By Oji Odu
MTN has negatively lived up to its slogan, “Everywhere You Go” in all the countries it operates, especially Nigeria where it is now synonymous with notoriety in gross disobedience of the country’s laws. For breaching telecommunications regulations, MTN Nigeria has incurred in recent times cumulative fines from the Nigerian Communications Commission (NCC) totaling N330 billion, out of which it has paid N110 billion to the Federal Government.
In October 2015, the NCC, again, imposed a fine of N1.04 trillion on MTN for irregular registration of subscribers. But after prolonged negotiation with both the telecommunications regulatory agency and the Federal Government, the Commission reduced the fine to N330 billion.
The fine was however resolved between the NCC and the telecommunications operator with an agreement for settlement over a three-year period. According to the Executive Vice Chairman of the Commission, the payment of the fine was spread over a period of three years because the intention was not to strangle MTN.
Again, the Federal Government has slammed South African telecommunications giant, MTN, Nigeria’s largest mobile telecommunications operator with a $2 billion tax demand. The new tax demand which comes amid controversies generated as a result of governments directive to the company to hand over $8.1 billion it was accused of illegally repatriating abroad with the collusion of four banks-Standard Chartered, Stanbic IBTC, Citibank and Diamond banks.
The banks were asked to refund the total of N5.87 billion with Standard Chartered Bank to refund the largest sum of N2.5 billion. Stanbic IBTC is to refund N1.9 billion, while Citibank and Diamond Bank are to refund N1.3 billion and N250 million respectively.
What is the problem with MTN? Why has it now been associated with disregard to Nigerian laws? With the searchlight increasingly beamed on it, how long can it survive?
Describing the recent demand as “regrettable and disconcerting,” MTN said it will “continue to engage with the relevant authorities on all these matters, and we remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position.
““MTN Nigeria, as a law-abiding citizen of Nigeria, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria.
“The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.
“We will engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available.”
In his reaction, Central Bank of Nigeria Spokesperson, Isaac Okafor said the four sanctioned banks were accused of committing what he described as “flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.”
He said following investigations in March, 2018, the CBN resolved to sanction the commercial banks because it confirmed allegations of their remittance of foreign exchange with irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria.
Details of the investigation showed that about $35.5billion was repatriated by Standard Chartered Bank based on illegally issued CCIs, while about $2.6billion, $1.8 billion and $348.9million fraudulently issued by Stanbic IBTC, Citibank and Diamond Bank respectively between 2007 and 2015.
The apex bank also stated that the sanction was on account of illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) of $399.6million, about $8.13 billion was illegally repatriated by MTN. The company’s shareholders invested about $402.6million between 2001 and 2006 through the inflow of foreign currency cash transfers and equipment importation evidenced by the CCIs issued by Standard Chartered, Citi Bank and Diamond Bank.
The CBN said the CCIs were issued with the investments by the three banks showed that about $59.4 million was invested as shareholders’ loan and $343.15million as equity.
Also, following a request by MTN through Standard Chartered for approval to convert the shareholder’s loan to preference shares, CBN said an approval-in-principle subject to the fulfillment of certain conditions was granted on November 13, 2007, including the implementation of the November 8, 2007 Board resolution which was submitted to the CBN’s Director, Trade and Exchange Department.
Others included provision of undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.
MTN refused to meet the said conditions, and without a final approval by the CBN, the company proceeded to convert the shareholders’ loan to preference shares with Standard Charted Bank by issuing new CCIs in respect of the illegal conversion.
Although not a few Nigerians are happy with the sanctions, the question many ask is whether MTN, a foreign company whose country is noted for heartless dealing with Nigerians is alone in this business of high powered fraud that has greatly contributed in the slow death of the nation’s economy. This is because “ it is the rat in the house that tells the one outside that there is fish in the house.”
In 2017, the Senate blamed the Central Bank of Nigeria for allowing MTN to abuse of its policy regulating capital repatriation. The Senate blamed the bank for not bringing up the observed deficiencies of the Foreign Exchange Miscellaneous Monitoring Act, FEMMA.
Adopting the recommendations by its Committee on Banking, Insurance and Other Financial Institutions, the Senate blamed CBN for granting some extensions and exemptions which became prone to sharp practices by commercial banks.
In a chat with the Magazine, Kenneth Obadare, a finance expert, he said: “ I don’t blame MTN for any wrong doing. In a country as Nigeria where tax evasion is still the order of the day both by the small and great, any dubious foreign businessman or company finds a safe haven to carry out his or its dubious activities to the detriment of the country.
“ Unless this is checked, the vicious circle will continue. Imagine the arrogance MTN exhibits in challenging federal government on this fraud issue. This is because supporters in government places. Can this happen in their South Africa?