MTN plotted to procure embargoed US technology products for an Iranian subsidiary through outside vendors to circumvent American sanctions on the Islamic Republic, according to internal documents seen by Reuters.
The fresh revelations about MTN Group, buttressed by interviews with people familiar with the procurement, come as the South African multinational faces fights on several fronts over its fast-growing and lucrative but controversial Iranian venture.
MTN is in talks with the US Treasury in an effort to win permission to repatriate millions of dollars of profit now bottled up in Iran by US sanctions on the Iranian financial system. MTN’s CE disclosed the talks with US officials this month, saying: "US sanctions should not have unintended consequences for non-US companies."
The Hawks are investigating how MTN obtained the Iranian telecommunications licence, following allegations of corruption made by a Turkish rival in a US federal lawsuit.
MTN owns 49% of MTN Irancell, a joint venture with a consortium controlled by the Iranian government. MTN provided the initial funding for the venture and oversaw its launch in 2006.
Hundreds of pages of internal documents reviewed by Reuters show MTN employees created presentations for meetings and wrote reports that openly discussed circumventing US sanctions to source American technology equipment for MTN Irancell. The documents also address the potential consequences of getting caught.
The sanctions are intended to curb Iran’s nuclear programme, which Tehran maintains is peaceful.
The equipment included products from Sun Microsystems, Oracle, International Business Machines, EMC, Hewlett Packard and Cisco Systems, and was used to provide such services as wiretapping, voice mail and text messaging, the documents show.
In a statement, MTN denied any wrongdoing.
The US companies have said they were not aware MTN Irancell had acquired their products, and several are investigating the matter. US Treasury officials declined to comment.
"It all showed up"
Turkcell’s bribery allegations emerged in February 2012. In June, Reuters reported that MTN Irancell had procured US equipment through a network of technology companies in Iran and the Middle East. The article quoted Chris Kilowan, MTN’s top executive in Iran from 2004 to 2007, saying MTN was directly involved in obtaining US parts for the Iranian telecom.
The new documents provide a much deeper understanding of the extent of MTN’s procurement of embargoed US goods, exposing new links in the supply chain of products worth millions of dollars.
They also give a rare inside look at the thinking of a multinational doing business in Iran and the difficult choices involved. The documents show MTN was well aware of the US sanctions, wrestled with how to deal with them and ultimately decided to circumvent them by relying on Middle Eastern firms inside and outside Iran.
MTN was not alone. In recent months evidence has emerged that other foreign companies, including British bank Standard Chartered and China’s ZTE, have helped Iran undermine increasingly tougher sanctions.
The bank, which agreed to pay $340m to New York’s bank regulator to settle allegations it hid transactions with Iran, still faces a separate US probe.
ZTE is the subject of investigations by the Federal Bureau of Investigation (FBI) and the commerce department after Reuters reported it had supplied US equipment to Iran’s largest telecom.
The new MTN documents appear to detail an intentional effort to evade sanctions. For example, a January 2006 PowerPoint presentation prepared for the project steering committee — consisting of then top-level MTN executives — includes a slide titled "Measures adopted to comply with/bypass US embargoes". It discussed how the company had decided to outsource Irancell’s data centre after receiving legal advice.
"In the absence of applicable US consents, it is a less risky route to MTN for Irancell to outsource data centre than it is to purchase restricted products," the PowerPoint slide says.
The documents also include a lengthy spreadsheet of "3rd Party" equipment dated June 2006 that lists hundreds of US components — including servers, routers, storage devices and software — required for a variety of systems.
A delivery schedule also dated June 2006 lists US equipment needed for "value-added services" including voice mail and a wiretapping system. The schedule states that the equipment will be "Ready to Ship Dubai" in July and August that year. It estimates it would take two weeks to arrive in the southern Iranian port of Bandar Abbas by "Air or Sea/Road", and then up to 30 days to clear Iranian customs.
According to a person familiar with the matter, the equipment ultimately arrived by boat.
"It all showed up," this person said.