The regulatory impasse between the country’s telecommunication regulator, Nigerian Communications Commission, and a leading GSM service provider, MTN, has taken a new dimension, with a recent payment of N50billion “good faith deposit” by the latter.
The crisis began in October last year when the NCC slammed a N1.04 trillion (about $5.2 billion) fine on MTN for failure to disconnect 5.1 million unregistered subscribers’ SIM cards from its network.
Shortly after the announcement of the fine, MTN claimed it had secured a 35 per cent reduction, equivalent to N647 billion (about $3.4 billion) from the NCC.
NCC however blamed typographic error in its letter to the operator, saying the actual reduction was by 25 per cent (N780 billion).
As the December 31, 2015 deadline for the payment of the fine elapsed, the Minister of Communications, Adebayo Shittu, claimed the final decision on the matter rests on the Presidency, clearly ignoring his role as the head of the supervising ministry.
But as a regulatory agency established by law of the National Assembly, the NCC has the full backing of the constitution to make and enforce its rules and regulations, with the supervision of the ministry, and without reference to any higher court.
Industry experts argued that it was the lack of firmness by government officials to enforce its rules that emboldened MTN to go to the Federal High Court in Lagos to challenge the fine.
But, as far back as 2013, the Director of Compliance Monitoring and Enforcement at the NCC, Ubale Maska, said the regulator had written to all operators in the Nigerian telecom sector, giving a July 1, 2013 deadline for every unregistered Subscriber Identity Module (SIM) cards to be disconnected from their networks.
He said the NCC cautioned that any operator that failed to comply would be liable to a fine of N200,000 for each SIM card pursuant to Regulations 19 and 20, Section 15(2) of the Registration of Subscribers Regulations, Act 2011.
“Clearly, more than two years later, MTN Nigeria flagrantly ignored the regulatory directive. But, the same company and its parent group were the first to describe the fine as excessive and arbitrary,” said an industry player, Sam Nelson.
At the expiration of the November 15, 2015 deadline, when MTN refused to pay the fine, NCC was compelled to allow an extension to December 31, 2015. The regulator also threatened other sanctions, including a possible withdrawal of its operational license.
“Interestingly, more than two months after the deadline, the impression Nigerians are left with is that government laws are meant to be breached with impunity without any consequence,” Mr. Nelson said.
Last month, MTN Nigeria’s Chief Executive Officer, Ferdi Moolman, announced the company’s decision to withdraw its suit against the Nigerian government, following a part payment of the fine to the federal government.
The announcement, however, stirred controversy with NCC’s Director of Public Affairs, Tony Ojobo, claiming the commission was never aware of either the MTN’s decision to withdraw the case or of its payment of N50 billion “good faith deposit” to the federal government.
Although the Minister of Communications, Adebayo Shittu, initially also denied knowledge of the deal, confirmation came later to reveal the involvement of the Attorney General and Minister of Justice, Abubakar Malami.
The Attorney-General, who later confirmed that MTN, through its legal counsel, approached his ministry to indicate willingness to withdraw the case, said nothing concrete took place.
He explained that the N50 billion was a “good faith” gesture towards an amicable settlement of the fine saga.
“The matter is what the office of Attorney-General of the Federation, as the chief law officer of the federation, is constitutionally vested with the powers to do, as the matter is pending in court,” Mr. Malami said.
The minister further explained that an audience with MTN should not be misconstrued as an intention to saddle the NCC, the federal government or his office with an obligation over the fine.
Experts however picked holes in the said meeting with Mr. Malami, saying since the NCC had handed down appropriate sanctions in line with the terms agreed by all operators, there was no basis for the meeting.
“In the first place, why was NCC not involved in all preliminary negotiations and decisions, having direct or indirect bearing with the fine, being the agency at the centre of it all?
“Whatever the impending meeting is worth, the Nigerian government must bear in mind that any decision that fails to uphold the sanctity of the regulatory authority of the NCC on the issue would be setting a dangerous precedence,” a telecoms expert, Jide Aminu said.
He cautioned that the country must avoid pandering to sentiments other than national interest.
“Since the fine was imposed, the argument has been that if MTN pays the fine, it would go under, irrespective of the dire security implications of its condemnable act of ethical indiscretion.
“Those promoting these views conveniently ignore the fact that laws are not there for fun, but to be obeyed for the orderly conduct of society.
“Any attempt for the Nigerian government not to stand its grounds and enforce its rules would send a wrong signal to other operators, and indeed prospective investors, that the country’s laws are nothing more than a huge joke.
“MTN’s body language from the onset suggests a complete disregard to Nigerian laws.
“At the very beginning, MTN said per second billing was not possible in the country. Until other operators came to give a lie to that claim, MTN was smiling to the bank,” Mr. Aminu argued.
In a move seen by industry experts as an attempt to block government from recovering the fine from MTN’s accounts in Nigeria, the operator moved to transfer funds from its accounts in about 21 commercial banks.
The move was however halted by a Federal High Court order in Lagos.
Records indicate that between October 2007 and May 2009, MTN repatriated over $7.7 billion of revenues generated from its operation in Nigeria to foreign accounts, including those in Mauritius, Cayman Island and British Virgin Island.
On Wednesday, the MTN Group published its 2015 financial statement, indicating that it recorded massive losses in its operations during the year.
The company blamed the declining performance on the regulatory sanction on its Nigerian subsidiary.
To enable it settle the fine, the group said its management had made a provision of about N119.6 billion, or R9.3 billion, which is only 15.3 per cent of the N780 billion it has been asked to pay.
Experts say regulatory sanctions are hardly flouted in developed countries of the world.
In 2010, when British Petroleum was indicted for gross negligence over its handling of the Gulf of Mexico oil spill, the regulatory authorities slammed a fine of $18.7 billion on the company – the largest environmental fine in US history.
In 2013, JP Morgan Chase, one of the largest banks in the world, was compelled to pay a total of $3.68 billion for foreclosure irregularities, illegal manipulation of electricity markets, ripping off credit card customers, and compliance failures at four different regulatory agencies relating to billions of losses on the London Whale trade.
Several other examples abound of fines imposed on organisation for regulatory infractions.
Experts argue that since government had already waived 25 per cent of the fine, any further review would not only make a mockery of the Nigerian law, but also open it to being taken for granted.
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