FOR any dedicated follower of the rather strange world of the cellphone business, reading the Hoffmann report is an illuminating experience. Here is my take on it, both positive and negative.

In many ways, it’s a rather remarkable document.

The background is now pretty well known; MTN are being accused in a US court (in itself hard to believe) and elsewhere for impropriety of different descriptions over the Iranian cell operator licence by Turkcell, who was awarded the contract, but who was subsequently ousted. MTN was then granted 49% of the licence in 2005, and the business has been a runaway success.

Faced with the allegations, MTN did a novel, and it must be said, laudable thing: they hired a judge to test the allegations. That judge is Lord Hoffmann, a South African-born British lawyer and member of the House of Lords. His report — in fact the report of a board committee — has found all the allegations false, based on "a fabric of lies, distortions and inventions".

MTN is delighted, as you might expect, and MTN chairman Cyril Ramaphosa, who has had an extra-ordinary year, has exuded an audible sigh of relief in the form of a triumphant press release.

What Turkcell hope to gain in this effort, other than an odd kind of vengeance and the off-chance of a big payoff ($4.2bn is the claim) is hard to understand.

What makes the cellphone business such a delicate game is that licences are, all over the world, granted by governments. Consequently, the business is premised on squeezing yourself through the eye of the needle. Even if Turkcell were to win the court case, they are surely never going to get another bite at this or any subsequent licence, and governments the world over will, presumably, think twice about having them as a partner.

Anyway, Turkcell thought they had a cast-iron witness from inside MTN who could provide some great evidence. What the Hoffmann report does is to knock that ball out of play. It is a devastating indictment on the character and honesty of the single witness in Turkcell’s case.

Yet, that is by no means the end of the story, partly because what we learn about how cellphone companies do business along the way is eye-popping — especially if you happen to be a shareholder.

The other reason it’s not the end of the story is that the choice of Hoffmann himself is questionable. His daughter, it turns out, and as he acknowledges in the document, worked for MTN Money — a joint venture with Standard Bank. The report dismisses a conflict of interest on the basis that she knew nothing about the Iran situation.

That said, the report is a fabulously thorough and credible document. It’s detailed, well thought out and meticulous. The allegations broadly fall into three categories: that MTN won the contract by supporting Iran in its battle against nuclear sanctions and by providing military technology, that Turkcell lost the contract to MTN through bribery and that MTN bribed an Iranian and a South African diplomat.

The first is easily dispensed with, even though the report deals with the issue in detail. South Africa did abstain in one crucial United Nations (UN) forum on the issue — but everybody knew it was going to do that anyway. All the other members of the Non-Aligned Movement did the same.

MTN didn’t have much sway on the issue, something the Iranians appreciated. As for the arms, it appears that far from helping Iran, the South African arms control committee, to its credit, prevented arms exports. From the start, this notion struck me as a bit bonkers.

But the fact that Turkcell’s star witness, Christian Kilowan, thought it was possible for MTN to have this kind of influence gives you a bit of an insight into the mental frame. Hoffmann notes, amusingly, Kilowan’s penchant for codenames and the way he headed some e-mails, "For your eyes only". Still, Kilowan was key. He visited Iran several times in 2004, and was basically the local contact person for the duration of the topsy-turvy licensing process.

The report deals at length with Kilowan’s credibility, generously noting from the start that since Kilowan could not cross-examine any witnesses, the committee could not reject any evidence of Kilowan’s merely on the grounds that it was in conflict with that of other witnesses. Hence, it could only be rejected if it was "in conflict with the contemporary documents, internally inconsistent or hopelessly implausible".

The best example of how this works in the report is what happened in the final days of the licence-granting process. The Hoffmann committee had access to depositions about proceedings of the Iranian-Turkish bilateral investment treaty. In this testimony, Kilowan said he had a meeting with Iranian officials on November 20 2005. It’s all very vivid. MTN has just paid €450m for the licence and he arrived at the government office expecting to get the one-page document.

Instead, he claims, after an ominous conversation in Farsi, the officials showed him a document from the Iranian Military Council suspending the handover of the licence until it was clear how South Africa had voted at the UN after a report of the International Atomic Energy Agency.

He objected, broke the news to his boss, Irene Charnley, and there were appeals to the local ambassador, and then president Thabo Mbeki. Very dramatic.

The problem is that all the people involved, both South African and Iranian, deny there was ever such an incident. But, says Hoffman, this all may be regarded as "word against word". Unfortunately for Kilowan, the licence contract itself suggests something different: the payment of the €300m licence fee was on Monday November 21.

