Why Turkcell is filing MTN lawsuit in the US

Turkcell has cited the Alien Tort Statute against MTN Group (MTN) as justification for its filing of a lawsuit in a US court – the legal merits of which are questionable, according to an analyst.

The statute is notable for allowing US courts to hear human-rights cases brought by foreigners for conduct committed outside the US.

On March 28, Turkish-based Turkcell filed a complaint in US District Court of Columbia, Washington DC, against SA-based MTN Group, demanding $4.2 billion in damages over the award of the cellular licence in Iran in 2004.

Turkcell is accusing MTN of bribing its way to the licence.

Within the 70-page document, Turkcell also alleges that MTN Group exercised its control over its subsidiaries – including MTN Holdings, MTN International, MTN South Africa, MTN Mauritius, MTN-Irancell, and MTN Management Services, among others – “to compose and execute its staggeringly brazen orchestra of corruption”.

Turkcell has appointed legal firm, Patton Boggs to represent its case.

The document notes that the jurisdictional contacts of each MTN company should be attributed to MTN Group and the MTN organisation as a whole.

It highlights as many as 19 points by way of justification for its filing in the US, including the allegations that MTN’s directors reside in the US, and that the group has long-standing and significant US banking relationships. It notes that MTN also transacts significant amounts of business with US entities.

Turkcell documents that MTN leases US satellite services, and it regularly and routinely broadcasts signals for its operations using American satellites. It says that MTN also sells a high number of calling cards in the US and that MTN is able to provide its customers with roaming cellular telephone service in the US through lucrative roaming agreements with US cellular carriers.

Fred Teeling-Smith, a telecoms analyst at STANLIB said that the market is obviously concerned about the allegations that have been made by Turkcell.

“The documents filed in the US appear to have significant evidence which is of concern. I would expect any company to lobby government support when trying to go into new markets but what is of concern would be if they were found to have paid bribes in order to obtain the licence,” he said.

However, Teeling-Smith believes that the legal merits of the claim are questionable.

“I expect MTN to lodge a legal defence rather than argue the merits of the claims at this stage. All legal commentary that I have seen seems to indicate that the action under the Alien Tort Statute is completely inappropriate, as this law is not normally used for commercial legal claims.

“It would appear probable that the legal action could be thrown out by the US Courts, but this could take some time,” the analyst continued.

“If it is found that the bribes were indeed paid then it questions the way that MTN has operated its business across all of its regions,” he concluded.

MTN, meanwhile, said it believes there is no legal merit to Turkcell’s claims and no basis for a US court to consider them. “We have nonetheless sought to obtain Turkcell’s cooperation with the independent investigation that MTN has set up.”

The group said that talks with Turkcell broke down as a result of Turkcell’s extortionate demands for damages and its threat to start a “frivolous lawsuit” in the US.

“MTN is committed to resolving the issue through Lord Hoffmann’s inquiry,” it said.

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Why Turkcell is filing MTN lawsuit in the US