Turkcell raises stakes on corruption allegations against MTN in Iran

16.04.2012
Africa's largest telecom operator, MTN, is facing mounting allegations of corruption in a deal involving Iran that could potentially damage the company's reputation and affect its expansion drive.

Istanbul-based Turkcell alleges that in 2004, MTN improperly paid South African and Iranian government officials to win an Iranian license in 2005. The license had initially been awarded to Turkcell by the Iranian authorities after a 2003 tender. Turkcell was, however, prevented from securing the license, and MTN, a South African-based telecom company that submitted a runner-up bid, secured it.

Turkcell also accuses MTN of promising Iran that MTN could deliver the South African vote at the International Atomic Energy Agency (IAEA), in support of the country's controversial nuclear program, in exchange for the GSM license. Turkcell further alleges that MTN promised and procured defense equipment for Iran otherwise prohibited by national and international laws.

These acts, Turkcell said, successfully frustrated its ability to close on the license that it had legitimately won through an international tender process.

"MTN's actions deliberately resulted in Turkcell losing its rightfully-won telecommunications opportunity and in MTN taking over the license, cause substantial direct harm to Turkcell," said Turkcell in a statement last week.

Turkcell has filed a lawsuit in the U.S. District Court for the District of Columbia against MTN, claiming not less than US$4.2 billion plus interest over MTN's alleged corrupt practices in Iran. Turkcell said it decided to file the lawsuit in the U.S. because both companies have extensive business dealings in the U.S. and because of the allegations that MTN breached international law.