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UPDATE 2-S.Africa police probe MTN Iran graft allegations
June 5, 2012 / 11:58 AM / 6 years ago

UPDATE 2-S.Africa police probe MTN Iran graft allegations

* S.Africa detectives open investigation into MTN

* Mobile giant accused of corruption in Iran (Adds background)

By Helen Nyambura-Mwaura

JOHANNESBURG, June 5 (Reuters) - South Africa’s elite Hawks police unit has opened an investigation into allegations of corruption at mobile phone giant MTN relating to its purchase of a cellular licence in Iran, a police spokesman said on Tuesday.

The police probe follows a $4.2 billion U.S. civil claim filed in March by Turkish operator Turkcell accusing Africa’s largest mobile firm of bribing Iranian officials with cash and promises of weapons to secure the licence, which was originally awarded to Turkcell.

“There are allegations of corruption. That’s exactly what we’re investigating,” Hawks spokesman MacIntosh Polela said.

MTN executives were also accused in the U.S. court papers of promising to get Pretoria to vote favourably about Tehran’s nuclear programme at international forums trying to curb Iran’s suspected pursuit of nuclear weapons.

MTN officials have denied any wrongdoing and described the Turkcell case, which is backed by a collection of alleged MTN internal documents including emails, invoices, memos and presentations, as without legal merit.

Pretoria has also denied that its diplomacy is for sale.

An MTN spokesman declined immediate comment on the investigation by the Hawks, South Africa’s equivalent of the FBI in the United States.

The Iran scandal, painted in Turkcell papers as a “staggeringly brazen orchestra of corruption”, has thrown a harsh spotlight on MTN, a $31 billion company with close links to South Africa’s ruling African National Congress (ANC).

It was set up with government help in 1994 as the first black-owned company after the end of apartheid, and has grown into one of the greatest success stories to emerge from the continent’s biggest economy.

MTN shares took a beating when details of the Turkcell allegations first emerged, falling 7 percent in three days amid fears the legal tussle might hamper the growth of its Irancell unit, which accounts for nearly 10 percent of group revenue.

As well as piling more pressure on MTN executives, the Hawks probe is likely to generate more unflattering coverage of the business practices of a firm that has become adept at winning in difficult emerging and frontier markets across Africa and the Middle East.

Reuters reported this week that Irancell had managed to obtain sophisticated U.S. computer equipment despite U.S. sanctions on such kit designed to curb Iran’s nuclear programme.

MTN shares were unaffected by news of the Hawks investigation, edging up 0.1 percent by 1221 GMT in line with the wider Johannesburg stock market. (Writing by Ed Cropley; Editing by David Cowell)

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