Former Spacefon CEO in $1m severance pay dispute with MTN
Former Spacefon CEO in Ghana, before the company was acquired by MTN in 2006, Ahmad Farroukh is locked in a legal dispute with his former employer over more than $1 million in severance pay.
Court hearing for the matter is set for October 16, 2023 following the breakdown of arbitration after six years of back and forth.
Farroukh, who now serves as group CEO of Smile Communications, said the dispute arose when MTN refused to honour an agreement regarding “end-of-service” payments.
These agreements originated at Investcom, a company MTN acquired in July 2006. Investcom owned Spacefon, which became Areeba in Ghana, with Farouk as CEO. But the brand name was changed to MTN and Farouk was moved to Nigeria and later to South Africa.
Farroukh explained that instead of a pension plan, Investcom provided an end-of-service payment for 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.
He became CEO of MTN Nigeria in 2006. He served in three other executive roles over the next nine years, first as vice president of West and Central Africa, then as Group Chief Operating Executive overseeing 19 countries in Africa and the Middle East.
In 2014, he was appointed CEO of MTN South Africa. The CEO at that time, Zunaid Bulbulia, became Group Chief Operating Executive.
A year later, Farroukh agreed to step down amid a protracted strike in its seventh week by the time he left MTN.
Call centre and franchise staff had downed tools unless their demands for higher salaries and bonuses were met.
Farroukh said his split from MTN 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.”
However, when he wrote to enquire about his end-of-service payment, MTN refused to pay.
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.
Dabengwa stepped aside after Nigeria’s telecommunications regulator tried to slap MTN with a 1.04 trillion naira fine for allegedly failing to implement the legal requirement for proper customer identification during SIM registration.
The regulation, which included know-your-customer provisions, required networks to obtain proof of identity and address from customers during SIM registration but MTN failed to implement.
According to the Nigerian authorities, MTN had failed to cut off subscribers who had not provided the necessary documentation by a set deadline.
Farroukh said that in the letter from Nhleko, MTN said he did not qualify for his end-of-service payment because the company had changed his policy.
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 also said there have been dozens of similar cases where MTN ultimately paid.
With the case dragging since 2017 — six years — Farroukh said MTN appears to be trying to stall the matter.
He explained that 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 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.
