Iran haunts MTN and SA

The MTN Group has a gigantic Iranian problem. This means South Africa has a gigantic political problem.

The incestuously intertwined worlds of big business, party financial interests and facilitating state actors may come under uncomfortable and damaging scrutiny from two court actions that have left MTN scrambling.

Because of MTN’s close connections to the ANC elite – Mcebisi Jonas, a struggle stalwart, former finance deputy minister and recently appointed special envoy to the United States, is the present chair of MTN; his close political ally, President Cyril Ramaphosa, is a previous chair – the ultimate judicial findings may have explosive political reverberations.

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The first is a recent New York (NY) District Court decision on a lawsuit filed in 2022. The second is a ruling this week by the South African Supreme Court of Appeal (SCA). Both cases revolve around MTN’s extensive business activities in Iran, which the US has designated as a state sponsor of international terrorism and imposed extensive sanctions upon.

The ANC, as a party, has made no bones about its admiration for Iran and its support for Iran’s terrorist affiliates, Hezbollah and Hamas. The ANC, as a government, is a sturdy defender of Iran against human rights criticisms in global forums, and its diplomats echo Iran’s anti-Israel, anti-US sentiments.

So, the last thing that SA needs right now is any Iranian skeletons to come tumbling out of the cupboard, which might well happen.

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One such scrutinising lens is provided by the NY court, permitting an Anti-Terrorism Act lawsuit against MTN Irancell to proceed to the discovery stage. The suit was filed by the families and estates of American military personnel who died or were injured in Iranian-backed terrorist attacks in neighbouring Iraq and Afghanistan.

Along with MTN Irancell, the other defendants are former MTN Group executives Phuthuma Nhleko and Irene Charnley. The litigants say MTN and these two executives, over 17 years, used known front organisations to partner with these terrorist organisations, “all while fraudulently concealing it from MTN Group’s shareholders”. If this lawsuit proceeds to a full trial, it will be a humdinger.

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The second microscopic examination would proceed from the SCA’s narrow 3-2 decision to allow Turkcell to pursue a claim for $4.2 billion in damages in a SA court. The Turkcell case rests on the same basis: MTN supposedly using its ANC connections to gain commercial favours.

According to Turkcell, MTN won the tender by bribing senior Iranian officials. All this occurred during Ramaphosa’s chairmanship of MTN in the early to mid-2000s. The president is not a respondent in the case. However, much like Jonas, it leaves a cloud over his reputation.

MTN is appealing both rulings. MTN faces significant reputational risks. Other corporations may be reluctant to do business with it. The scrutiny may erode investor trust or trigger a public backlash.

The biggest problem for MTN, for Jonas and Ramaphosa and, ultimately, for SA itself, is that cases like these are slow torture. Whatever verdict is finally reached, it’s a sometimes fatal drip of claims.

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Most importantly, the US doesn’t need a final court judgment to make political decisions based on the balance of probabilities. Critically for MTN’s future, the US might impose sanctions on it and its executives, apply banking restrictions, and cut it off from the US-centred international finance system.

Most critically, any or all of these measures might be taken against SA.