|MTN Press Release|
Potential legal action by Turkcell Iletisim Hizmetleri AS
|Issued by: MTN|
[Johannesburg, 6 February 2012]
Shareholders will be aware that MTN, through one of its subsidiaries, owns a 49% shareholding in Irancell, which holds the second GSM telecommunications licence in Iran (2nd GSM Licence). The remaining 51% of Irancell is owned and controlled by Iran Electronic Development Company (IEDC).
By way of background, Turkcell Iletisim Hizmetlera AS (Turkcell) and its subsidiary, East Asian Consortium (EAC), have brought a variety of legal proceedings arising out of EAC's unsuccessful effort to obtain the 2nd GSM Licence in 2005.
In late 2005, EAC commenced (ultimately unsuccessful) proceedings against the Iranian Ministry of Telecommunications. In 2008, Turkcell instituted (currently pending) international arbitration proceedings against the Iranian government under a bilateral investment treaty.
Turkcell has informed MTN that it believes it has a claim against MTN and its relevant subsidiary, arising out of the award of the 2nd GSM Licence, based on alleged violations of United States laws (the Turkcell US Claim), and has indicated an intention to bring such a claim before a United States court. No such claim has been filed or served.
As MTN understands the Turkcell US Claim, it would allege that, in approximately 2004 to 2005, in an effort to cause the Iranian government to issue the 2nd GSM Licence to MTN rather than Turkcell, MTN made improper payments to an Iranian and a South African government official; that MTN encouraged the South African government to take a favourable position toward Iran's civil nuclear power development programme at a meeting of the International Atomic Energy Agency in November 2005; and that MTN enlisted South African government support for the provision of military equipment to Iran.
Turkcell has intimated a range of putative claim amounts, the nominal value of which, if formally asserted, would be material. No basis for any such claim amount has been substantiated to date. The MTN Board of Directors, on legal advice, presently believes that the Turkcell US Claim lacks legal merit, and that, in any event, a US court would not have jurisdiction to entertain the claim.
MTN has zero tolerance for corruption and unethical business practices. Accordingly, the Board of Directors has established a special committee consisting of non-executive directors to consider the allegations made in support of the Turkcell US Claim. The board has appointed Lord Leonard Hoffmann, an internationally renowned jurist, to chair the committee, to oversee and validate its investigation, and to ensure the integrity and independence of the investigation.
The board has directed the committee to take all actions it deems appropriate to investigate the allegations, and to make recommendations to the board as to any actions to be taken as a result of its findings, including as to publication of such findings and any measures which may be warranted.
Issued by MTN Group Corporate Affairs