MTN wants home-court advantage

2012-07-07 09:08

Retired judge assisting cell operator in legal battle

South African telecoms giant MTN told a US court to dismiss legal action brought by adversary Turkcell, as the matter could be heard by South African courts.

The company employed retired justice of the Constitutional Court of South Africa, Johann Kriegler, to drive this point home.

Turkcell is suing MTN under the US’ Alien Tort Statute, written in 1789.

It is usually cited in human rights and torture cases.

This law gives US courts jurisdiction in some instances to consider claims by foreigners, against US companies, for illegal conduct that occurred in another country.

MTN claims this law normally addresses issues like piracy and genocide, not business disputes.

Kriegler who, in a sworn affidavit, admitted that MTN was paying him to make the testimony, told the US court that justice can be sought by Turkcell in South Africa and the American court should decline to exercise jurisdiction over the matter.

Besides serving as the chairperson of Freedom Under Law, Kriegler is also a director of the Nelson Mandela Children’s Fund.

He was involved with MTN chairman, lawyer, politician and businessman Cyril Ramaphosa in setting up the transitional constitution and constituent assembly arrangements in South Africa.

Kriegler said: “I was requested to provide a factual exposition of the SA legal system insofar as it relates to the potential resolution of the causes of action set out in the complaint.”

He argued that “the SA legal system offers adequate equivalents for such action”, as brought by Turkcell against MTN.

Turkcell filed a $4.2-billion motion to have the US court hear a matter in which it alleged that MTN illegally bribed its way into Iran and conspired with Iranian officials to wrestle away a lucrative mobile licence from the Turks.

This week, MTN filed a motion to dismiss the complaint laid by Turkcell on the grounds that the court had no jurisdiction over MTN.

The matter also involves key US-listed IT companies like Hewlett Packard, Sun Microsystems and Cisco Systems.

Paul Norman, the MTN Group’s chief human resources and corporate affairs officer said the case lacks merit and has no place in the US law courts.

He said: “These are manipulative tactics from Turkcell aimed at inflicting the maximum reputational harm. We are fighting these claims and fully expect them to be dismissed.

“There are no connections with the US that make the US courts the appropriate place to address any claims that Turkcell want to make against MTN.

“If Turkcell wants to bring such claims then the South African courts are where such claims should be brought and the courts would be perfectly capable of dealing with the claims.

“Turkcell has brought its claims in the US because it seeks damages in the US that it knows it could never dream of recovering elsewhere, as there is no proper basis for the loss claimed.

“Turkcell hopes to bring pressure to bear on MTN by suing in the US to try to force MTN to settle with it.”

As MTN sought to dismiss the Turkcell application, on the additional grounds that its business in the US is minimal and does not confer jurisdiction, the US companies opened investigations into their supply chains.

An 89-page document alleges that through MTN, these companies unwittingly supplied Iran with equipment in defiance of US sanctions.

The document is alleged to be an MTN Irancell document from 2008 and it lists the names of four current MTN executives accused to have been involved in the procurement of banned equipment.

Extracts from the document, published by Reuters, allege that through a network of technology companies in Iran and the Middle East linked to MTN Irancell, US companies subverted sanctions intended to curb Iran’s nuclear programme.

Norman said: “MTN owns a non-controlling 49% share in Irancell. MTN is not going to provide detailed commentary on Irancell’s procurement processes or its commercial relationships.”

It is asserted in the report that the procedures and processes around the sanctions-busting procurement were established by MTN in Iran.

MTN told the court that the fact that it has US sales does not create general jurisdiction over the matter.

MTN sought to repel the suggestion that MTN top-up services permitting customers in the US to purchase additional airtime, and that MTN sells calling cards in the US, confers any jurisdiction over the matter to the US court.

“To the best of MTN’s knowledge, MTN personnel did not, either directly or indirectly, acquire or seek to acquire equipment for use in Irancell’s operations in a manner that was intended to avoid or circumvent any sanctions,” said Norman.

“MTN is committed to compliance with US sanctions, and is working with the US government and its international legal counsel to remain compliant with applicable EU, US and UN sanctions,” he said.

The residency of directors of MTN in the US also did not make the US court the appropriate forum for the matter, MTN maintained.

The company asked the court to disregard that they raise capital from US institutions or have offered American depository receipts to investors in the US, as these do not confer jurisdiction, according to MTN’s legal team.

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