MTN faces headache in Cameroon over bizarre bank account seizure

Pan-African operator MTN is facing serious challenges in Cameroon where its bank accounts have been frozen for ten months due to a dispute it says it doesn't have anything to do with.

MTN Cameroon CEO Mitwa Ng'ambi told Connecting Africa that the telco's accounts – holding more than 14 billion CFA francs (US$22 million) – were frozen by a court order in September 2022.

"These are funds used for operational requirements but have been inaccessible since September 2022," she said in an emailed response to questions.

The bizarre case stems from a dispute between Cameroonian business mogul Ahmadou Baba Danpullo, who owns Bestinver Group, and South Africa's First National Bank (FNB) over a real estate loan.

After FNB liquidated a number of properties belonging to Danpullo in South Africa, the businessman retaliated by seeking to recover his lost money via other South African companies based in Cameroon. He had the courts freeze the accounts of MTN and Chococam – which is a subsidiary of SA's Tiger Brands – in an attempt to get that money back.

Danpullo claims that South Africa's Public Investment Corporation (PIC) is an investor in FNB and further claims that the PIC is also the majority shareholder of MTN Cameroon and Chococam Tiger Brands SA.

"On this logic, their petition claims that XAF259 billion [US$428 million] in this alleged dispute with FNB is owed to them by MTN Cameroon and Chococam. It must be noted that PIC is not a shareholder of MTN Cameroon, whose shareholders are a matter of public record in Cameroonian court, in the Register of Companies," Ng'ambi explained.

"MTN Cameroon firmly contests the garnishment of its bank accounts, that it considers as abusive, fraudulent and unacceptable given that MTN Cameroon has no relation whatsoever with neither Bestinver Group of companies, Mr. Danpullo, nor the said South African Bank," Ng'ambi said.

On June 9, 2023, things got even worse for MTN when a court ruled that the funds were to be transferred into an escrow account managed by the court registrar until the determination of the garnishee dispute by the Court.

"We cannot determine how long this court procedure would take and have thus immediately contested this decision. If the funds are transferred to the court escrow, the escrow will also charge non-refundable fees of 0.3% on the amount transferred per quarter," Ng'ambi explained.

Bizarre situation

Ng'ambi told Connecting Africa that since last September MTN Cameroon has initiated several legal actions before the courts in Cameroon, to contest its involvement in a matter that appears to be private between Bestinver Group and FNB.

"We do not understand how we have been brought into this matter that we are not even remotely involved in. Our matters before the court, which include a request for recusal of the presiding judge, given suspected bias, remain pending to date. Following the recent act by the same Judge, whose recusal we seek, we have further applied for a stay of execution and will continue to explore all legal means to have this issue resolved," she added.

MTN Cameroon CEO, Mitwa Ng'ambi. (Source: LinkedIn).

She said MTN has obtained records from South African Courts related to the Bestinver matter and MTN Cameroon "is in no way related to any of its legal procedures in South Africa".

The consequences of the frozen funds include how the company will continue paying its local employees and suppliers.

Ng'ambi said that so far the company has been able to sustain employee and supplier payments but that it had over 800 directly employed staff and over 200,000 distribution agents whose livelihoods depend on MTN Cameroon.

She said MTN intends to "use all possible legal means to put an end to the imminent miscarriage of justice".

"A threat to our operations is a threat to everything we have built in service to Cameroon over the last 23 years," Ng'ambi added.

MTN's Cameroonian business

MTN is Cameroon's second biggest mobile operator with about 10.8 million mobile users at the end of March 2023, according to statistics from market research company Omdia. The only bigger operator is Orange Cameroon with almost 11.7 million mobile users.

Nexttel had almost 6.5 million mobile users, putting it in third place, and Camtel had just 560,400 mobile customers.

Last month, Cameroon's four mobile operators were fined a total of XAF6 billion (US$9.8 million) by the country's regulator for poor network quality.

MTN Cameroon also faced protests from users in Cameroon over quality of service and said in May 2023 it would fast-track the implementation of its 2023 network investment plan.

In 2022, MTN Cameroon signed a strategic national network roaming agreement with Camtel to expand its 2G, 3G and 4G coverage.

"We remain confident that justice would prevail. The case simply has no basis. Apart from the legal actions MTN Cameroon has also been engaging Government authorities and other material stakeholders to make the true facts of the case known in hope for support and intervention on this matter," Ng'ambi added.

SA government expresses concern

South Africa's Minister of International Relations and Cooperation, Dr. Naledi Pandor, this week also expressed concern regarding the treatment of South African companies in Cameroon.

She advised the executives of South African companies to continue pursuing all legal avenues available.

"Unfortunately, these latest developments will challenge the extent and appetite for investments into Cameroon, thus the minister called for the need for further explorations to resolve the attendant matters," her department said in a statement.

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*Top image source: warrenski on Flickr CC 2.0

— Paula Gilbert, Editor, Connecting Africa