCI's GDRs (global
depositary receipts) were offered shares in OCI NV, while
holders of the firm's Egypt-listed ordinary shares got the
option of cash or OCI NV shares.
The deal might lead OCI to leave the Egyptian exchange.
Egyptian Finance Minister Al-Mursi Al-Sayed Hegazy told a
news conference earlier on Tuesday there were no negotiations
under way with the firm over the dispute and that the issue had
been referred to the public prosecutor.
The prosecutor dropped the tax evasion case soon after
receiving it, a source with knowledge of the issue said.
($1 = 6.9343 Egyptian pounds)
(Reporting by Ehab Farouk; writing by Maggie Fick and Patrick
Werr; Editing by James Jukwey and Mark Potter)