(Bloomberg) -- South African police arrested a former ambassador to Iran on corruption charges related to the award of a mobile-phone license to MTN Group Ltd. after it was initially given to Turkcell Iletisim Hizmetleri AS.
The case has been the subject of legal claims for several years by the Turkish company, which accuses Johannesburg-based MTN of paying bribes to South African and Iranian officials. MTN secured 49 percent of Irancell Telecommunication Co. Services in 2005, which gave it a license to operate in the country, after the stake was originally awarded to Turkcell. MTN has always denied the bribery charges.
Yusuf Saloojee, 75, was seized by the Hawks, a South African anti-corruption police unit, over allegations he facilitated the cancellation of the Turkcell license by the Iran government, which was then awarded to MTN. Saloojee, now retired, is accused of earning 1.4 million rand ($99,170) for his role in the process, which was then used to buy a house in Pretoria, according to a Friday statement by the Hawks.
“MTN has consistently denied that there is any credible evidence that it promised Ambassador Saloojee any money, or that Ambassador Saloojee accepted money from MTN,” the carrier said in an emailed response to questions. “The allegations against MTN and Ambassador Saloojee appear to be based on the evidence of a single witness, Mr Chris Kilowan, a disgruntled former employee of MTN.”
The ex-ambassador’s arrest may have implications for the outcome of Turkcell’s latest attempt to sue MTN, which was filed in South Africa’s High Court in Johannesburg in 2017. The Istanbul-based company is demanding $4.2 billion in damages, based on profit the carrier says it could have made had it been able to keep the license, plus interest.
MTN shares reversed gains and traded 1.8 percent lower at 84.50 rand as of the close in Johannesburg, valuing the company at 161 billion rand. The stock has slumped more than 34 percent over the past 12 months.
Iran is MTN’s second-biggest market, with 44.5 million subscribers at the end of March. The country has been a thorn in the carrier’s side of late, as U.S.-led sanctions prevent MTN from being able to repatriate funds from the nation. The company is also facing legal claims in Nigeria, its biggest market, over the alleged non-payment of $2 billion of back taxes, while the head of MTN’s Uganda division was deported earlier Friday.
Turkcell first sued Johannesburg-based MTN in the U.S. in 2012, though was later forced to withdraw the claim after the Supreme Court ruled that it couldn’t be heard in the country. The case was later filed in South Africa in 2013, but was delayed following objections by MTN and subsequent amendments.
Saloogee was granted bail by the Johannesburg Specialised Commercial Crimes Court and his case will be heard on April 17.
(Updates with MTN comment in fourth paragraph.)
--With assistance from Renee Bonorchis.
To contact the reporters on this story: Loni Prinsloo in Johannesburg at firstname.lastname@example.org;John Bowker in Johannesburg at email@example.com
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