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MTN Group is off the hook over accusations of paying pr...

Business Maverick


MTN gets some respite in the US, paving the way to focus on its African strategy

(Photo: Waldo Swiegers / Bloomberg via Getty Images)

MTN shares finished 6% higher on Monday at R111.30 on news of settling repatriation dispute in Nigeria and an anti-terrorism court case in the US, adding about R13bn to the company’s market value.

MTN Group is off the hook (for now) regarding the allegations that it paid protection money to militant Islamist groups in Afghanistan and actively helped its fighters from being detected by US counter-insurgency forces.

MTN, along with a number of other Western businesses, was accused on 27 December 2019 in a US court by 400 US service members and civilians, and their families, of having violated the Anti-Terrorism Act by paying protection money to the Taliban.

Along with MTN, the businesses are: London-headquartered G4S Holdings International and its subsidiaries; Kansas firm Black & Veatch Special Projects; the Florida company Centerra Group; the Maryland company DAI Global; the Tennessee firm Janus Global Operations; and the Canadian company Louis Berger Group and its subsidiaries and affiliates. MTN Group and its wholly-owned subsidiaries, MTN Dubai and MTN Afghanistan were listed as defendants in the case.

Some of the families were killed and wounded while serving in Afghanistan between 2009 and 2017. The Taliban is a terrorist organisation known to have been working with al-Qaeda, which is also widely regarded as a terrorist movement. Both the Taliban and al-Qaeda have pledged to stop cooperating but there’s yet to be demonstrable evidence of this.

According to Business Day, “Protection money was often paid in two forms: by disbursing money to Taliban commanders in dangerous districts; and/or cash passed to local tribe elders to protect cell tower sites, money which would eventually end up in the hands of the Taliban.”

MTN Group operates in 21 countries in Africa and the Middle East, where it previously faced scrutiny over its Iranian operations.

In April 2020, MTN asked a US court to dismiss a case filed against it, saying that the “plaintiffs [the US service members and civilians, and their families] have sued the wrong defendants [MTN Dubai and MTN Afghanistan] in the wrong court based on insufficient allegations”.

MTN also asked that the court dismiss the complaint on the basis that it lacks jurisdiction because the telecommunications giant doesn’t operate in the US and that the complaint does not allege any conduct that violated the Anti-Terrorism Act.

Its wish was granted, the company said with the release of its financial results on Monday for six months to 30 June 2021.

“MTN is pleased to report that on Friday, 30 July, the magistrate judge to whom the case had been referred made a recommendation to the district judge presiding over the case to grant the motion to dismiss for all defendants in the case. The magistrate judge further concluded that the court did not have jurisdiction over MTN defendants,” MTN said in a statement that included developments to its operations in Nigeria.

MTN also announced on Monday that it had repatriated approximately R9.3-billion in cash from its operating companies, including R4.3-billion from MTN Nigeria. The telecommunications company has been struggling to repatriate R4.3-billion in dividends from Nigeria due to challenges of securing foreign currency in that country.

MTN shares finished 6% higher on Monday at R111.30 on the news of repatriating money from Nigeria and the court case in the US, adding about R13-billion to the company’s market value. 

CNN initially reported about the lawsuit in which MTN and other firms were accused of using a “network of subcontractors and private security groups to transfer cash to Taliban agents, and in some cases dole out salaries to certain Taliban ‘guards’ between 2006 and 2014, while the group was allying with al-Qaeda and waging a violent campaign against US forces and their allies”.

But there is still a fighting chance against MTN by US service members and civilians, and the families that levelled damaging allegations against the telecommunications company. 

“Under the US court’s procedures, the plaintiffs are permitted to file objections to the report with the district judge, and MTN defendants will have an opportunity to respond,” MTN said.

With the court case out of the way, MTN can now focus on its rest of Africa strategy. 

The strategy will see the company focusing on the rest of Africa and allocating more capital in the continent by 2025. In doing so, MTN is already in the process of exiting the Middle East in the next three to five years, starting with the sale of its 75% stake in MTN Syria.

Its exit from markets outside Africa will see MTN raise about R15-billion – funds that would help it reduce its high debt pile of more than R49-billion for the year to December 2020, and help it fund new growth opportunities in markets such as Ethiopia. Some of MTN’s debt is denominated in dollars and euros and has derailed its investment case over the past few years. DM/BM


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