MTN chairman Mcebisi Jonas' appointment as the new Special Envoy to the US has been construed by some as possibly the worst move for South Africa, and his past comments of US President Donald Trump being a “racist, homophobe” and “rightwinger” is only half the problem.
Jonas' appointment comes after former South Africa's Ambassador to the US, Ebrahim Rassool, was recently expelled from the country after criticizing President Donald Trump in public.
MTN is the only publicly invested group in South Africa with a significant investment in Iran, holding a 49% stake in the Irancell telecom operator, the second-largest mobile network operator in that country, which is 49% owned by MTN and 51% by Iran Electronic Development Company (IEDC).
Iran faces numerous economic and human rights sanctions from individual countries and multilateral organisations such as the US, European Union, and the United Nations, due to its ongoing development of its nuclear program.
According to an online search by Business Report, the IEDC is a joint venture between Bonyad Mostazafan and Iran Electronic Industries, which is controlled by the Ministry of Defense and Armed Forces. Bonyad Mostazafan is linked to the Islamic Revolutionary Guards Corps.
Trump has taken a hard stance against Iran since his appointment in January, calling for talks about its growing nuclear capabilities and warning of possible military action if Tehran refuses—these talks are ongoing. Iran has repeatedly insisted its nuclear program is for peaceful purposes, such as energy. Trump has also accused South Africa of aligning with Iran to help develop its nuclear industry.
MTN’s history in Iran is further complicated. In December 2022, the High Court in South Africa dismissed a case brought by Turkcell against MTN, where the Turkish company claimed MTN had bribed an Iranian and a South African government official and had encouraged South Africa to support Iran’s nuclear development program at a meeting of the International Atomic Energy Agency (IAEA) to win the Iran telecoms contract.
Last month, the IAEA Board of Governors highlighted serious concerns about Iran's nuclear program, claiming it had significantly increased its stockpile of highly enriched uranium, far exceeding the limits set by the Joint Comprehensive Plan of Action. Their report also noted Iran's lack of cooperation with the IAEA.
MTN divested its Middle Eastern markets such as Syria, Yemen, and Afghanistan in 2020, but has retained its investment in Iran. MTN’s reputation was also called into question this year when an investigation by Opensecrets.org.za claimed it was guilty of human rights violations for internet shutdowns in several conflict-affected countries, including Sudan, Afghanistan, Uganda, and Iran.
MTN responded to BR at that time, stating that it had complied with regulations at all times and remained committed to digital human rights.
Liam Hechter, a fund manager at Anchor Capital, stated: "South Africa does seem to be caught up in some geopolitical process. There are certainly some congressmen in the US that have it out for South Africa right now, and as soon as the word sanction has been brought into the conversation, it's really going to rattle the confidence of offshore investors. MTN is the only company we can think of that has ever been mentioned (by the US as potentially having transgressed)."
Gryphon Asset Management portfolio manager, Kasparus Treurnicht, said Western institutional investors concerned about the possibility of sanctions likely exited MTN or decided not to invest in it a long time ago, especially as the geopolitical climate deteriorated with the onset of the Russia-Ukraine war. He expressed concern that nobody in the government appeared to have checked Jonas’ suitability for his new appointment if his job was to repair South Africa’s relations with the US.
Another JSE analyst said there was considerable uncertainty in the market regarding the possibility of sanctions being imposed on South Africa. This week, BizNews reported that the US think-tank, the Hudson Institute, warned that the US, through a Bill going before its Congress, was considering broad sanctions against South Africa under the Magnitsky Act, targeting both South Africa and some ANC and government officials.
Asset managers and institutional investors have a duty to act in their clients' best interests, which includes investing responsibly and ethically. MTN’s biggest shareholder is the Government Employee Pension Fund, holding a 20.42% stake.
Jonas had referred to Trump in derogatory terms during the 11th Ahmed Kathrada Annual Lecture in November 2020. MTN had not responded to BR's questions at the time of going to print on Tuesday.
BUSINESS REPORT