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MTN Fights ‘Bizarre’ Funds Seizure in Cameroon Over Dispute

MTN Fights ‘Bizarre’ Funds Seizure in Cameroon Over Dispute
Shoppers pass the entrance to an MTN Group Ltd. telecommunications store at the Clearwater Mall in Johannesburg, South Africa, on Thursday, Aug. 3. 2017. MTN Group Ltd. said a Nigerian listing that it agreed to as part of a $1 billion regulatory fine was on track and would take place within the next six to 12 months.

A Cameroon court ordered banks used by South Africa’s MTN Group Ltd. to transfer its funds into escrow over a dispute the wire carrier says it has nothing to do with, marking an escalation of a conflict that had already frozen MTN’s access to local accounts. 

The order, dated June 9, relates to a dispute between South African lender First National Bank and Cameroonian businessman Ahmadou Baba Danpullo, MTN said in an emailed response to questions.

“It is utterly astounding that MTN is being brought into this issue,” MTN’s chief of sustainability and corporate affairs, Nompilo Morafo, said. “We have pursued all legal channels to resolve this bizarre situation in which we find ourselves caught up, but to no avail.”

African wireless carriers have been hit with an increasing number of legal, regulatory and tax disputes, curbing investor appetite on the continent at a time when major capital outlays are needed to keep up with growing demand. MTN in January got a $722 million tax bill from Ghana that was later scrapped, while the Democratic Republic of Congo last year seized the passports of executives at carriers including Orange SA and Vodacom Group Ltd. over a controversial tax law.

Read More: Congo Returns Telecom Executive Passports After Signing Tax Deal

MTN Cameroon said moving the money to an escrow account is unnecessary as it has already been frozen for ten months due to the dispute, adding the issue “poses a serious risk to the continuation of our business.”

MTN is Africa’s largest wireless carrier and has about 12 million clients in Cameroon, representing more than half of the local market. It says it has been targeted in the dispute because South Africa’s national pension fund, the Public Investment Corp. Ltd., is a shareholder in both First National Bank and MTN.

The pension fund is owned by the South African government and has 2.5 trillion rand ($136 billion) in assets under management. It owns about 17% of MTN on a group level, and has no holding in its Cameroonian business. The asset manager holds stakes in most of South Africa’s listed businesses.

Danpullo and the Cameroon government did not immediately respond to requests for comment. First National Bank declined to comment.

Danpullo, a Cameroonian with investments in real estate, telecommunications and other industries, is pursuing a claim of 259 billion Cameroon francs ($427 million) related to a dispute over real estate with First National Bank.

Last year, he began to target other South African companies operating in Cameroon in an attempt to receive the money, including MTN and a division of food producer Tiger Brands Ltd.

A local Tiger Brands subsidy was “unreasonably caught in the crossfire of this dispute,” the company said in an e-mailed response to questions.

South Africa’s foreign ministry expressed concern over the order.

“Unfortunately, these latest developments will challenge the extent and appetite for investments into Cameroon,” the ministry said in a statement on Tuesday.


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