EXCLUSIVE: Governance issues rear ugly head again at MTN

January 29, 2016 9:52 am30 comments


YAOUNDE, – AS MTN, the continent’s biggest mobile network operator lurches from one corporate governance crisis to another, industry experts suggest it addresses its insatiable appetite for profit if it harbours any chance of redeeming its increasingly tattered image.

The South African-headquartered blue-chip company has, controversially, started the new year the same year it ended 2015.

No sooner than MTN’s predicament in Cameroon hogged the limelight than it was reported National Anti-Corruption Commission of Cameroon (CONAC), had implicated the company in a tax evasion issues.

CONAC said a wide-ranging probe recently carried out into the sector established MTN alongside other companies had failed to pay taxes on games and gambling services.

MTN and French-owned Orange were also accused of allegedly not paying taxes on their money transfer system, known as Mobile Money.

For its alleged troubles, MTN has been fined a hefty MTN 52 billion CFA francs (about US$85,873).

Together with Orange, they were said to jointly owe $166 million between 2010 and 2014.

MTN Cameroon, which has 10,4 million subscribers, denied any involvement in corrupt activities in the central African country.

“While waiting to receive a copy of the said CONAC report, the Management of MTN Cameroon wishes to reassure its stakeholders that MTN Cameroon is not and has never been implicated in corruption-related actions, in the exercise of its activities,” Philisiwe Sibiya, Chief Executive Officer of MTN Cameroon.

Sibiya said MTN Cameroon was a “responsible” investor and is up to date with regard to its fiscal obligations to the relevant authorities in Cameroon, “in accordance with all applicable rules and regulations.”

“Our corporate citizenship and responsible attitude have, on several occasions, earned public recognition, notably from the General Directorate of Customs.”

In an exclusive interview with CAJ News Africa, CONAC investigations head, Haman Adji, dismissed the rebuttal.

He accused the company of “deceit.”

Adi said CONAC had proof from the accounts of the companies concerned, documents from the Telecommunications Regulatory Agency as well as the Directorate General of Taxation.

“MTN, Orange and CAMTEL owe this money and their attempts to contest are deceiving people. The figures are incontestable. They have to pay because that money belongs to the state,” Garga emphasised.

Cameroon has long been beset by lax tax regulation and corruption, allowing revenue to leak from official channels. After years of laxity, the anti-graft watchdog is cracking the whip.

While the CONAC findings have been denied, there is no denying the fact they have dented MTN’s already marred image.

“We are seeing a continuation of MTN’s battle to bring corporate governance under control in recent years, but should bear in mind that many of the issues relate to events that occurred under previous management,” said industry expert, Arthur Goldstuck.

MTN Cameroon’s woes coincides with negotiations to have authorities reduce a record $5.2 billion fine it was charged by the Nigeria Communication Commission (NCC) in October for allowing unregistered SIM cards on its network after a September deadline expired.

The fine has since been reduced 25 percent to $3,9 billion but negations are still ongoing amid hopes by the operator an out-of-court settlement can be reached.

Controversy has best the MTN Group outside Africa.

In 2012, a US-based advocacy group launched a campaign publicly calling for MTN to scale back its operations in Iran and end its business in the country, alleging that MTN technology was “enabling the Iranian government to locate and track individual cellphone users which it says is a violation of users’ human rights.”

While MTN has been cleared, in 2012, Turkey’s Turkcell filed a $4,2 billion lawsuit alleging it paid bribes to win a mobile licence in Iran, which was first awarded to Turkcell.

“The impression one gets is that the group had an obsession with results at all costs,” Goldstuck argued about MTN’s recent problems.

“It’s fairly clear that the company needs to enter a process of deep and meaningful soul-searching, revisiting the notion of core values as opposed to a narrow focus on results at all costs.”

Goldstuck said the massive resignations that followed the damning revelations in Nigeria might not be enough to redeem lost pride.

Group President and Chief Executive Officer, Sifiso Dabengwa, who was later followed out by Nigeria head, Michael Ikpoki, quit in November following the Nigeria debacle.

“The company probably needs a cultural shift rather than a management change, and that is far more difficult than merely reshuffling people,” said Goldstuck.

The expert noted such bad press was overshadowing the positives in the company’s operations.

“MTN finds itself in a toxic media space at present, with each new revelation, announcement or threat adding to the media fire. This means that, one the one hand, a cloud also hangs over positive news like good results, acquisitions or contributions to society,” said Goldstuck.

“On the other hand, it means there is absolutely no sympathy for MTN when it mounts a campaign to get regulators to protect it from the over-the-top services like WhatsApp and Skype. It needs to overhaul its image from top to bottom, not only in terms of structure and positioning, but also in terms of its actions.”

When contact for comment on Thursday regarding the company’s effort in addressing what communications technology view as corporate governance challenges with the mobile network, MTN Group Spokesman, Chris Maroleng, fumed that the media were reporting negatively about his company.

“You (media) are trying to create controversy where there is none! Why report MTN issues as if there is conspiracy against our company? The Iran issue you are bringing in happened way long back….and MTN were not guilty of any wrongdoing, ” Maroleng charged.

He was reacting to questions why MTN’s name was always dragged in muddy right from Iran, Nigeria and latest Cameroon.

CAJ News


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