There was no way Kilowan could have picked up the contract the day before. There is also no trace, the report says, of this crisis in the written record, including in Kilowan’s own reports, which confirm that the money was paid on November 21, and the licence would be issued on November 26. (It was, a day later). Furthermore, there was no "critical vote" of the International Atomic Energy Agency on November 24. Kilowan fabricated the entire story, the report concludes: "There is an extraordinary recklessness about his falsehoods."

There are a bunch of examples like this, after which the report really twists the knife. After Kilowan left MTN in 2007, he wrote to MTN offering, in return for a fee of $40m, 15% to be paid up front, to secure repayment of MTN’s Irancell loans.

"MTN did not accept the offer, which appears to have been either an advance fee fraud of the kind familiar to anyone receiving spam e-mails from Nigeria," the report says.

Eina. And that’s not all. Kilowan also tried to set up a Iranian consultancy slush fund.

So Kilowan’s reputation is now trashed. Except he makes two allegations which seem to me significant — although the report sees things differently.

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IT IS easy to understand Turkcell’s fury at being stiffed on this cell licence. Not only was the company awarded the licence, and then that award was taken away. But its Iranian partners jumped ship and teamed up with MTN. The way it unfolded was all rather cruel.

Turkcell made some rather bad mistakes, but it is true that history was not on its side. The political relations between Iran and Turkey, two rather large bulls in the Mideastern kraal, were getting tense at the time. Political power also changed at the time from the reformist administration of Mohammad Khatami to the conservative administration of Mahmoud Ahmadinejad.

The new administration revoked the deal with Turkcell, objecting to the fact that local players were in the minority. Turkcell objected and at first threatened legal action. The deadline passed and everything was up in the air. Turkcell then reluctantly agreed to be the minority partner, and everything was on again. Then it fell apart for a second time, allowing MTN to grab the spoils.

All this time, Turkcell’s local partner, a military group, was in a quandary, as you might imagine.

MTN was whispering sweet nothings into their ears, and they did sign a memorandum of understanding with MTN when it seemed the Turkcell bid was dead. But then the group promptly decided to go back to the Turkcell consortium when the bid appeared to be on track again. When if failed for the second time, they went back to MTN, and MTN took them in. The company’s original local partners got stiffed.

Kilowan’s allegation in this regard is essentially that MTN paid not only the licence fee owed by the local partners but also paid in the cash to capitalise the local company on a "never to be repaid" loan basis. This, he claims, constitutes a bribe.

This allegation is mostly untrue. It is true that MTN loaned the local partners the money to pay the licence fee and to capitalise the company. It is true, it turns out, that these loans have been rolled over several times. It is not true that they have not been repaid, but it is true that large chunks of them have still not been repaid despite a thriving business, seven years after the contract was signed.

The local partner is a subsidiary of a state-owned defence company called Sairan and Bonyad, one of the five Iranian quasi-independent charitable foundations. Both are effectively controlled by the Iranian ministry of defence.

Hoffmann’s approach to this issue is to attack both the claim and the principle of it. The report poses the hypothetical question, what if Turkcell’s allegations were true? What if MTN had just given the money to Sairan and Bonyad? "That might have been foolish, but how can it be a complaint by Turkcell?"

MTN shareholders could rightly complain, but it wouldn’t be a wrong against Turkcell.

I’m not so sure about his argument. As its turned out, MTN lent the local partners $88m, which has been repaid, the report says. Further, this loan and the loan for half of the licence fee were agreed at Libor plus 4%, which gave MTN a margin. So far, $130m of the interest on the loan to pay the licence fee was paid in 2010 and the maturity date has been extended further. There was nothing illegal about this. "All this seems to us to be the result of ordinary commercial decisions in changing circumstances," the report says.

Really? Is it an "ordinary commercial decision" for the minority partner to bankroll the entire financial commitment of the majority partner to the tune of $258m?

As I say, strange world, this cellphone business.

The report also finds inconsistencies in the evidence of Kilowan regarding a "loan" to South Africa’s former ambassador to Iran, Yusuf Saloojee. But the fact is that a loan was made by Kilowan, and accepted by Saloojee (and repaid as it happens), who thought MTN would pay him back. In the event, MTN thought better of it. It’s a small thing, but I think the report was a bit willfully naive on this point, but maybe that’s just my dark imagination at play.

So in the end, the company who quite happily loaned their Iranian "partners" $258m, were too morally upright to loan Saloojee $150,000.

Strange world.