MTN Group CEO Sifiso Dabengwa.   Picture: MARTIN RHODES.
MTN Group CEO Sifiso Dabengwa. Picture: MARTIN RHODES.

MTN said on Friday that the independent special committee chaired by Lord Hoffmann had found Turkcell’s allegations of improper behaviour in Iran were "a fabric of lies, distortions and inventions" and that the allegations of improper behaviour by MTN board members were false.

The committee, appointed by the MTN board but chaired by internationally renowned jurist Lord Leonard Hoffmann to ensure its integrity, has wound up a year-long investigation and issued a report exonerating the company, while US legal proceedings are still pending.

In February last year, Turkcell Iletisim Hizmetleri and its subsidiary, East Asian Consortium, instituted a claim against MTN and its subsidiary, MTN International (Mauritius), in the US District Court in Washington DC arising out of EAC’s unsuccessful attempt to obtain the second GSM licence in Iran in 2005.

In these proceedings in the US, Turkcell alleged MTN had conspired with Iranian officials to oust Turkcell from the successful consortium and take its place.

Among the ways it alleged MTN had done this, was by promising to use its influence with the South African government to procure defence equipment for Iran and to support Iran’s nuclear development programme at meetings of the International Atomic Energy Agency (IAEA).

Turkcell also levelled several bribery allegations against MTN, claiming it had bribed two Iranian public bodies, Sairan and the Bonyad, with payments disguised as sham loans; had bribed South Africa’s ambassador to Iran at the time, Yusuf Saloojee, with a payment of $200,000; and bribed an Iranian official, Javid Ghorbanoghli, with a payment of $400,000 to a company called Aristo Oil International.

These claims were based on the allegations of Christian Kilowan, a former MTN employee who was involved in its operations in Iran from August 2004 to November 2007.

The MTN board stated its belief that the claims made in the US proceedings lacked legal merit and launched a motion to dismiss them.

However, in the light of the serious nature of the factual allegations and the company’s zero tolerance for corruption, the MTN board established a special committee, the Hoffmann committee, consisting of an external chairman and nonexecutive directors, to take all actions the committee deemed appropriate to investigate the Turkcell allegations.

To ensure the integrity and independence of the investigation, the MTN board appointed Lord Leonard Hoffmann, an internationally renowned jurist and former UK House of Lords judge, as the chairman.

The Hoffmann committee undertook a thorough examination of Turkcell’s allegations, which included an extensive collection and review of electronic and documentary records, including those relied on by Turkcell, and a consideration of all available evidence, including the evidence of current and former MTN employees as well as current and former South African and Iranian officials, the testimony of Mr Kilowan in the US proceedings and several expert reports commissioned by the Hoffmann committee.

Following this year-long investigation, the Hoffmann committee has reported its unanimous findings to the MTN board.

The report runs to 193 pages, with more than 500 pages of appendices, and addresses Turkcell’s allegations in detail.

In summary, the key findings are that:

• There was no conspiracy between MTN and Iranian officials to remove Turkcell from the successful consortium;

• There was no promise on the part of MTN to get the South African government to supply defence equipment to Iran or to support Iran’s nuclear policy at the IAEA;

• There were no sham loans to Sairan and the Bonyad;

• MTN paid nothing to Mr Saloojee and neither Phuthuma Nhleko, the then CEO of MTN, nor Irene Charnley (until March 2007 the MTN director with responsibility for Iran) authorised Mr Kilowan to promise him anything;

• Neither Mr Nhleko nor Ms Charnley approved a payment which they knew to be intended for Mr Ghorbanoghli. On April 4 2007 a subsidiary of MTN made a payment of $400,000 into the personal account of a Mousa Hosseinzadeh, a business partner of Mr Kilowan who had been introduced to him by Mr Ghorbanoghli.

The Hoffmann committee determined that the evidence of both Mr Kilowan and Mr Hosseinzadeh was unreliable, and was thus unable to determine what happened to this money.

The payment was made on an invoice from Aristo Oil International Limited, of which Hosseinzadeh is a director, for consulting services, apparently countersigned by Mr Nhleko, but the Hoffmann committee found there was evidence (including expert handwriting analysis) to suggest Mr Nhleko’s signature was forged; and

• Consequently, the allegations made by Turkcell against Mr Nhleko, Ms Charnley and members of the MTN board and senior management, including chairman Cyril Ramaphosa and current CEO Sifiso Dabengwa, who were all alleged to be complicit in the actions attributed to Mr Nhleko and Ms Charnley, are false.

In reaching these findings, following a critical examination of the evidence, the Hoffmann committee found Turkcell’s allegations were "a fabric of lies, distortions and inventions".

Lord Hoffmann confirmed to the MTN board that he, personally, had approved the report and the committee had received full co-operation from MTN and access to all individuals, information, documents and facilities it requested.

Lord Hoffmann further confirmed that neither MTN nor its management had in any way sought to influence the committee in its deliberations or the formulation of the report.

The MTN board was satisfied that Turkcell’s allegations had been the subject of a thorough, comprehensive and independent investigation and was satisfied with the findings presented to it.

Mr Ramaphosa said the board “is particularly pleased to note Lord Hoffmann’s categorical findings that the allegations against” Mr Nhleko, and Ms Charnley “were baseless”.

 Allegations of “complicity” against Mr Ramaphosa and Mr Dabengwa “were similarly found to be without substance”, said Mr Ramaphosa.  

“Lord Hoffmann concluded that he found nothing in the conduct of MTN over this period that puts at question MTN’s integrity or propriety”, he said.

MTN said it would continue to vigorously defend the US proceedings. As noted in the Sens announcement on October 15 2012, MTN expects the US proceedings to be disposed of after the US Supreme Court issues its decision in the Kiobel case clarifying the scope of the applicable US law, which is expected to happen by the end of June 2013.

The Kiobel case is a high-profile case in which 12 Nigerians have accused international oil company Royal Dutch Shell of complicity in human rights abuses in the country.

The US Supreme Court will decide whether the Alien Tort Statute, an 18th-century law that has usually been reserved for human rights abuses, can be used to sue foreign corporations in US courts.

MTN has reserved its rights to take any legal action it deems appropriate arising from the Hoffmann committee’s report.

MTN share price was 0.48%, to close at R175.94.

With Thabiso Mochiko