Greek Firm to Pay $8.25 Million in Taxes

A Greek telecommunications corporation, which bought an Armenian telephone company from a firm controlled by Orange County developer Barry Hon, has agreed to pay $8.25 million in settling a tax dispute with the Armenian government, a lawyer said Wednesday.

Under terms of the settlement, Hellenic Telecommunications Organization agreed to pay $3.25 million by Oct. 21, and $5 million more by Dec. 31, said Harold Reichwald, the Los Angeles attorney representing the Armenian government.

The dispute began last year over a business deal involving Trans World Telcom Ltd., an offshore company the government contends is run by Hon. Trans World sold its 49% stake in the Armenian telephone company, Armentel, to Hellenic Telecommunications for an estimated $55 million.

In a lawsuit filed in June, the Armenian tax ministry said Trans World and Hellenic Telecommunications failed to pay $8 million in capital gains taxes due after the sale, and owe an additional $10 million in penalties and back taxes. The government later dropped its effort to collect the punitive fees, focusing solely on recovering the capital gains taxes.

The Armenian court issued a judgment against Trans World for $8.4 million. But Trans World’s lawyers, who did not appear at the trial, said the court lacked the authority to resolve the dispute.

“Trans World, and its holding company, vehemently deny they owe any profit taxes,” said Robert Green, an Orange County attorney representing Trans World.

Trans World already has filed for arbitration through an international group in London. A hearing date has not been scheduled, Green said.

With Hellenic agreeing to pay $8.25 million, only about $160,000 would remain from the Armenian tax ministry’s claim, Reichwald said.

Trans World and Hellenic Telecommunications have been trying to work out contract disputes stemming from their deal. Officials at Hellenic have said the government should have collected the taxes last year, when the sale took place.

Indeed, Hon’s ties with Trans World also are in dispute.

Green said Hon doesn’t control Trans World, adding that the developer was not an officer or director of the company and did not receive any of the profits. In an earlier interview, another lawyer representing Hon said the proceeds from the deal went to charity.

But Reichwald said Hon was chairman and controlling shareholder of the company.

Hon is the founder of Laguna Hills-based Hon Development Co., which was the master planner behind Foothill Ranch. Hon, a resident of Monarch Bay, also is one of the builders hoping to win a development contract from the conversion of the Tustin Marine Corps Air Facility.