How African MTN Allegedly Bribed Its Way Into Iran

For a South African telecommunications company, it represented a unique chance to seize what its chief executive called "one of the most significant 'virgin' mobile opportunities in the world."

But the location, he added in a memo marked "Strictly Confidential," was "no normal country."

The country was Iran. The company, MTN Group, was widely seen as a post-apartheid success story. Now, seven years after MTN and its local partners won a lucrative licence to launch a new Iranian mobile-phone carrier, the deal is swirling in controversy and raising embarrassing questions for South Africa at a time when the Western world is trying to contain Iran's nuclear ambitions.

Turkcell, an Istanbul-based rival, in March filed a federal lawsuit in Washington alleging MTN bribed its way into Iran and stole the licence from under it. It is seeking at least $4.2 billion in damages. An elite South African police unit called the Hawks is investigating. MTN has denied the allegations and called Turkcell's demands "extortionate."

MTN has appointed a prominent judge in London to conduct an internal probe of the allegations surrounding what has become one of its most valuable holdings. In 2011, MTN generated $1.3 billion, or 9 percent of its annual revenue, from its Iran venture, the company reported.

The core of the Turkcell case is the sworn testimony of Chris Kilowan, a former MTN executive who guided the company's bid to win the Iranian licence and has emerged as the key witness. He has turned over to Turkcell's attorneys some 7,000 pages of internal MTN documents related to "Project Snooker" - MTN's code name for its effort, named after a billiard game popular in Britain. "We said we are going to snooker Turkcell," Kilowan testified.

MTN, now Africa's largest mobile phone carrier, has called Kilowan "a disgruntled former employee" and has termed his allegations "outlandish."

During three days of sworn testimony in Washington that concluded May 2, Kilowan presented an extraordinary tale of a multinational company so intent on winning a contract, it was willing to help Tehran obtain military hardware, sway South Africa's votes before the United Nations' International Atomic Energy Agency and pay bribes, sometimes in the guise of consulting fees. MTN has yet to give evidence in the case, which is continuing and may go on for years.

Kilowan admitted fronting $200,000 of his own cash to reward South Africa's then ambassador to Tehran, Yusuf Saloojee, for assisting MTN in Iran. Kilowan says it was MTN's later refusal to pay him back that convinced him to cooperate with Turkcell. Saloojee, now South Africa's ambassador to Oman, didn't respond to requests for comment. Other South African officials denied Kilowan's allegations.

Reuters and Africa Eagle have reviewed the entire transcript of Kilowan's deposition, most of which has not been made public, as well as numerous other exclusive documents.

The dramatic testimony comes at a time when the Western world is trying to contain Iran with forceful sanctions intended to deter its nuclear development programme, which Iran maintains is peaceful. After choking off Iran's banks from the international monetary system, the European Union plans to implement an embargo on Iranian oil and a ban on insuring oil cargoes on July 1.

The sanctions haven't been leak-proof. Reuters has documented in a recent series of articles how Iranian telecoms - including the MTN joint venture - have managed to obtain embargoed U.S. computer equipment through a network of Chinese, Middle Eastern and Iranian firms. The Turkcell-MTN case offers further evidence that there are always companies willing to do business with a country even when it becomes an international pariah.

That goes for some governments as well. South Africa's ruling party, the African National Congress, has long maintained close ties with Tehran, which during the 1980s supported the anti-apartheid underground and imposed a trade boycott on the white-ruled government.

In an interview last month with Reuters, Gwede Mantashe, the ANC's secretary general, said he had "no problem at all" with South Africa "trading anything" with Iran today, including weapons.

News Source: Reuters