MTN's head office in Johannesburg. Picture: EPA/KIM LUDBROOK
MTN's head office in Johannesburg. Picture: EPA/KIM LUDBROOK

MTN Group, facing the prospect of a damages claim from rival Turkcell more than four times the size of the $1bn (R14.4bn) settlement it reached last year with Nigerian authorities, is hoping the case will be thrown out by the High Court in Johannesburg on its merits before it is even heard.

The JSE-listed mobile telecommunications group has moved to have the matter, in which the Istanbul-headquartered Turkcell is seeking damages of $4.2bn (about R59bn), thrown out on technical legal grounds. However, if the court decides to reject these “special pleas”, MTN will “absolutely not” be seeking an out-of-court settlement, the group’s chief legal officer, Michael Fleischer, said in an interview with Business Day, as it believes its defence is rock-solid.

Turkcell’s claim dates back 12 years to when MTN Irancell, Iran’s second network operator, in which MTN has a 49% stake, was granted an operating licence by the Iranian communications regulator. Turkcell has levelled several serious charges against MTN, accusing the Johannesburg-based group of paying bribes to ensure its rival was ejected from the bidding process in Iran.

MTN on Monday afternoon filed a statement of defence with the high court, arguing that the matter should be thrown out. Former MTN Group CEO Phuthuma Nhleko — who is now its nonexecutive chairman — and former director Irene Charnley have filed separate pleas with the court. Both Nhleko and Charnley, who have been named as defendants, were intimately involved in securing the Irancell licence in November 2015.

MTN wants the high court to dismiss Turkcell’s suit given that the Istanbul company has tried unsuccessfully to prosecute the matter in several other forums, including in two arbitration proceedings — one under the auspices of the International Chamber of Commerce and the other under a bilateral investment treaty between Iran and Turkey — as well as in the Iranian and US courts.

It has also argued in its latest filing that Turkcell’s suit violates the act-of-state doctrine. Under this doctrine, it is “not permissible or appropriate” for a South African court — or any other court outside Iran — to determine the lawfulness of the conduct of a foreign state within its own borders and under its own domestic laws, it said.

MTN believes Turkcell will have a tough time convincing the high court of its arguments, especially in the light of the findings of the Hoffmann committee, which exonerated the group of any wrongdoing in Iran. That committee, appointed by MTN and headed by retired South African-born British jurist Leonard Hoffmann, found that Turkcell’s allegations, which rested on the evidence of former MTN executive Chris Kilowan, were a “fabric of lies, distortions and inventions”.

MTN said Turkcell was attempting to relitigate issues already dealt with elsewhere, including in international arbitration proceedings, and that its lawsuit was “opportunistic, an abuse of the process of the court, baseless and without merit”. Fleischer said MTN would not allow itself to be “bullied, harassed and oppressed”.

In a statement issued late on Tuesday, Turkcell said MTN’s pleas “assert a variety of expected and meritless technical legal defences”. “Turkcell is confident that they will be rejected by the court and that the case can now be  scheduled for trial in the coming months.”

It claimed, without elaborating, that MTN had admitted to “many of the allegations asserted by Turkcell that form the basis of its claims”.

MTN’s share price closed 0.16% lower at R122.77.

duncan@techcentral.co.za

 

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