MTN’s leaving the Middle East after 15 years of controversies. Here are the biggest.
- MTN announced it wants to leave the Middle East and focus on Africa.
- The company says it's already in advanced discussions to sell its Syrian operations, and wants to wrap up its exit over the next three to five years.
- Since 2005, there's been no shortage of controversy over MTN's operations in the region, including allegations of bribery, terrorism funding, and sanctions busting.
- These are some of the troubles MTN has faced in the Middle East.
- For more articles, go to www.BusinessInsider.co.za.
MTN has announced that it's leaving the Middle East and focussing on Africa. This brings an end to a long and, at times, controversial period for the company.
In its interim results for the first half of 2020, the group said it wants to leave the Middle Eastern market over the medium term and focus on a "pan-African strategy". That would see it exit operations in Iran, Yemen, and Syria.
"This is not some kind of fire sale. This will be done in a very orderly and responsible way over the next few years," MTN group CEO and president Rob Shuter told journalists.
According to its results MTN's operations in the Middle East contributed less than 4% to the group's earnings.
Meanwhile, operating there has sen the company accused of everything from bribery to busting sanctions, with sometimes far-reaching repercussions.
Here are some of the biggest controversies MTN has faced in the Middle East over the past 15 years.
It was accused of paying protection money to terrorist groups in Afghanistan
In December last year MTN, along with five other companies, was accused of paying protection money to terrorist groups in Afghanistan. The allegations were made in a lawsuit filed in Washington on behalf of 200 US soldiers and contractors killed and wounded in the region.
The company entered Afghanistan in 2006. The lawsuit accuses MTN officials of paying bribes to al-Qaida and the Taliban to avoid damaging MTN's cellphone towers.
The lawsuit alleges that that money provided "material support to known terrorist organisations" and violated US anti-terrorism legislation.
According to CNN, “the [accused] firms allegedly used a network of subcontractors and private security groups to transfer cash to Taliban agents, and in some cases dole out salaries to certain Taliban ‘guards’ between 2006 and 2014, while the group was allying with al-Qaeda and waging a violent campaign against US forces and their allies.”
Where is the lawsuit now? In its interim results, MTN says it filed a motion to dismiss the case in April, arguing that the US court does not have jurisdiction over MTN, and that the complaint "does not allege any conduct by MTN that would have violated the Anti-Terrorism Act".
In June, the lawsuit was amended and a fresh complaint filed, adding more allegations and bringing the total number of defendants to seven. MTN says it's going to file another motion to dismiss on pretty much the same grounds, and that's where matters stand right now.
It allegedly violated US sanctions targeting Iran – according to a former executive
In 2012, a former top executive of MTN Irancell, Chris Kilowan, accused the company of violating US trade sanctions targeting Iran.
“There’s nothing you can get in the U.S. or Dubai that you can’t get in Iran,” Kilowan told Reuters at the time. Kilowan was with MTN from 2004 to 2007.
Kilowan alleged that MTN, which began operating in Iran in 2004, was instrumental in importing telecommunications equipment from, amongst others, Hewlett-Packard and Sun Microsystems into Iran, despite strict US sanctions on technology in a bid to delay the country’s nuclear program.
MTN and the various associated technology companies denied the allegations.
It was accused of facilitating bribes to enter Iran
Kilowan pops up again as a key witness in an ugly and very long-running court case between MTN and Turkcell, a Turkish telecommunications company.
In 2012, Turkcell filed a $4.2 billion lawsuit in the US accusing MTN of using bribery to get a license to operate in Iran. Turkcell says it was the highest bidder in the tender to get the license, but that this was still awarded to MTN.
The Turkish group alleges that MTN bribed Yusuf Salojee, a previous South African ambassador to Iran, to influence the tender process, and that MTN also promised to support Iran’s nuclear program in exchange for the license.
MTN has repeatedly denied the allegations, but the case has dogged it for years. In 2012, it appointed a retired UK judge, Lord Leonard Hoffmann, to investigate the allegations. Hoffmann’s report exonerated MTN, and founded Kilowan, upon whose testimony the lawsuit was based, to be a “conspiracy theorist”.
In 2013, Turkcell withdrew its case from US courts. But in 2017 the Turkish company refiled in South Africa with the ultimate aim of going to trial. In 2018, the police priority crime investigation unit, the Hawks, raided the offices of MTN and law firm Webber Wentzel. In February 2019, the Hawks arrested Salojee, the former ambassador to Iran. He was later released on bail, and passed away in March.
The court case is still alive, but has been stuck in legal limbo ever since.
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