MTN Group, Africa's largest telecommunications company, has disclosed that it is now the subject of a grand jury investigation by the U.S. Department of Justice (DOJ). The probe, revealed in a statement accompanying the company's recent financial results, centers on MTN's historical business dealings in Iran and its former subsidiary in Afghanistan. This development marks a new and serious escalation in the legal challenges facing the South African multinational.
The investigation is linked to a separate, ongoing civil lawsuit brought by U.S. military veterans and their families who were injured or lost loved ones in Iraq and Afghanistan. The plaintiffs in that case allege that MTN knowingly provided material support to terrorist groups and anti-American militias through its operations, specifically by doing business with Iranian entities. MTN holds a 49% stake in Irancell, an Iranian mobile phone carrier, and the plaintiffs claim this relationship funneled funds and provided communications technology to groups like the Iranian Revolutionary Guard Corps (IRGC), which they assert then aided attacks against U.S. forces.
MTN has consistently and categorically denied any wrongdoing and stated it conducts its business in a responsible and compliant manner in all its territories. The company has announced its intention to file a motion to dismiss the civil claims, and it is fully cooperating with the DOJ's investigation by voluntarily responding to requests for information.
The DOJ probe adds a new layer of complexity to MTN's legal entanglements. Unlike the civil lawsuit, a grand jury investigation is a criminal proceeding where a jury determines if there's enough evidence to formally indict an organization. While this doesn't mean MTN has been charged with a crime, it signals that U.S. authorities are seriously examining the allegations.
This new scrutiny also comes against a backdrop of strained diplomatic relations between the U.S. and South Africa, a factor that could influence the political and economic landscape surrounding the case. The U.S. administration has been critical of South Africa's positions on various global issues, including its close ties with Russia and its stance on the conflict in Gaza.
The DOJ investigation is not the only high-stakes legal battle on MTN's plate. The company is also embroiled in a long-running dispute with Turkish competitor Turkcell. Turkcell alleges that MTN used bribery and other corrupt practices to win the Iranian mobile license in 2006, a license that Turkcell claims was promised to them. This case has been winding its way through South African courts for years, with a recent appellate ruling upholding that South African courts have jurisdiction to hear the matter.
For multinational corporations, operating in geopolitically sensitive regions presents significant legal and reputational risks. The MTN case highlights the increasing trend of companies being held accountable for indirect complicity in conflicts. The U.S. Anti-Terrorism Act (ATA), under which the civil lawsuit is filed, allows victims of terrorism to sue those who provide material support to terrorist organizations. A U.S. District Court has already ruled that the plaintiffs in the veteran's lawsuit have "plausibly stated a claim" for aiding and abetting liability against MTN, allowing the case to move to the discovery phase. This ruling in September 2023 was a significant hurdle for MTN to overcome.
This litigation also raises questions about the due diligence and risk disclosures of multinational firms. Legal experts have noted that MTN's past assessment of the U.S. terrorism cases as having a "remote" risk, and thus not requiring contingent liabilities, could be misleading. This has prompted concerns from professors of law about the potential for securities fraud.
The dual investigations—one criminal and one civil—signal a challenging road ahead for MTN as it attempts to navigate the intersection of international business, geopolitical tensions, and U.S. law. While the company maintains its innocence, the financial and reputational costs of these protracted legal fights are likely to be substantial.
Comments