Bloomberg News

Turkcell Says Suit Over MTN-Iran Deal Can Proceed in U.S.

August 01, 2012

Turkcell Iletisim Hizmetleri AS, Turkey’s biggest mobile-phone operator, asked a U.S. judge to allow its lawsuit against South Africa’s MTN Group Ltd. (MTN) to proceed, arguing American courts have authority to oversee a case involving a wireless service deal in Iran.

Turckcell, in a filing today in Washington, denied that its lawsuit alleging bribery by MTN Group Ltd., Africa’s largest wireless provider, is merely a commercial dispute between two non-U.S. companies that doesn’t trigger a 1789 law giving the federal court jurisdiction to consider the case.

“MTN’s mischaracterization of this case as a ‘commercial dispute’ is either a refusal to acknowledge the allegations in Turkcell’s complaint, or, far worse, an affirmation of MTN’s belief that corruption and bribery are acceptable ‘commercial’ strategies,” David Farber, Turkcell’s lawyer, said in the filing.

Turkcell, which initially was awarded the Iranian mobile- phone license, sued its Johannesburg-based rival on March 28 for $4.2 billion in damages. The suit alleges MTN bribed officials, arranged meetings between Iranian and South African leaders, and promised Iran weapons and United Nations votes in exchange for a license to provide mobile-phone service in the Islamic Republic.

Internal Memos

The complaint includes numerous alleged internal MTN memos that detail the company’s efforts to win the Iranian business after losing the bid to Istanbul-based Turkcell in February 2004.

Turkcell claims MTN violated the Alien Tort Statute, usually cited in human rights and torture cases. The law gives U.S. courts jurisdiction in some instances to consider claims by foreigners for illegal conduct that occurred in another country.

Timothy Coleman, a lawyer for MTN, didn’t immediately respond to an e-mail message seeking comment on the filing.

MTN asked U.S. District Judge Reggie Walton to dismiss the case, arguing that Turkcell was trying to get paid by a “nonstate actor” for the Iranian license. The U.S. court “has no business deciding this dispute,” MTN said in a July 2 filing.

MTN’s promises of International Atomic Energy Agency votes and arms, and its payment of bribes “to steal Turkcell’s right to the Iranian GSM license, clearly support Alien Tort Statute jurisdiction here,” according to Turkcell’s filing.

Corruption, Bribery

“For the last two decades the law of nations has outlawed corruption and bribery as acceptable ways of doing business,” Farber of Patton Boggs LLP in Washington, said in today’s filing.

The U.S. Supreme Court is considering a case brought by a group of Nigerians seeking damages under the Alien Tort Statute, claiming Royal Dutch Shell Plc helped their government commit torture and murders in the early 1990s. The company argued that corporations can’t be sued under the law. Four federal appeals courts have permitted corporations to be sued under the statute, the Nigerians argued.

The Supreme Court scheduled arguments in the Nigerian case for Oct. 1.

The case is Turkcell Iletisim Hizmetleri AS (TCELL) v. MTN Group Ltd, 12-cv-479, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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