Illegal $8.12bn profit repatriation from Nigeria: Questions, as Emefiele announces how CBN, MTN settled

Godwin Emefiele, Governor of Central Bank of Nigeria (CBN)
Godwin Emefiele, Governor of Central Bank of Nigeria (CBN)

Nigeria’s central bank on Tuesday reversed itself and settled for an N19.5billion ‘notional settlement’ with MTN Communications Nigeria Limited over the controversial repatriation of huge profits from Nigeria totaling over $8.12billion without mandatory regulatory approval.

The apex bank’s action has left many questions unanswered, with many civil society groups saying the ‘slap in wrist’ handling of the matter by CBN will embolden MTN and other multinationals to act with impunity in the future.

The Four ‘Unlucky’ Banks

In August 2018, the CBN announced the sanctions of four banks — Standard Chartered, Citi, Stanbic-IBTC, and Diamond — for violating the country’s foreign exchange regulations and facilitating the repatriation of over $8.12bn on behalf of MTN.

The sanctions followed a report of the findings by the CBN’s banking supervision department in March 2018, which investigated allegations the four banks facilitated the funds transfers on behalf of some MTN offshore shareholders between 2007 and 2015.

Besides, the department also accused MTN of conspiring with the four banks to commit the crime using irregular capital importation certificates.

MTN vigorously rejected the report against it. In September 2018, the mobile firm approached the Federal High Court in Lagos seeking an order to restrain the CBN from enforcing its sanctions.

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But, the CBN had insisted the company had a case to answer, as its refusal to wait for the final approval before converting its shareholders’ loan/investment to preference shares violated the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.

CBN Wanted Transaction Reversed

Following MTN’s later concession that it did not fulfil the mandatory regulatory requirements before approving the repatriation of the funds by the four banks, the CBN demanded the telecommunications company to undertake a reversal of the transactions and return the funds to Nigeria.

However, on November 20 last year, the CBN governor, Godwin Emefiele, disclosed the apex bank was reviewing the case against MTN, following the submission of documents CBN requested, to validate the transactions.

Meanwhile, hearing in the case filed by MTN against CBN, which was fixed for December 4, 2018, was initially adjourned December 12, after representatives of both parties told the court they were ready to settle out of court.

But, on a day they were scheduled to present a joint out-of-court settlement report, the case was again stepped down till last Tuesday, January 22, 2019.

Terms of Out-Of-Court Settlement

At the end of the first meeting of the monetary policy committee (MPC) in Abuja on Tuesday, Mr Emefiele told journalists the terms of the settlement by both parties.

“The CBN is very delighted that at last, we are able to give an update on the MTN situation as promised. I had said the issue between MTN and the CBN will be resolved amicably and equitably and everyone will be happy.

“I am glad to tell you that in November we held a round of meetings with the MTN officials, even from South Africa. By December, we concluded those engagements and the matters were resolved. It resulted in a notional (not a fine; not a penalty), I repeat, a notional reversal of the $53 million (N19.5billion).

“This has since been paid by the MTN, and the terms of settlement of the matters have already been lodged in the appropriate Nigerian courts,” Mr Emefiele said.

Questions, Disappointments

Despite the settlement, close followers of the transaction expressed disappointment on Tuesday over the CBN handling of the matter.

When CBN first announced its sanctions against MTN and the four banks in August last year, one of the few Nigerians who supported the move was Uche Orji, the Managing Director, Nigeria Sovereign Investment Authority (NSIA), one of the corporate investors in MTN Nigeria.

According to Mr Orji, the NSIA believes all companies it has investments in, must adhere to the highest ethical standards and regulatory compliance in any country they operate.

“We take serious offence at any of our investment companies (including MTN Nigeria) who violates the law. I believe the law should take its full course on those companies, NSIA investments notwithstanding.

“Nigeria should not be taken for granted. If MTN Nigeria breaks Nigerian laws, Nigeria has a right to take full action against MTN Nigeria. Our laws work. Our laws are meant to be obeyed. Operators must take regulators seriously,” Mr Orji told PREMIUM TIMES.

For the CEO of Global Analytics Consulting Limited, Tope Fasua, CBN’s handling of the matter is disappointing, highlighting that it shows Nigeria still has a long way to go on the regulation of its processes.

“The controversy emanated in the first place, as a result of regulatory laxity. Clearly, there were internal compromises by some CBN officials over the matter. CBN recapitulated to the blackmail from some foreign capitalist interests who said the enforcement of its sanctions will scare investors.

“Rather than giving MTN a slap on the wrist treatment over the matter, CBN should have utilized the opportunity to assert itself. It shows many of those in positions of authority are not working for Nigeria’s interest,” Mr Fasua said.

The Lead Director, Centre for Social Justice, Eze Onyekpere, said he is not surprised, as this is not the first time MTN will be involved in what is scandalous.

“Sadly, from what is happening, it might not be the last.

“The first time, it involved NCC. The $1.1billion fine was also reduced by the government. Till date, it is not clear if MTN has paid. They seem to have known how to deal with Nigeria.

“They have now learned to politicize regulation. Infractions all over the world are not always treated with kid gloves, particularly monetary policy infractions that put pressures on the Naira and make inflation go hare-wire,” he said.

“What is the $53million for? It is either MTN infringed CBN regulations and should be sanctioned according to law, or it did not, and be given a clean bill of health? What did CBN after meeting with MTN officials to warrant reversing its earlier announcement?

The Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwwal Rafsanjani, expressed sadness over the fact that the country still has regulators who will rather cooperate with multinational organizations to undermine the interest of Nigeria.

“Clearly, MTN violated the country’s laws through its conduct. CBN said so initially. Turning round to say something else means it has something to hide from Nigerians. MTN cannot do what it did in South Africa or any other developed world and get away with it. This is because MTN knows Nigeria has officials who have other interests.

“That’s why CISLAC and other civil society groups have been advocating for a beneficial ownership register that will make it possible for the public to know where their interest lies when it comes to enforcing sanctions. What has happened is not good for transparency and accountability and the economy of the country,” Mr Rafsanjani said.

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