MTN 'was warned' over Iran

2012-06-17 14:00

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.


  • robin.harriram - 2012-06-17 14:52

    if you can get screwed for that kind of money then it means you are screwing your loyal supporters. easy come easy go

  • braamc - 2012-06-17 15:53

    A South African company doing business with an oppressive regime. Should never happen.

  • Dave - 2012-06-17 19:07

    I lived and worked in Iran for two years in 2004 & 2005. There is no doubt in my mind that MTN could get screwed. In fact I would say that it is likely that MTN will get screwed. We did not do business unless we had cash in the bank first. If the national oil and gas companies can't pay, you have a big problem.

  • tumelo.kennedy - 2012-06-17 21:22

    This Iran thing over MTN will bring anything but trouble in SA so I'm saying our government must step in before its gng far(you knw iran dnt trust them

  • Derrick Chong - 2012-06-18 00:52

    MTN deserves the crap its going to get for being a bunch of greedy fools....

  • Deon Du Plessis - 2012-06-18 09:03

    @robin, my mate, you have NO idea how hard we are being screwed. In 2005, a average 1minute phone call then cost R1.47p/min. At that stage their TOTAL cost per minute, that is running cost, salaries etc etc. was R0.27p/min. Go do the math ;)

      magomarele - 2012-06-18 09:35

      Don't thumb-suck figures and post them as facts. How did you arrive at the figure of R0.27p/m? Fixed costs of running a network operator were far much higher than that. Remember the company still needed to expand and upgrade the network on regular basis. 3G, HSDPA, EDGE etc don't come cheap, that's why you're enjoying low-cost data downloads. Not that I'm trying to defend anyone here, just saying.

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