The investigation is a welcome development, says DA shadow minister of defence and military veterans, David Maynier.

The Department of International Relations and Cooperation is launching an investigation into claims that SA's former ambassador to Iran, Yusuf Saloojee, accepted a bribe from MTN.

The claim has emerged from an ongoing legal dispute between SA's second cellphone operator and rival Iranian licence bidder Turkcell. The case implicates Saloojee in a $200 000 payoff – part of a greater claim that MTN employed underhanded tactics to acquire its GSM licence in Iran in 2005.

MTN has denied all allegations against it, including those of human rights violations, shady arms deals and bribery.

International relations and cooperation minister, Maite Nkoana-Mashabane, yesterday confirmed the department has instituted an investigation into Saloojee, who stands accused of accepting a payment of about R1.6 million towards the purchase of a home for himself in SA.

According to David Maynier, Democratic Alliance shadow minister of defence and military veterans, MTN allegedly paid the money to property attorneys Gildenhuys Lessing Malatji, in 2007.

Maynier says the department's announcement comes as a surprise, given that Nkoana-Mashabane previously snubbed the suggestion of an investigation. Nkoana-Mashabane said it was unnecessary to investigate the issue and that any evidence of “improper payments” should be referred to law enforcement agencies for further investigation.

“It is not clear why the department has done an about-turn, but the institution of this investigation is nevertheless a welcome development,” says Maynier.

Key witness claims

At the core of Turkcell's case is the sworn testimony of whistleblower Chris Kilowan, a former MTN executive who orchestrated the operator's bid to win the Iranian licence and has emerged as the key witness.

According to Reuters, Kilowan has turned over some 7 000 pages of internal MTN documents to Turkcell's attorneys. The documents are related to “Project Snooker”, which Kilowan testified was MTN's code name for its Iranian quest. “We said we are going to snooker Turkcell,” Kilowan testified.

Kilowan says he fronted $200 000 of his own money over to Saloojee for assisting MTN in Iran. According to Kilowan, when MTN later refused to reimburse him for the “reward” he bestowed, he decided to cooperate with Turkcell. Saloojee is now SA's ambassador to Oman. MTN officials have denied the allegations set forth in Kilowan's testimony.

Dismissal plea

The minister's announcement comes a week after MTN asked the US court, where the matter is being heard, to dismiss the $4.2 billion claim filed against the company by the Istanbul-based cellphone operator.

This, on the grounds that the Washington court has not got jurisdiction over the subject matter of Turkcell's claims, according to MTN.

Turkcell is expected to respond to MTN's dismissal motion by 1 August; MTN should then respond by 15 August and a court decision is expected later this year.

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According to former MTN Group president and CEO Phuthuma Nhleko, allegations that the MTN Group was involved in bribery and corruption in its Iranian dealings are “scurrilous and untrue”

 

In what has been an ongoing saga of allegations and denial, MTN has appealed to a US court to dismiss the $4.2 billion claim filed against it by Turkish cellphone operator Turkcell.

The motion to dismiss Turkcell's case, which is steeped in allegations of corruption on the part of MTN, in its acquisition of the second GSM licence in Iran in 2005, was filed on Monday. MTN holds a 49% stake in Iran's second cellphone operator, Irancell.

Turkcell has accused MTN of bribing both South African and Iranian officials, as well as soliciting the provision of weapons by SA to Iran, to acquire the permit. But MTN has repeatedly denied the claims, calling them “scurrilous and untrue” and the utterings of an “aggrieved competitor”.

According to MTN, the Istanbul-based operator's case, lodged with the Washington Federal Court, in March, is the latest of four legal claims launched by Turkcell, “[two of these] decided so far both being unsuccessful”.

Motion rationale

In its motion, MTN laid out its motivation for the dismissal of Turkcell's claim based on it being what it calls a “legally insufficient restatement of a case that Turkcell has already tried and lost”.

MTN says there is “no proper basis” for the claim to be taken up, for three reasons. Firstly, says MTN, the US court does not have jurisdiction over the subject matter of Turkcell's claim. “Turkcell has not alleged a violation of the law of nations as required under US law for the sort of claim Turkcell is seeking to bring in the US.

“Secondly, because Turkcell's arbitration against its former Iranian joint venture partner was recently dismissed by a Paris-based arbitral tribunal, Turkcell's US claim should be dismissed as already having been decided against Turkcell. The award precludes the claim now brought by Turkcell against MTN in the US courts for the alleged loss of the licence.”

