MTN wins long ugly legal battle against Turkcell

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Turkish telecommunications group Turkcell’s long-running litigation against MTN over a disputed licence in Iran has been dismissed by the high court with costs – a significant victory for the South African-listed group.

The litigation, over a dispute that goes all the way back to 2005, saw Turkcell suing MTN for US$4.2-billion in damages. Over the years, Turkcell accused MTN of paying bribes to secure an operating licence in Iran in late 2005. MTN won a 49% stake in MTN Irancell. Turkcell, which was also pursuing the Iranian licence, claimed it lost out to MTN after the latter paid bribes and other inducements to secure the lucrative stake.

Turkcell first filed papers in the high court in South Africa in November 2013. It also sought damages from former MTN Group CEO Phuthuma Nhleko and former director Irene Charnley, both of whom were intimately involved in the negotiations with the Iranians to secure the Irancell license.

Previous attempts by Turkcell to resolve the matter through international arbitration failed. The company approached the South African courts after a legislative change affected the jurisdiction of a US court from which it had earlier sought relief. It alleged in its application to that court that MTN had conspired with Iranian officials to oust it from the successful consortium that bid for the licence and take its place by promising to use its influence with the South African government so it could procure defence equipment and garner support for its nuclear development programme at meetings of the International Atomic Energy Agency.

Turkcell’s legal challenge came despite the findings in 2013 of the Hoffmann Committee, appointed by MTN in 2012, which cleared the South African group of wrongdoing in Iran. That committee, chaired by South African-born former senior British jurist Leonard Hoffmann, found there was no conspiracy between MTN and Iranian officials to remove Turkcell from the bidding process. Indeed, the committee found that Turkcell’s allegations were a “fabric of lies, distortions and inventions”.

It cleared MTN, Nhleko and Charnley of wrongdoing. Lord Hoffmann found that MTN made no payments to South Africa’s then ambassador to Iran, Yusuf Saloojee, and neither Nhleko nor Charnley authorised former MTN Irancell director Chris Kilowan to promise him anything, as Turkcell had alleged. Kilowan’s allegations form the basis of Turkcell’s claims, but the committee found his evidence to be “unreliable”.

On Thursday, reacting to the high court judgment, MTN said it is “delighted” at the outcome of the legal proceedings in Johannesburg.

“Through various communications since 2013, MTN shareholders are aware that Turkcell, and Turkcell’s wholly owned subsidiary, East Asian Consortium (EAC), instituted legal action in the high court of South Africa against MTN Group and certain of its subsidiaries in 2013. In that action, Turkcell and EAC sought substantial damages from MTN pursuant to allegations of impropriety in the award of the first private mobile telecoms licence in Iran.

“During November 2020, Turkcell withdrew as a plaintiff, leaving EAC as the sole plaintiff in the action against MTN. In a judgment handed down by the high Ccurt of South Africa on 30 November 2022, EAC’s action against MTN has been dismissed with costs, putting an end to the Turkcell litigation.”

TechCentral has reached out to Turkcell for comment and will update this article if and when the company provides feedback on this latest development.

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