South African Elite police, Hawks, raided South African largest telecommunications company, MTN Group, and seized documents from the offices. They also raided the offices of top law firm Webber Wentzel, MTN’s external legal counsel. This is the latest move in the decade-long battle between Africa’s largest telecom company and Turkcell after Turkey’s Turkcell launched a $4.2 billion lawsuit over a disputed Iran license to MTN.
According to reports, the Istanbul-based Turkcell is claiming damages against MTN as a result of the telco having acquired a 49% interest in Irancell in 2005. The Turkish company says MTN engaged in illicit activity to obtain a GSM license in Iran.
What is MTN saying about this?
According to a statement released by MTN, the hawk “Visited both MTN and MTN’s external legal counsel to obtain documents relating to aspects of the Turkcell litigation pursuant to MTN’s original self-reporting of this matter and the Turkcell complaint.”
“MTN remains of the view that Turkcell’s claim is opportunistic, an abuse of the process of Court, baseless and without merit,” the company said in a statement, adding it was cooperating with authorities.
“When the allegations made by Turkcell were first raised, MTN appointed an Independent Special Committee under the Chairmanship of the eminent international jurist, Lord Leonard Hoffmann, to investigate the allegations. Lord Hoffmann embarked upon a thorough and exhaustive analysis of the investigations. He found that Turkcell’s allegations, which rested entirely upon the evidence of one Christian Kilowan, were all ‘a fabric of lies, distortions, and inventions’; and that Mr Kilowan was shown to be ‘a fantasist and a conspiracy theorist’.
“Lord Hoffmann was also very clear in finding that he was entirely satisfied that there was no conspiracy between MTN and Iranian officials to remove Turkcell from the license process in Iran, that there were no promises made to procure the South African government to supply defence equipment to Iran or to support Iran’s nuclear policy, nor that MTN had advanced sham loans to its Iranian partners, nor indeed that any promises of payment to Iranian or South African officials were made or authorised by Nhleko or Charnley.”
Webber Wentzel’s side of the story?
“As a law firm, we are professionally prevented from providing any third party with information related to our clients’ matters. This is a requirement of our profession,” Webber Wentzel told News24 in an emailed response to questions. The company confirmed the Hawks arrived at its Sandton offices armed with a warrant on Friday “to seize documents related to a client involved in ongoing commercial litigation”.
“We are reviewing the lawfulness of the warrant and its execution by the Hawks on various grounds, including legal privilege. We ensured that the documents and information taken were sealed and will be kept by an independent third party, nominated by us, pending the outcome of an application to the high court. We will ensure that our client’s rights are protected and that legal privilege, which is a key principle to our profession, is upheld.”
MTN said in a statement on Tuesday that it was co-operating fully with the Hawks and that it “continues to defend itself in the long-running litigation where Turkcell is claiming damages against MTN”.
Did the Hawks confirm the raid?
The spokesman for Hawks Brigadier Hangwani Mulaudzi confirmed the raids happened on Friday. He also said that documents and equipment were seized at both offices.
“The Hawks serious corruption investigation, and the priority crime and specialized investigation units conducted a search and seizure operation at MTN and Webber Wentzel attorneys last week Friday on allegations of foreign bribery,” Mulaudzi said.
“It relates to an MTN/Turkcell international tender where multiple companies participated. A winning bidder was announced however, the process was allegedly overturned in favour of MTN.
“The purpose was to obtain documentation relating to the deal and further seize equipment linked to the matter. Investigations are still continuing.”
This is the fifth time that Turkcell has attempted to pursue legal proceedings against the telco for the same issue and all previous attempts have failed. Last year it was reported also reported that South African telecom firm and Africa’s largest telecom company filed court papers to have the R59-billion claim dismissed.
MTN, which is headquartered in Johannesburg, South Africa has over 230 million customers across Africa with a market cap of $17.8 billion. Currently, it has launched an IPO in Ghana in the hope of raising about $743 million at 0.75 cedis per share. If they succeed with this IPO, it will be regarded as the largest IPO in the West African country. In Nigeria, MTN is also looking forward to raising the sum of $500 million through an IPO listing on the Nigerian Stock Exchange (NSE) in order to dispose of about 30% stake in the business.
This is another scandal to hit the telco company after it was fined $915.4 million by the Nigerian Communications Commission (NCC) in 2015 for failing to register its subscribers after several warnings. This led to a fall in the company’s share as well as revenue. If this matter is not handled properly its shares and revenue might be affected again. It could also affect its current listing on the Ghana stock exchange as well as its expected listing on the NSE. MTN shares have continued to fall since the news broke.
Correction: An earlier version of this article said the Hawks raid on MTN’s office happened on Tuesday. The raid occurred on Friday.