Aafrican firm bribed Iranian Deputy Foreign Minister Javid Ghor-banoghli with $400,000 to get the contract.
The suit also says Iran withheld the contract until it saw how South Africa would vote in a UN agency on criticizing Iran’s nuclear program. South Africa abstained and MTN got the contract three days later.
The suit says MTN bribed officials and promised Iran weapons and United Nations votes in exchange for a license to provide mobile-phone service in the Islamic Republic.
Turkcell Iletisim Hizmetleri AS, which initially was awarded the Iranian mobile-phone license, sued its Johannesburg-based rival for $4.2 billion in damages.
The suit includes numerous alleged internal MTN memos that detail the South African company’s efforts to win the Iranian business after losing the bid to Turkcell in February 2004. The suit doesn’t say how Turkcell got hold of internal MTN documents.
“Upset by the loss of the open competition, MTN sought to obtain illegally what it could not obtain through honest competition and thereafter embarked on a premeditated program of corruption through bribery and trading in influence,” the complaint states.
The contract was “the largest new international telecommunications opportunity in the world and was known to involve the largest single investment opportunity into Iran since the 1979 Revolution,” said the complaint.
MTN told Bloomberg news it will oppose the claim: “MTN continues to believe that there is no legal merit to Turkcell’s claim and no basis for such claim to be brought before a U.S. court.”
In the memos that Turkcell attached to the complaint, MTN described payoffs to Javid Ghorbanoghli, then Iran’s deputy foreign minister, dubbed “Long-J” in the memos, and Yusuf Saloojee, South Africa’s ambassador in Tehran at the time, who was codenamed ‘Short-J.’’ The men were paid $400,000 and $200,000 respectively, according to the complaint.
The documents say the Iranian Communications Ministry told MTN it was withholding its license until it saw how South Africa voted on Iran at an upcoming meeting of the International Atomic Energy Agency (IAEA). South Africa’s representative to the IAEA, Abdul Minty, abstained from an IAEA vote on Iran on November 24, 2005. The license was delivered three days later, the complaint states.
According to the complaint, MTN in August 2004 struck a deal with Ali Shamkhani, who was then Iran’s defense minister, to facilitate South African military cooperation and the delivery of defense equipment, including Denel AH-2 Rooivalk helicopters, encrypted military radios, sniper rifles, G5 howitzer artillery weapons, cannons, armored personnel carriers and radar technology.
MTN officials used their personal relationships with South Africa’s minister of defense at the time, Mosiuoa Lekota, to promise delivery of the elicit arms and technology in exchange for the license, the court papers allege. “This equipment was unavailable to Iran through legitimate means because of US and international restrictions at the time,” Turkcell said in the papers.
While MTN had promised Iran it could deliver South African military aid, no arms sales took place, angering Iranian officials, Turkcell claimed.
Turkcell’s complaint cites violations of the US Alien Tort Statute, a 1789 law that gives US courts jurisdiction in some instances to consider claims by foreigners for illegal conduct that occurred in another country. The law is usually cited in human rights and torture cases.
MTN said US courts would not have jurisdiction over any such a case because the “accusations involve conduct alleged to have taken place in South Africa and Iran, and have no connection to the United States.”
An alleged March 25, 2007, memo to MTN’s chief executive from its representative in Iran, Chris Kilowan, recounts Ambassador Saloojee’s description of visits to South Africa by top Iranian officials on behalf of Supreme Leader Ali Khamenehi and President Ahmadi-nejad.
Khamenehi dispatched Ali Larijani, then the secretary of Iran’s Supreme National Security Council, to remind Thabo Mbeki, South Africa’s president at the time, “that certain defense-related promises were made by the South African Minister of Defense in 2004 in exchange for which MTN was allowed to replace Turkcell,” according to the memo.
The same memo reports that Manouchehr Mottaki, who was then Iran’s foreign minister, was sent by Ahmadi-nejad to “get a direct answer” from President Mbeki about South Africa’s alleged promises to sell arms to Iran. Mbeki “would not like to be drawn into the matter,” his spokesman Mukoni Ratshitanga told Bloomberg news last week.
Mottaki “reiterated their understanding that MTN was allowed to replace Turkcell in exchange for defense cooperation,” Kilowan wrote in the memo attached to the complaint.
MTN had 33.3 million subscribers in Iran as of Sept. 30, the company has reported.
Turkcell says MTN’s business dealings in the US are “extensive,” giving the US court so-called personal jurisdiction over the company. Turkcell cites MTN’s roaming agreements with US cellular carriers such as AT&T and T- Mobile, the sale of airtime at 7-Eleven stores, and contracts with Intel Corp., Microsoft Corp. and Cisco Systems as evidence.