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MTN 'was warned' over Iran

Jun 17 2012 14:00 City Press

Company Data

MTN GROUP LIMITED [JSE:MTN]

Last traded 243.12
Change -1.88
% Change -0.01
Cumulative volume 2667764
Market cap 449.37bn

Last Updated: 22/10/2014 at 04:23. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - MTN’s former financial director Rob Nisbet clashed with his bosses and was given a letter of warning over the financing of the Iranian cellular phone licence.

This was revealed in the testimony of former MTN Iran executive Chris Kilowan, who has turned against the mobile giant and is now helping competitor Turkcell in its $4bn lawsuit against MTN.

MTN is accused by Turkcell of “stealing” the Turkish mobile operator’s licence through bribery.

Kilowan testified more than a month ago in a US court that in 2005 he and Nisbet warned their superiors, former MTN chief executive Phuthuma Nhleko and ex-commercial director Irene Charnley, of intentions by MTN’s Iranian partners in Irancell (the joint venture) not to repay loans of about R4.8bn advanced by the telecoms firm for the purchase of the local shareholders’ portion. Nisbet this week declined to comment.

“During the negotiations Rob would often just walk out and I would go back and talk to him, and he would say, ‘we are getting screwed here, and nobody wants to listen to me’. That was Rob’s view,” said Kilowan.

“My intelligence was saying the same thing. So I thought that before we entered into the second part of negotiations, that I better forewarn Phuthuma (Nhleko),” testified Kilowan.

Kilowan told the US court that Nisbet continued to object to the financial arrangements entered into by MTN in Iran.

He said that Nisbet was later issued with a letter of warning by Nhleko as he refused to sign off on the financial contracts involving MTN and its Iranian partners.

Nisbet stepped down as financial director in September 2009 after 14 years at MTN.

An MTN statement at the time said he was leaving “to pursue other business interests outside the group”.

Kilowan said that in June 2005 MTN signed a memorandum of understanding with their soon-to-be local partners Sairan and Bonyads.

The agreement said that apart from paying for its 49% equity, MTN would also fund up to 80% of the local shareholders’ portion.

Later, Kilowan said, he realised that the local partners had no intention of honouring their part of the agreement.

MTN’s Paul Norman said the company had always disclosed these loans in their financial statements.

“These loans have been highlighted to shareholders in MTN group’s financial statements. These have been signed off by the auditing firm PWC and are easily accessible on our website.”

Norman said three of the four loans advanced to its Iranian partners have been repaid with interest. Only one loan is still outstanding and is due to be repaid in 2014.

 
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