The report highlighted growing concerns about rising illicit financial flows in Africa and underlined the role of multinationals in under-developing the continent’s economy.
Last August, Nigeria’s central bank sanctioned four banks — Standard Chartered, Citi, Stanbic-IBTC, and Diamond — for allegedly violating the country’s foreign exchange regulations and facilitating the repatriation of over $8.2bn on behalf of MTN.
Also, Nigeria’s Attorney-General, Abubakar Malami, about the same period, released another incriminating report against the telecoms operator, alleging accumulated tax liabilities totaling about $2bn.
Mr Malami, also the Minister of Justice, in his August 20, 2018 letter to MTN seen by PREMIUM TIMES, said the liabilities followed a 10-year “revenue assets investigation” the Nigerian government conducted between 2007 and 2017.
Analysts say aggregation of the two contentious figures linked to MTN alone in the West African country (a staggering $10.2bn) mirrors the grim reality of the menace of illicit financial flows (IFFs) in Africa.
The African Union High-Level Panel on IFFs says the continent’s losses have grown by about 60 percent since 2015, from about $50bn to around $80bn annually.
In Naira terms, $10.2bn translates to a whopping N3.12 trillion (at N306 dollar official exchange rate), about one-third of Nigeria’s total N9.12 trillion budget for 2018.
Financial experts knowledgeable on the matter say the withdrawal of such a colossal amount could sink Nigeria’s fragile economy still struggling to recover from a devastating recession since 2016.
Failed reconciliation efforts and the sanctions
Last September, CBN governor, Godwin Emefiele, told PREMIUM TIMES, at the end of investigations, despite several meetings between a committee of CBN governors and the management of the affected banks, with representatives of MTN over its findings, they failed to produce documents to back up the transactions.
Mr Emefiele said the meeting, which he presided on May 25 in Lagos, attended by all financial sector regulators, CBN deputy governors, the director of banking supervision, and about 20 examiners and auditors, was inconclusive.
He said a one-week deadline for MTN and the banks to reconcile their records and report back to the committee was not met. A fresh deadline also stretched to almost two months without the documents.
“At this point, we (CBN) could not wait endlessly for them. That is why we released the report to the public and imposed various sanctions totaling N5.87bn against the banks,” Mr Emefiele told PREMIUM TIMES.
“What CBN sought was a reversal of the transactions by MTN and return of the funds, because they were not finally authorised by the CBN, and follow due procedures in funds repatriation,” Mr Emefiele explained.
Alluding to previous regulatory infractions by MTN that were waived, the CBN governor added: “There were a number of issues, two of which we decided to let go. But, on this last one, we thought the amount ($8.2bn) was too large, and therefore the need for CBN to further investigate.”
In its reaction to the sanctions on the banks last August, MTN spokesperson, Tobe Okigbo, in a statement, insisted the company was not guilty of any wrongdoing and was ready to “vigorously protect its assets and shareholder rights within the confines of the law.”
In September, MTN filed an application before a Federal High Court in Lagos seeking to restrain the CBN from enforcing its sanctions. Hearing in the case was fixed for December 4, 2018.
However, at the resumed sitting, lawyers for MTN, the CBN and a representative of Nigeria’s Attorney General and Justice Ministry, told the court, all parties were engaging each other in “out-of-court settlement talks.”
Initially, hearing was adjourned until last Wednesday, December 12, for presentation of a joint settlement report. But, at the resumed sitting, the case was again adjourned to January 22, 2019.
It is not clear whether the terms of the settlement included a reversal of the sanctions by CBN against MTN and the banks.
But, Mr Emefiele told this newspaper on November 20 that a review of the case, following the submission of documents CBN requested from MTN and the banks, did not mean their clearance from applicable penalties for infractions.
“There are still issues to be addressed. It is normal for MTN and the banks to clear themselves. But, the banks must do what is right, by obeying our country’s extant rules and regulations. The sanctity of CCIs issued by our banks to foreign investors remains sacrosanct and inviolable,” he declared.
MTN rejects tax liabilities
Also, on December 3, 2018, hearing in another application by MTN before the Federal High Court, Lagos was postponed till February 7, 2019 following the absence of the judge.
In the application obtained by PREMIUM TIMES, MTN’s lawyers rejected the tax liabilities charges against the telecoms firm.
They, however, did not contest the veracity of the liabilities against their client.
Rather, they accused the justice minister of acting “illegally, unconstitutionally and in excess of his powers”, by usurping, through the self-assessment exercise, the rights, duties, and powers of the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS).
However, when contacted to confirm FIRS’ role in computing the tax liabilities released by Mr Malami, its Chairman, Babatunde Fowler, refused to comment on the issue.
“Issues relating to tax records of individuals and corporate entities were confidential documents that cannot be disclosed to third parties without the consent of the affected person or entity,” he said.
The Nigeria Customs spokesperson, Joseph Attah, also refused to comment until he had consulted with his principals.
For Nigeria’s Finance Minister, Zainab Ahmed, the entire MTN saga was “terribly bad for Nigeria”
“The conduct of the banks and MTN created serious reputation problems for Nigeria,” she noted. “It made the country look bad in the eyes of the international community.
“First, the fine by CBN was not imposed on MTN, rather on the banks, for deliberately ignoring established regulations for repatriating profits by multinational companies. Again, they refused to provide the documents showing the transfers were done legally.
“CBN only asked MTN to reverse the transactions, return the funds to Nigeria, and follow due process. A situation where it was made to appear as MTN, or South African companies, were being targeted by Nigeria for victimisation was not fair at all on the country.”
When PREMIUM TIMES contacted the banks for their side of the story, only Diamond Bank responded.
“Beyond our initial statement that we are working with our regulators on this matter, we have nothing further to add,” its spokesperson, Chioma Afe, said in a text message to this reporter.
It is not clear why other banks failed to respond to either text messages or mails sent to them.
In 2001, as Nigeria’s first GSM licensee, MTN refused to carry out regulatory directives from the Nigerian Communications Commission (NCC) to adopt per second billing.
For over three years, MTN creamed off billions of naira from its subscribers.
Again, in 2013, MTN, for over 24 months, ignored directives to all telecoms operators to disconnect all unregistered subscriber identity module (SIM) cards from their networks on or before July 1 of that year, or risk N200,000 fine per SIM card.
In October 2015, for refusing to disconnect over 5.1 million unregistered subscribers’ SIM cards from its network, the NCC imposed N1.04 trillion (about $5.2bn) fine on MTN.
Following protests, the fine was cut to N780bn initially, and later by almost 70 percent to just N330bn. Yet, MTN failed to keep its part of the bargain to list its shares on the Nigerian Stock Exchange (NSE) and settle the fine.
In 2015, PREMIUM TIMES investigations uncovered how MTN was serially funneling abroad billions of its profits from Nigeria and avoiding paying its fair share of taxes to Nigerian authorities.
This story was written and produced by Bassey Udo as part of ‘Wealth of Nations’, a media skills development programme run by the Thompson Reuters Foundation.
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