Former CEO in battle with MTN

Former MTN South Africa CEO Ahmad Farroukh is locked in a legal dispute with his former employer over more than $1 million (R18.8 million) in severance pay.

Farroukh served as the Lebanese telecoms holding company Investcom’s chief executive from 1995 to 1999.

Between 1999 and 2006, he was managing director at Scancom, owned and managed by Investcom.

In July 2006, MTN acquired Investcom for $5.5 billion as part of its growth strategy in emerging markets.

Following this acquisition, Farroukh worked for MTN in numerous executive positions, including MTN Nigeria CEO and MTN South Africa CEO.

He left MTN in 2015 to head up Mobily in Saudi Arabia and moved to Smile Communications as CEO in 2019.

Since leaving MTN, Farroukh has been in a dispute with MTN over an agreement regarding “end-of-service” payments.

These agreements originated at Investcom. Instead of a pension plan, Investcom provided an end-of-service payment to employees who left the company.

End-of-service payments were structured similarly to regular severance – employees who left the company got one month’s salary for every year’s service.

Farroukh started at Investcom in 1995 and was at MTN from when it acquired the company in 2006 until 2015 – 19 years overall.

Farroukh said his split from MTN in 2015 had been amicable. “I spent a good nine years at MTN, and I had been happy,” Farroukh told MyBroadband.

“Under my management, with my team, we took Nigeria from 9 million subscribers to 40 million,” he said. “We paid $8 billion in dividends during my six-year tenure at MTN Nigeria.”

Despite his long relationship with MTN, he said the mobile operator refused to honour his end-of-service payment.

Farroukh said he received a letter from MTN executive chairman Phuthuma Nhleko telling him he did not qualify for severance.

Nhleko, MTN’s former Group CEO, had taken over as executive chair following the “resignation” of Sifiso Dabengwa.

Farroukh said that in the letter from Nhleko, MTN claimed that he did not qualify for his end-of-service payment because the company had changed his policy.

According to MTN, severance would only be paid if a contract ends and is not renewed or after mutual separation.

However, Farroukh contends this change of policy was never communicated. He added that there have been dozens of similar cases where MTN ultimately paid.

He said the case has been dragging on for six years and that MTN appears to be trying to stall the matter.

He tried to resolve it amicably before the case went to an arbitrator. When the arbitration broke down, he instituted legal proceedings.

The date for the first legal hearing is set for 16 October 2023.

MTN declined to comment. “Due to the legal nature of the ongoing matter, MTN is unable to comment at this time,” a spokesperson told MyBroadband.

Source: MyBroadband