$4 billion legal battle between Turkcell & MTN over “bribes” to Iran
A Supreme Court of Appeal judgment is expected soon in the appeal of a Gauteng High Court decision that South Africans alleged to have bribed foreign government officials are immune from prosecution in South Africa. That court decision is part of an ongoing case between Turkcell and MTN in connection with a GSM license in Iran. In this interview with BizNews, Turkcell's global counsel Cedric Soule, details allegations of bribery and corruption against MTN to overturn a public tender that it lost for a multi-billion-dollar opportunity to run the Iranian GSM telecom license. "MTN, not happy with having been a runner up, decides to meddle and inserts itself in these negotiations by secretly talking to the Iranian authorities, promising all kinds of things. We say they promised weapons, sort of introductions to weapons companies. They promised to lobby the South African government so that the South African government would take a different position on Iran's nuclear program. And we also allege that MTN paid Iranian and South African authorities bribes… So the judgment of the Supreme Court of Appeal that we're expecting has pretty serious implications, we believe, because it will, we think, set the stage for how bribery and corruption are dealt with in South Africa for years to come." Turkcell is seeking $4 billion in damages.
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Extended transcript of the interview ___STEADY_PAYWALL___
Chris Steyn (00:02.445)
A court battle has raged between MTN and Turkcell since 2013. We get the latest from Turkcell Global Legal Council, Cedric Soule in New York. Welcome, Cedric.
Cedric Soule (00:15.597)
Thank you. Glad to be on the show.
Chris Steyn (00:18.795)
May we go back to the beginning? Please tell us what these allegations are.
Cedric Soule (00:25.453)
Sure. So in 2003, Iran puts out a tender for a GSM network in Iran. It's a huge opportunity because it's at the time, it's a territory of some 70 million people, most of which don't have cell phones. So it's a really exciting opportunity. Turkcell, the Turkish telecoms company that I represent, puts in a bid. MTN puts in a bid and Turkcell wins.
And so Turkcell starts you know, doing what is necessary to move the process along and finalise the license and get the license. And our allegations are that while Turkcell is doing this with the Iranian authorities, MTN, not happy with having been a runner up, decides to meddle and inserts itself in these negotiations by secretly talking to the Iranian authorities, promising all kinds of things. We say they promised weapons, sort of introductions to weapons companies. They promised to lobby the South African government so that the South African government would take a different position on Iran's nuclear program. And we also allege that MTN paid Iranian and South African authorities bribes.
And all of this led to Iran essentially kicking Turkcell out and giving the license to MTN. So those are the basis of our allegations and that is why we are in court against MTN today.
Chris Steyn (02:08.991)
Okay. Now, what stage have the court proceedings reached now?
Cedric Soule (02:15.605)
So it's been a very long process. The parties agreed to separate certain key issues on the court's jurisdiction. And the High Court in Gauteng back in November 2022 issued a first ruling on these separated issues, finding in favour of MTN, essentially suggesting that because MTN had bribed, or we say, bribed Iranian authorities that they were immune from civil suit in South Africa. So we appealed that judgment before the Supreme Court of Appeal in Bloemfontein, and we had that hearing in August of this year. And so we are now waiting for the Supreme Court of Appeal's judgment on those separated issues.
Chris Steyn (03:15.753)
If the court does not find in your favour, what is the next legal step that you can take?
Cedric Soule (03:22.664)
Well, will have to consider. Turkcell hasn't made any decisions, obviously, but we will have to consider whether to take this to the Constitutional Court.
Chris Steyn (03:34.389)
What are the implications of the outcome of this case?
Cedric Soule (03:38.858)
Well, that's a very interesting question. We believe that the ruling from the Gauteng High Court, if the Supreme Court of Appeal affirms it, we believe that what that means essentially is that anyone can come to South Africa, can essentially bribe foreign authorities and then claim that they're immune from civil suit on the basis of this judgment because they would say – as the judge in Gauteng found – that because it involves Iranian authorities or foreign authorities, these doctrines of international law called Foreign State Immunity and another doctrine of common law called Active State Doctrine, which all involve state conduct are implicated. And therefore, because they involve state conduct and are implicated, the courts in South Africa shouldn't rule though on the allegations. So the judgment of the Supreme Court of Appeal that we're expecting has pretty serious implications, we believe, because it will, we think, set the stage for how bribery and corruption are dealt with in South Africa for years to come.
Chris Steyn (05:19.437)
So when the allegations first surfaced, MTN appointed an independent inquiry, and the chairman found that the allegations were based on the evidence of a former MTN employee described as a fantasist and a conspiracy theory theorist. What do you say to that?
Cedric Soule (05:48.554)
So there are various things that I'd like to say in response. One is the idea of an independent inquiry. We reject the idea that this was a quote unquote independent inquiry for multiple reasons. These are all people appointed by MTN. Turkcell had no role in appointing them. This is not like an arbitral tribunal or even a court where the judge is independent. These are all people that MTN paid, that MTN appointed. So we say that amongst other reasons that this is not an independent inquiry.
Secondly, we would say that it's not just the allegations that we have brought forth are not just based on that person's evidence. We have documents that we believe will show that MTN paid bribes to Iranian and South African authorities. And we have documents sort of showing purported introductions, for example, between MTN personnel and South African weapons companies and sort of purporting to make those introductions to the Iranians that were involved in deciding who was going to get the license, the GSM license.
So it's not just the documents. It's not just the testimony of this person. We have hard evidence that we believe will show that our allegations are correct.
We do have this ex-MTN employees testimony. We don't believe that he's a fantasist or a conspiracy theorist. In the US, we call these people whistleblowers. And we believe that he will be credible when he is examined in court and that what he says is confirmed by the documents. And we believe that all that together should convince a judge to find in our favour.
Chris Steyn (07:44.973)
Can you tell me what the financial implications have been for Turkcell?
Cedric Soule (07:50.27)
Well, the financial implications have been severe because the claim that we have brought in South Africa, we are seeking 4 billion US dollars in damages. And that was back in 2013. So that number will have risen in the 11 years that have passed since then. But that is what we say is the amount of money that Turkcell would have made had MTN not improperly interfered and had essentially let the process run its course, which was Turkcell being awarded the GSM license. So 4 billion US plus is the sort of financial loss that Turkcell has incurred as a result of what we say is MTN's improper conduct.
Chris Steyn (08:40.117)
And I'm sure not the inconsiderable cost of the fight subsequently.
Cedric Soule (08:44.66)
That too, absolutely, absolutely. But it still pales in comparison to the of this GSM license when it was awarded to Turkcell in 2004.
Chris Steyn (08:58.709)
When are you expecting judgment in your case?
Cedric Soule (09:02.017)
So we are expecting judgment in the next months, hopefully before Christmas.
Chris Steyn (09:08.501)
Okay, well, maybe we can have another interview once the judgment has been handed down. Meanwhile, thank you very much for making time for BizNews. That was Cedric Soule, the legal counsel for Turkcell, speaking to BizNews from New York, and I'm Chris Steyn. Thank you.
Cedric Soule (09:26.497)
Thank you, Chris.
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