MTN officially denies Turkcell accusations after two-month silence

13 Apr 2012

South Africa’s MTN Group has taken steps to formally deny allegations from Turkish mobile giant Turkcell that it used corrupt practices and promises of weapons to win its wireless licence in Iran. An emailed statement from MTN CEO Sifiso Dabengwa marks the first time that the mobile operator has clearly rejected the two-month old charges from the Turks. Dabengwa has issued the following statement: ‘Any suggestion that Turkcell’s failure to obtain the licence was as a result of any alleged corrupt or improper practices by MTN is unfounded. The allegation that MTN influenced South African foreign policy with regard to its armaments and nuclear position is simply ludicrous and has already been dismissed by the South African government … It was Turkcell’s own failures to meet Iranian legal and commercial requirements that caused its exit from the licence process’.

In February this year MTN said that Turkcell, which was ignominiously stripped of Iran’s second cellular licence in 2005, informed the South African group that it planned to bring a case against it and the MTN Irancell unit, in a US court regarding the aforementioned issues; a USD4.2 billion lawsuit was duly levelled at the South African firm in a Washington court on 28 March. However, US legal experts have cast doubts over the likelihood of the case succeeding, pointing out that the issue has the most tenuous of links to the US, which may prove reluctant to interfere. Further, Reuters reports that Turkcell’s suit may also be hampered by the fact that it relies on a US law usually reserved for human rights abuses; the Alien Tort Statute (ATS) allows non-US citizens to make claims in the US for torts, or civil wrongs, committed against the law of nations or US treaties. The law, which dates back to the 18th century, has previously been used in cases of extrajudicial killing (murder for political reason), mass political rape and slave labour. Turkcell’s lawyer, Read McCaffrey of Patton Boggs, has suggested that the nature of the charges and the extent of MTN’s business in the US makes the case applicable to a US court.

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 Turkis 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