South Africa Ex-envoy to Iran Arrested Over Telecom Deal

A retired South African diplomat has been arrested over claims that he received bribes to help a telecommunication company receive a large contract in Iran. Yusuf Saloojee, 78, who has been one of the country’s top diplomatic experts on Middle Eastern affairs and its ambassador to Tehran from 2004 to 2008, was detained as part of an investigation by South Africa’s elite anti-corruption squad known as the Hawks. 

The Hawks’ Hangwani Muladuzi said the investigation was on going and “on the right track.” He said the arrest sent “a strong message to anybody who wants to deal with any foreign bribery.”

Saloojee is accused of earning 1.4 million rand (about US$100,000) to help the mobile telecommunications company MTN secure a major cell phone contract in Iran. According to Hawks, he used the money to buy a house in the capital city Pretoria. The “house,” a mansion in the exclusive Duiwelskloof estate where Saloojee’s wife lives, has been raised in previous lawsuits.

“MTN has consistently denied that there is any credible evidence that it promised Ambassador Saloojee any money, or that Ambassador Saloojee accepted money from MTN,” the telecommunications company told Bloomberg, adding that a disgruntled former employee was the only witness for the police. 

“There is no doubt that bribes were being given and taken on both the South African and Iranian sides of this deal,” Iraj Abedian, a leading South African economist, told IranWire in a phone conversation. “For about 10 years, this deal has been under analysis and many have suggested that it involved corruption and bribery.”

Abedian, who has regularly acted as an economic advisor to the ANC and who is of Iranian origin, spoke to me in fluent Persian. He remembers being invited to speak to a group of Iranian investors about the investment climate in South Africa just when the MTN-Iran deal was getting going and said South Africa has been an investment target for many wealthy Iranians who are “connected politically and with the religious establishment.” He said these relationships often involve “illegal acts and bribery.” He added that the arrest of Saloojee was “unexpected,” but that it was a welcome sign that South Africa’s new president, Cyril Ramaphosa, is serious about corruption, unlike his predecessor Jacob Zuma. 

Turkey, Israel, Espionage, “Good Genes”

The Johannesburg-based multinational MTN is the largest cellphone operator in Africa and one of the largest in the world. It has more than 230 million subscribers around the world and holds a large chunk of the market in Nigeria. It has a presence in many African countries but also in countries closer to Iran, including Cyprus, Afghanistan, Syria and Yemen. In 2005, it was able to secure 49 percent of Irancell Telecommunication Company, giving it a license to operate in this massive Middle Eastern market. IranCell was the second-ever cell operator in the country and helped break the previous monopoly held by the state company. It continues to be Iran’s second-largest cell company, with about 45 million subscribers. The majority stake in IranCell belongs to Bonyad Mostazafan, a parastatal behemoth, and Iran Electronics Industries (IEI), a state-owned company linked to the country’s Ministry of Defense. 

The 2005 license to MTN had caused much scandal in Iran at the time. The award came barely a year after Turkcell, the leading operator in neighboring Turkey, had won a tender for the contract over many rivals — including MTN. Turkcell’s contract was only canceled after a media campaign against the company, which included claims it had links to Israel. This was during the last months of reformist Mohammad Khatami’s presidency, during which Khatami had to deal with a parliament controlled by anti-reform conservatives. The parliament passed an act that required the legislature’s approval for Turkcell’s activities in Iran and President Khatami canceled a scheduled trip to Turkey amidst a tense atmosphere. Khatami’s communications ministry continued to back Turkcell, but MTN’s Iranian partner was not a conservative — it was Hamid Reza Aref whose father, Mohammad Reza, was Khatami’s first vice president.

Years later, in 2017, Hamid Reza Aref caused much anger after he claimed that bringing MTN to Iran had been a feat that showed he had “good genes” and had nothing to do with nepotism, as critics had said. “I brought a company from South Africa and everyone was like, 'Can Africans do any of this?' They all looked to Europeans and the blue-eyed people. It was my talents that brought such a company to Iran,” he said in a televised interview. 

