MTN FACES new allegations of helping militant groups in Afghanistan, including paying protection money, in an amended lawsuit filed last week on behalf of hundreds of families of US soldiers.     Simphiwe Mbokazi African News Agency (ANA)
MTN FACES new allegations of helping militant groups in Afghanistan, including paying protection money, in an amended lawsuit filed last week on behalf of hundreds of families of US soldiers. Simphiwe Mbokazi African News Agency (ANA)

Old Mutual calls on MTN to clear Afghan militant aid accusations

By Dineo Faku Time of article published Jun 15, 2020

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JOHANNESBURG - Old Mutual Investment Group has called on MTN to resolve, with full transparency, allegations that it aided militant groups in Afghanistan. In an unprecedented move, the group, which holds a 5percent stake in the mobile operator, warned that the dispute would likely impact MTN’s environmental, social and governance engagement (ESG) score.

Old Mutual’s ESG head, Robert Lewenson, on Friday said the allegations were severe and threatened MTN’s attractiveness to investors.

Lewenson said MTN could lose out on key markets and investments in the event of any conviction directly or indirectly to terrorist activities.

“Companies can become blacklisted,” Lewenson said. “From our perspective, we would like to see full transparency and full disclosure to the market. We would also like the company to articulate what the plan for bringing the allegations to a close.”

MTN, Africa’s mobile giant, faces new allegations of helping militant groups in Afghanistan, including paying protection money, in an amended lawsuit filed last week on behalf of hundreds of families of US soldiers.

The original lawsuit was aimed at least at eight multinational companies, which operated in Afghanistan and Iran between 2009 and 2017.

The suit was initially filed in December 2019 in the US District Court in the District of Columbia and alleged the companies violated the US Anti-Terrorism Act by paying protection money to al-Qaeda and the Taliban. The new, amended complaint filed early this month by Washington-based law firms, alleged that MTN’s “conduct targeted the US" by executing a strategy reliant on dominating markets in unstable countries not allied with Washington.

MTN said it was reviewing the new material in consultation with its legal advisers, but remained of the view that it conducted its business in a responsible manner in all its territories. The mobile operator said it would continue to defend its position.

Lewenson said the allegations threatened MTN’s investability. He said MTN could be excluded from certain indices. “More and more indices are introducing criteria that exclude companies that engage in certain types of controversies. You lose the ability to raise capital in the capital markets,” he said.

“You lose a committed group of long-term investors such as ourselves who want a better outcome. You see that your ability to enter new markets becomes at risk.”

Over the past five years, MTN has faced a series of regulatory challenges that resulted in a $1billion (R17bn) fine by Nigerian authorities for missing the deadline to deactivate unregistered SIM cards. Nigerian regulators also accused the group of allegedly moving $8.1bn out of the country and owing $2bn in back taxes.

In a move to manage regulatory risks, MTN announced a major shake-up to its board, including the appointment of former deputy Finance Minister Mcebisi Jonas as the new chairperson last May.

It also established an international advisory board, chaired by former president Thabo Mbeki, to guide the group in navigating complex geopolitical issues.

“Going forward, we would like to see fewer controversies coming through in their operations. Yes, we expect that there will be some controversies which need to be dealt with, but it is crucial that the board has a clear view of how the controversies are being dealt with. Because of the experience of the board, we would expect things to smooth out,” Lewenson said.

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