November 20, 2012 / 5:36 PM / in 5 years

UPDATE 1-Ugandan court summons MTN bosses over tax charges

* MTN Group says court ruled CEO need not appear in court

* MTN says dismissed worker lodged “baseless” charges (Adds MTN Group comment)

By Elias Biryabarema

KAMPALA, Nov 20 (Reuters) - South African telecoms group MTN’s chief executive and other senior managers have been summoned by a Ugandan court to face tax fraud charges, according to a document seen by Reuters on Tuesday.

MTN Uganda, the largest operator in the east African country, has previously denied the charges, saying they were initiated by a former employee sacked on allegations of theft.

MTN Group CEO Sifiso Dabengwa and 12 officials including the chairman and CEO of MTN Uganda were asked to appear in court on Dec. 12 to face charges of tax evasion, conspiracy to make false customs declarations and conspiracy to evade taxes, according to a summons issued by the Buganda Road Court on Nov. 7.

MTN’s website says a former worker, Naphtal Were, initiated the charges. Its statement also said an internal investigation and another by police implicated Were in the loss of 13 billion shillings ($5.0 million).

Were, whose lawyer was not available to comment, has since been sued by MTN for embezzlement. He initiated the case against the company as a private prosecution last month but a court ruled on Nov. 6 the public prosecutor should take it over.

Ugandan laws permit a person to start private criminal proceedings against another, with the public prosecutor having the a right to take over any such case.

MTN said on Tuesday the Buganda Road Chief Magistrate’s Court had ruled that criminal summons issued earlier, during the private prosecution by Were, were not mandatory orders that required court appearance.

“The matter has been handed over to the Director of Public Prosecutions, who will decide whether to lay criminal charges against MTN,” said Paul Norman, MTN Group’s corporate affairs officer. “The allegations against MTN are baseless and spurious; and are a desperate attempt by an employee facing four cases of fraud and theft to sully MTN’s reputation.”

MTN’s statement on its website said: “It should be noted that the private prosecution ... was brought against the MTN global chief executive and the board ... Customs declarations are made by clearing agents, and not by the MTN global chief executive or the MTN board”.

MTN, the market leader in the region’s third-largest economy since it entered Uganda in 1998, faces rising competition from other players including Airtel Uganda - owned by Indian company Bharti Airtel, and Warid Uganda - owned by Indian group Essar. ($1 = 2,615 Ugandan shillings) (Editing by Dan Lalor and James Macharia)

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