Johannesburg - An MTN subsidiary in Cameroon is being sued for R98 million by a small company owned by African Americans over unpaid invoices for services it provided in a software system contract.
The claim against MTN Cameroon (MTNC) began at R20.7 million, but has now increased to R98 million, including damages, costs and interest.
MTN owns 70 percent of MTNC.
Two courts in Cameroon have found in AppsTech's favour and one has even ordered that R98 million, the entire declared profit by MTNC in the financial year to March 2003, be put in a trust pending the outcome of the lawsuit.
The MTN group refused to comment, citing sub judice rules.
Rebecca Enonchong, the chief executive of AppsTech in Cameroon, has written two letters to the MTN chief executive, Phuthuma Nhleko, in which she asked him to intervene because her company was in dire straits.
She said he had not bothered to reply on both occasions.
In its results for the six months to September, MTN did not mention the current legal dispute in the contingent liabilities. It did announce a 34 percent increase in adjusted headline earnings to R1.658 a share.
On the day of the announcement of the MTN results, Enonchong wrote to Nhleko: "Today, as MTN announces unprecedented profits, we are being forced to close offices and, worse, lay off employees.
"Some of these are the same employees who, without hesitation, worked 18 hours a day, seven days a week to fulfil our own contractual obligations to MTN."
In June 2002, MTNC engaged AppsTech to implement a software system contract.
According to Enonchong, the project, due to be completed in October 2002, did not begin until November 2002 because of MTNC internal staff changes, with the contract signed only in February 2003.
Enonchong said AppsTech, under trying circumstances, was able to fulfil all but one of its contractual obligations by September 2003.
On November 6 2003, a day before the official end of the project, AppsTech staff were barred from MTNC premises without cause, she said.
Enonchong alleged that a number of invoices for work completed or other fees and expenses due under the contract went unpaid.
The largest number of the unpaid invoices were for the additional fees due to delays caused by MTNC.
Since this was a fixed price, scope and time project, any change would lead to additional fees.
Enonchong said: "The calculation for additional fees for missed deadlines as well as the deadlines themselves are specified in the contract, and AppsTech billed MTNC accordingly.
"Between November 2003 and April 2004, AppsTech made several proposals to complete the project and for the unpaid invoices to be settled with a one-time payment. Despite MTNC promises, AppsTech never received any feedback to any of those proposals."
AppsTech decided to deal with MTN directly, which paid some of the outstanding invoices.
As AppsTech and MTNC could not reach an amicable solution, the MTNC lawyers suggested conciliation.
Enonchong alleged that on several occasions MTNC lawyers did not turn up for the conciliation, forcing the magistrate to find in default against MTNC.
This was followed by a summary judgment in the high court, where MTNC lawyers again did not appear. The court ordered MTNC to pay AppsTech R20.7 million.
In June 2004, AppsTech began liquidation proceedings against MTNC. These are now being opposed by the MTNC lawyers, who are also appealing against the high court judgment.