MTN faces Iranian bribery allegations from Turkcell

6 Feb 2012

South African telecoms giant MTN Group has confirmed that it faces a potential lawsuit in the United States relating to allegations that it bribed Iranian and South African government officials in order to secure the licence to become Iran’s second mobile phone operator back in 2005. In a statement issued to the press, MTN said that Turkcell – which was ignominiously stripped of Iran’s second cellular licence in 2005 – has informed the South African group that it plans to bring a case against it and the MTN Irancell unit, in a US court; to date, no such claim has been filed in the courts or served to MTN, however.

MTN’s statement said that Turkcell alleged the following: ‘In approximately 2004 and 2005, in an effort to cause the Iranian government to issue the second GSM licence to MTN rather than Turkcell, MTN made improper payments to an Iranian and a South African government official.’ Turkcell also alleges that MTN encouraged the South African government to take a favourable position towards Iran’s nuclear power development programme at a meeting of the International Atomic Energy Agency in November 2005. Hitting back at the claims, in an announcement issued to the Johannesburg Stock Exchange (JSE), MTN chairman Cyril Ramaphosa stated: ‘MTN has zero tolerance for corrupt and unethical business practices … The MTN board has decided to set up a special committee to consider these allegations in depth and to recommend appropriate action.’ Further, the MTN board believes that Turkcell’s allegations lack legal merit and also that ‘a US court would not have jurisdiction to entertain the claim’. The South African government has denied any involvement; Reuters quoted Foreign Ministry spokesman Clayson Monyela as saying: ‘South Africa’s foreign policy is independent and it cannot be influenced by anyone.’

The MTN Irancell licence has long been a bone of contention for Turkcell. According to TeleGeography’s GlobalComms Database, the Turkish group was awarded a 70% stake in then-Irancell in 2004, only to fall foul of a hard-line faction within the conservative-run parliament, which made allegations that the Turkish cellco had links to Iran’s bitter foe Israel, saying that it would pose a threat to national security if it gained access to phone lines. Turkcell promptly saw its stake reduced to 49% after the hasty unveiling of new foreign direct investment (FDI) laws, amid rumours that the Iranians were secretly lining up MTN, the runner-up in the original 2003 tender, to replace Turkcell. After being stripped of its licence, the Turkish firm went on to instigate legal proceedings against the Ministry of Information, Communications & Technology (MICT), and in 2008 Turkcell commenced international arbitration proceedings, which are still pending, against Tehran.

Iran, South Africa, MTN Group, MTN Irancell, Turkcell