Finally, MTN says the US court lacks personal jurisdiction over MTN and its subsidiary, MTN International (Mauritius) Ltd (MTN International), which is also named in the US action. “MTN and MTN International both lack sufficient contact with the US to be subject to the jurisdiction of the US court.”

Turkcell is expected to respond to MTN's dismissal motion by 1 August; MTN should then respond by 15 August. A court decision is expected later this year.

MTN says it is confident its motion will be accepted and the claim dismissed.

Africa's largest cellular company, MTN, saw its shares close 1.66% down on Friday, after the company announced late on Thursday that it faced possible legal action over its Iran operation.

The stock lost 230c, to close at R135.99 on Friday. Its 52-week high is R146.94, which it hit on 5 July last year, while its 52-week low is R119.69, which it closed at on 24 February last year.

MTN said late on Thursday that Turkish operator Turkcell told the company that it believes it may have a claim against the African operator, and will be filing a case in a US court. The claim is against MTN and one of its subsidiaries over a GSM licence in Iran.

The JSE-listed operator has a 49% stake in Irancell through one of its subsidiaries. Irancell, which has the second GSM licence in Iran, is 51%-owned and controlled by Iran Electronic Development Company.

MTN's Iran operation accounted for 33 million of its 158.6 million subscribers at the end of September last year.

Claim papers have yet to be filed, although the damages claim would be “material”. MTN says the claim lacks legal merit and any damages cannot be substantiated.

Baseless

Turkcell alleges that, in 2004/5, MTN “made improper payments to an Iranian and a South African government official” in a bid to secure the licence in Iran, says MTN's statement.

The Turkish operator also alleges that “MTN encouraged the South African government to take a favourable position toward Iran's civil nuclear power development programme at a meeting of the International Atomic Energy Agency in November 2005”, and that MTN enlisted South African government support for the provision of military equipment to Iran.

In a separate statement, MTN chairman Cyril Ramaphosa said “irrespective of the validity of Turkcell's claims, the very fact that such allegations have been made is serious”.

Ramaphosa said: “MTN has zero tolerance for corrupt and unethical business practices.” The company has set up a special committee to investigate the allegations, which will be chaired by local-born justice Lord Leonard Hoffman.

 

The Johannesburg Stock Exchange (JSE) advised clients that the start of all derivatives markets and the spot interest rate market were delayed this morning.

This was due to issues with the bourse's production infrastructure that these services operate on.

It adds that it is focused on restoring connectivity to halted derivatives market systems.

“The JSE SENS service is also affected and is being recovered. The exchange regrets the inconvenience to its clients and is focused on restoring the services as fast as possible. The JSE will keep the market informed of its progress.”

Local engine

Last month, the JSE paused trading on the equity market, because of issues with the international links between the exchange and London.

The bourse's trading engine is located in London. It is working on implementing a new trading system, which will be located in Johannesburg, and should go live in July. The new system is aimed at eliminating trading halts and increasing trading speeds.

The JSE has signed a licensing agreement with MillenniumIT to move its equity market trading activity onto Millennium Exchange. The move will speed up trades by 40 times and also provide more stability in the trading platform as dealings will be settled in Johannesburg and not London.

Last July, an outage halted equity trading for 34 minutes, because of the international link between the bourse and London.

An outage at the JSE yesterday, which halted equity trading for 34 minutes, has been attributed to the international link between the bourse and London.

In a statement issued yesterday, the JSE said it had halted trade at 3.41pm to isolate the exact cause of issues on the link between Johannesburg and the London Stock Exchange. Trade resumed at 4.15pm.

MTN is the JSE's third-party service provider and is responsible for the link between Johannesburg and London, where trades are settled. The JSE says, after a technical investigation, “MTN made an adjustment which enabled the equities market to reopen”.

“Our service providers are working with the exchange to resolve the matter. The JSE apologises for any inconvenience caused to clients,” says head of equities market Leanne Parsons.

The JSE has signed a licensing agreement with MillenniumIT to move its equity market trading activity onto Millennium Exchange, which will happen in the first half of next year.

The move will speed up trades by 40 times and also provide more stability in the trading platform as dealings will be settled in Johannesburg and not London.

In the middle of last year, a technical issue with international connectivity delayed the bourse's opening by an hour-and-a-half. In July 2008, the JSE was hit by network issue, which delayed the opening of the market until 3pm.

MTN did not immediately respond to a request for comment.