Khatami’s reign came to an end in 2005, when the reformists lost to a surprising new figure on the political scene, Mahmoud Ahmadinejad, who came from the margins of the establishment of the Islamic Republic and whose rise to power was to be fueled by astronomical corruption. Hamid Reza Aref later claimed that he had been “illegally” ousted by the Ahmadinejad government so that state companies could take over as MTN’s Iranian partners. Masoom Fardis, a deputy communication minister who had defended the Turkcell contract on competency grounds, was arrested, charged with espionage and convicted to six years in prison. He later told his cellmates in Evin Prison’s infamous Section 350 that his imprisonment was most probably due to his role in opposing the MTN deal.

Turkcell didn’t take the blow lying down. First it attempted to sue MTN in the United States in 2012, but the Supreme Court decided the company’s suit couldn’t be heard in the country. A year later, it filed a suit in South Africa but MTN has successfully held the Turkish company at bay for years. In the most recent lawsuit, the Istanbul-based company is demanding US$4.2 billion in damages, based on the profits it says it would have gained had it held the contract. Ironically, Fardis, despite his conviction of espionage, has been repeatedly allowed to travel abroad to represent Iran in international courts since he is known to be the country’s top expert on the contract. 

Fall of an Ambassador 

News of Saloojee’s arrest shocked the markets and heightened the multinational’s crisis. MTN’s stocks slumped 1.8 percent in a day after having already seen a 34 percent reduction in the last 12 months. The company continues to face problems in repatriating funds from Iran due to the US-led sanctions and is also encountering tax non-payment problems in Nigeria. The head of its division in Uganda was deported on Friday, February 15. 

Many Iranians have also reacted to Saloojee’s arrest. Those who had been bitter about Hamid Reza Aref’s claims to having “good genes,” which they saw as a fig leaf for his typical nepotism, were quick to remind the public that Saloojee’s role in the deal had probably gone through Aref. This is especially topical since his father is now a top reformist MP and a possible candidate for the 2021 presidential elections. 

“We await the trial of Aref’s son [Hamid Reza] as the king of corruption in the telecommunications industry,” a Marxist activist called Abed Tavanche tweeted, using the hashtag #Good_Genes. 

The arrest has also caused some grief in South Africa’s Muslim community, since the ambassador was a key figure there. “Uncle Jo Jo had already lost much of his reputation in 2012 when he was named in the US plea but this arrest is painful,” a Muslim activist in Cape Town who asked to remain anonymous told IranWire. 

Saloojee was a childhood friend and later an associate of Ahmed Timol, the legendary anti-apartheid activist from the country’s Communist Party who died in 1971 after he was thrown out of a window in Johannesburg’s infamous Vorster Square Police Station. Together with Timol, Saloojee was among the few Muslims who joined the anti-apartheid movement early on in the 1960s and his friendship with Timol is celebrated in Johannesburg’s Apartheid Museum. 

Saloojee left the country for ANC-friendly Zambia in 1966 and was later instrumental in establishing the ANC’s first outlet in Canada. He lived in Toronto from 1978 to 1989 before returning to South Africa and emerging as a top diplomat in the country’s post-liberation days. He headed the foreign ministry’s Middle East division and was was ambassador to the United Arab Emirates, Iran and Oman before retiring in 2012. 

He has previously met with other scandals. In 2001, while ambassador to Abu Dhabi, he allegedly sexually harassed a female passenger aboard a Singapore Airlines flight while she was asleep in her business-class seat. It was alleged that Saloojee had sworn at the woman and called her a racist, according to a 2012 report by City Press. He survived the scandal and was sent from the UAE to Iran, keeping his ambassadorial rank. In Iran, he was reportedly expected to engage in “economic diplomacy,” i.e. help South African companies win contracts. But receiving bribes for personal gain is obviously a different matter. 

MTN’s links to Iran are not limited to the Irancell deal, as the company also sells surveillance technology, according to Abedian. “They sell technology that is used to monitor communications, which is one of the reasons why the investment community and analysts in South Africa have kept a close eye on MTN,” he told me. 

Saloojee has been released on bail and awaits trial in April. The Hawks’ investigation continues and is likely to uncover many other names, including those Iranians who allegedly worked with Saloojee for their own financial gain. The trial will be closely watched in both countries.