MTN Nigeria and the four banks fined by the Central Bank of Nigeria (CBN) have begun lobbying the apex bank for a “revisiting” of the action, SaharaReporters has learnt.
CBN had said the N5.87illion fine became necessary following allegations of "remittance of foreign exchange with irregular certificates of capital importation issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March 2018”.
It said the sum of $3,448,119,321.72 was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs, while the sums of $2,632,005,623.78, $1,766,263,212.75 and $348,914,501.30 were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, between 2007 and 2015, respectively.
Godwin Emefiele, CBN Governor, was initially preventing the imposition of the fines, but the bank announced the fines on Wednesday, two days after the matter was exclusively reported by SaharaReporters.
SaharaReporters now understands the banks spent Thursday and Friday intensely engaging the CBN to state their sides of the story, insisting that the apex bank vetted and approved the transactions in question.
A source within CBN who is familiar with the development said all of the banks, as well as MTN, have been engaging key CBN officials, including its Governor, “by phone calls, physical visits and even formal correspondence”, in the hope that the fine may be “revisited”.
“It’s been a hectic two days for all of us, but it is well worth it,” said the source, who asked not to be named.
“What is important is that the CBN has sent a clear signal to all parties that it cannot be business as usual anymore. Even though we are not averse to reviewing the cases, I cannot assure you that the CBN is in any position to review these fines, which are the end-result of painstaking investigations.”
In its submission, MTN, for instance, argued that it adhered to all extant laws in the payment of dividends to its shareholders between 2007 and 2015. Pascal Dozie, its Chairman who is also founder and former Chairman of Diamond Bank, is understood to have made phone calls to the CBN Governor seeking a middle ground out of the current imbroglio.
MTN’s local shareholders are said to be looking up to Dozie as a respected banker and long-term operative in the financial services sector to intercede for the organisation. Other directors such as Gbenga Oyebode, who until recently was Chairman of Access Bank, are also under pressure from MTN Group headquarters to help resolve the matter.
SaharaReporters gathered that in its official response to CBN, Stanbic IBTC Bank described the conclusions reached by the regulator as based on “factually incorrect premises”. It reminded the CBN of the outcome of its findings on the same issue following a special examination that was conducted in March this year. The finding reportedly cleared the bank of any wrongdoing, as its actions were in line with extant rules and regulations.
Going into a point-by-point rebuttal, the letter from the bank examined different allegations contained in the CBN letter. Regarding the claim that the shareholders of MTN Nigeria invested the sum of $402,590,261.03 in the company from 2001 to 2006, the bank stated: “The twenty certificates of capital importation CCIs transferred to our bank by Standard Chartered Bank and which were in the above quoted sum, were re-issued from existing CCIs that had been issued by Standard Chartered Bank to the original investors in MTNN.”
It added that “these CCIs were transferred to our Bank to facilitate the repatriation of the proceeds of MTN’s Private Placement which took place in February 2008.
CBN had also said that “on account of the illegal conversion of the shareholders loan to preference shares (interest free loan) of USD399,594,146.00, the sum of USD8,134,312,397.63 was illegally repatriated by Stanbic IBTC Bank and other banks on behalf of MTN Nigeria between 2007 and 2015.” Stanbic IBTC denied involvement in the conversion of the shareholders loans, or in making any amendment to the CCIs issued in respect of such loans to accommodate these conversions.
The bank added that the repatriations effected in this case “were related to the sale of Linked Units (comprising ordinary shares and preference shares) by existing shareholders of MTN as well as dividends validly declared and paid by MTN,” and that the “repatriations were effected on the basis of the CCIs transferred to it by Standard Chartered Bank, which indicated they had been issued in respect of investments in such ordinary and preference shares.”
On CBN’s claim that Stanbic IBTC Bank “issued eight CCIs of USD58,359,616.67 in respect of foreign exchange sourced locally as shareholders loan” in contravention of the requirement of section 15 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and Memorandum 20(1.3) (III) of the Foreign Exchange Manual, which stipulate that CCIs should be issued on capital imported”, the bank said it was not aware “at the relevant time that the affected investors in the MTN Private Placement had obtained foreign exchange loans from local banks for the purpose of their investments.”