Africa News blog

African business, politics and lifestyle

Turkcell’s dubious case against MTN

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 By Alison Frankel
NEW YORK (Reuters) – On February 28, during oral arguments at the U.S. Supreme Court in an Alien Tort Statute suit by a group of Nigerians who accused Shell of complicity in state-sponsored torture in their country, Justice Samuel Alito interrupted the Nigerians’ lawyer, Paul Hoffman of Schonbrun DeSimone Seplow Harris Hoffman & Harrison. “What business does a case like this have in the courts of the United States?” Alito said.

Enough justices agreed with Alito that days after the argument in the case, called Kiobel v. Royal Dutch Petroleum, the Supreme Court decided it was more interested in the extraterritorial application of the Alien Tort Statute than in the nominal issue in Kiobel, which concerned corporate liability under the ATS. In an extraordinary post-argument order, the justices called for additional briefing from both sides on the question of “whether and under what circumstances the Alien Tort Statute allows courts to recognize a cause of action for violations of the law occurring within the territory of a sovereign other than the United States.”

Whoever defends South Africa’s MTN Group in a new suit in federal court in Washington, is going to be very interested in the answer the Supreme Court eventually delivers to that question. In a 70-page complaint filed on March 28, the Turkish cellular services company Turkcell is asserting the Alien Tort Statute against MTN Group . According to Turkcell’s lawyers at Patton Boggs, MTN engaged in all sorts of corporate skullduggery, from bribery to peddling votes at the United Nations, to wrest away Turkcell’s contract to provide private mobile phone service in Iran. Turkcell said that MTN’s conduct is a “violation of the law of nations,” and has demanded $4.2 billion in damages.

The Turkish company’s allegations were explosive enough to have led to a 6 percent fall in MTN’s share price since the suit was filed . “MTN used its high-level political influence within the South African government to offer Iran the two most important items that the country could not obtain for itself: (1) support for the Iranian development of nuclear weapons; and (2) the procurement of high-tech defense equipment,” the complaint said. “MTN developed a scheme to trade these items — nuclear votes and illicitly procured arms — for (Turkcell’s)license. MTN furthered its scheme by bribing and trading in influence with government officials in both Iran and South Africa in exchange for the license…. MTN went so far as to create a code name for its corrupt scheme — ‘Project Snooker.’ Between February 2004 and November 2005, MTN Group worked feverishly to ‘snooker’ its business competitor through these corrupt arrangements.”

China shunts U.S. into second place in Scramble for Africa

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A presidential visit followed by U.S. Secretary of State Hillary Clinton’s African tour cannot conceal a stark reality: China has overtaken the United States as Africa’s top trading partner.

That is one of the main problems facing Clinton on a seven-nation jaunt meant variously to spread Washington’s good governance message and shore up relationships with its key oil suppliers on the continent.         

Sovereign risk in South Africa

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Recent events in South Africa have sent some conflicting signals to investors about sovereign risks. On the one hand there was some regulatory flip-flopping over the Vodacom listing given objections from the union organisation COSATU, which raised questions about the influence of unions in Jacob Zuma’s administration. On the other hand the sovereign issuing some $1.5 billion was highly successful and oversubscribed.

With Zuma recently elected on a platform of change for his domestic audience and continuation of old policies when speaking to investors, there is a raft of new ministers and new ministries and quite a bit of policy uncertainty. No foreign investor will deny South Africa’s need to address serious social problems of inequality, housing, jobs and education through a more developmental state agenda.

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