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Turkey's Turkcell says $4.2 billion suit against South Africa's MTN to go to trial
June 1, 2017 / 10:06 AM / 4 months ago

Turkey's Turkcell says $4.2 billion suit against South Africa's MTN to go to trial

FILE PHOTO: Pedestrians walk past the main Turkcell shop in central Istanbul, Turkey, January 18, 2016. REUTERS/Murad Sezer/File Photo

ISTANBUL/JOHANNESBURG (Reuters) - Turkcell’s (TCELL.IS) $4.2 billion lawsuit against South Africa’s MTN (MTNJ.J) over a disputed Iran license will go ahead in a South African court after years of delay, the Turkish mobile operator said on Thursday.

Turkcell alleges that the South African mobile company used bribery and wrongful influence to win a lucrative Iran license originally awarded to Turkcell. MTN has rejected the allegations and on Thursday reiterated its stance that the lawsuit had “no legal merit”.

Istanbul-based Turkcell first brought the suit against MTN in the United States in 2012. A year later it withdrew the U.S. suit and filed in South Africa, where the case has been stuck in procedural wrangling since.

Turkey’s top mobile operator is no stranger to protracted lawsuits and is itself the subject of a decade-long struggle between three of its shareholders.

“We are delighted that the case is finally coming to trial in South Africa,” said Serhat Demir, a Turkcell vice president.

“Turkcell will be seeking the earliest possible trial date, and looks forward to vindicating its claims before the South African courts.”

Turkcell’s claim was delayed by objections from MTN and Turkcell’s responses to the objections, it said. On May 5 a South African high court rejected another 30 objections from MTN, clearing the way for the case to go to trial, it said.

The trial could be held toward the end of 2018, Turkcell’s lawyer in South Africa, Eric van den Berg, told Reuters.

MTN TO FIGHT CASE

FILE PHOTO: Workers install the logo of Turkcell, country's top mobile operator, on the Tat Towers in Istanbul, Turkey, June 29, 2016. REUTERS/Murad Sezer/File Photo

Shares of MTN fell as much as 2 percent in Johannesburg trade, while Turkcell shares were down a third of a percent in Istanbul.

Iran is the third-largest market for MTN, which until the lifting of international sanctions against Tehran recently had been struggling to repatriate around $1 billion in accumulated dividends from its 49 percent stake in Irancell.

“Recent developments in the matter were procedural in nature and had nothing to do with the merits of the case,” MTN said in a statement.

“MTN continues to believe that there is no legal merit to Turkcell’s claim and will accordingly oppose it.”

In papers filed in November 2013 with the South Gauteng High Court in Johannesburg, Turkcell claimed it was the victim of “corruption and bribery” that caused it to lose the contract in Iran.

It claimed that MTN, its former CEO and current Chairman Phuthuma Nhleko and former executive Irene Charnley “acted wrongfully” and interfered with Turkcell’s relationship with the Iranian government.

Nhleko has denied that he authorized bribes or that any bribes were paid. Charnley has described Turkcell’s claims as “without substance”.

Turkcell also alleged MTN promised to “influence the South African government with regard to the manner in which South Africa would vote on Iran’s nuclear program at the International Atomic Energy Agency (IAEA),” according to the court papers.

South African officials have denied those allegations.

MTN previously appointed a retired British judge to lead an external investigation into them. That probe dismissed the accusations as “a fabric of lies, distortions and inventions”.

Additional reporting by Can Sezer; Additional reporting by Tiisetso Motsoeneng in Johannesburg; Editing by Keith Weir

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