The brouhaha over the alleged illegal repatriation of $8.1 billion by MTN Nigeria appears to have been settled as the Central Bank of Nigeria (CBN) has announced the resolution of the dispute with MTN now having to refund only US$52.6 million for the illegal remittances on preference shares issued in 2008.
CBN had in August ordered MTN to refund $8.1
billion which it claimed the company repatriated out of Nigeria using irregular
certificates of capital importation. Four banks, Diamond Bank, Standard
Chartered Bank, Stanbic IBTC and Citibank were also penalized N5.87 billion for
their roles in the alleged repatriation.
On Monday, December 24, 2018, the apex bank, in a statement by its spokesman and Director of Corporate Communications, Isaac Okorafor, confirmed the resolution, which was simultaneously collaborated by the telecom giant in a statement in Johannesburg.
According to the terms of settlement, the CBN instructed MTN Nigeria to implement a notional reversal of the 2008 private placement of shares in MTN Nigeria at a net cost of circa N19.2 billion, an equivalent of US$52.6m (the notional reversal amount).
“This is on the basis that certain certificates of capital importation (CCIs) utilized in the private placement were not properly issued. MTN Nigeria and the CBN have agreed that they will resolve the matter on the basis that MTN Nigeria will pay the notional reversal amount without admission of liability”, MTN said. “In terms of the resolution agreement, the CBN will regularize all the CCIs issued on the investment by shareholders of MTN Nigeria of circa $402,625,419 without regard to any historical disputes relating to those CCIs, thereby bringing to a final resolution all incidental disputes arising from this matter,” it added.
Regarding the banks, CBN fined Standard Chartered Bank N2.47 billion, Stanbic IBTC N1.88 billion, Citibank Nigeria N1.26 billion and Diamond bank N250 million.
CBN’s statement: “The Central Bank of Nigeria (CBN) in August 2018 directed MTN Communications Limited (MTNN) to reverse repatriations valued at $8.1 billion done on its behalf by four commercial banks between 2007 and 2015 on the basis of Certificates of Capital Importation (CCIs) irregularly issued to MTNN.
Following the keen interest shown by various stakeholders sequel to the regulatory action, the CBN committed to engage further with MTNN with a view to achieving an equitable resolution.
Consequent
upon the above, MTNN, led by its Nigerian shareholders, held intensive
engagements with the CBN in the course of which it supplied additional material
information, not previously offered to the Bank, satisfactorily clarifying its
remittances. Having now reviewed
the additional documentation provided by the company, the CBN has concluded
that MTNN is no longer required to reverse the historical dividend payments
made to MTN Nigeria shareholders.
However, the CBN identified that the proceeds from the preference shares in MTNN’s private placement remittances of 2008 were irregular having been based on CCIs that were issued without the final approval of CBN. The CBN and MTNN have mutually agreed that the aforementioned transaction be reversed notionally to bring it into full compliance with foreign exchange laws and regulations.
The parties have resolved that execution of the terms of the agreement will lead to amicable disposal of the pending legal suit between the parties and final resolution of the matter.
The CBN assures foreign investors that the integrity of the CCIs issued by authorized dealers remain sacrosanct. Potential investors are encouraged to take advantage of the enormous investment opportunities that abound within Nigeria.”
On its part, MTN assured its shareholders that it is also moving towards resolution of the issue.
“Shareholders are advised that the legal process initiated by MTN Nigeria for injunctive relief restraining the AGF from taking further action in respect of its orders for back taxes is continuing. The AGF matter came up for initial mention before the Federal High Court of Nigeria Lagos Judicial Division on 8 November 2018 and has been adjourned to 7 February 2019. MTN Nigeria continues to maintain that its tax matters are up to date and no additional payment, as claimed by the AGF, is due, and consequently no provisions or contingent liabilities are being raised in the accounts of MTN Nigeria for the AGF back taxes claim”, the telecom giant said.
