Nigeria's central bank (CBN) has ordered Africa's telecoms giant, MTN and four other banks to “refund a total of $8.134billion moved out of the country" for breaching the country's forex regulations.
The central bank also slammed a huge N5.8 billion fine on the banks for allegedly aiding MTN in the illegal capital repatriation.
Business Insider Sub-Saharan Africa looks at some of the issues surrounding the forex regulation saga:
1. Certificate of Capital Importation
The Central Bank of Nigeria in June 2016 introduced the Electronic Certificates of Capital Importation (e-CCI), a process replacement for the paper approval, for improved efficiency.
Certificate of Capital Importation (CCI) is a Central Bank of Nigeria (CBN) certificate issued by banks for the importation of cash (foreign currency Inflow) for investment as Equity or Loan, and also for the importation of machinery and equipment for investment as Equity or Loan.
A CCI is usually issued in the name of the investor within 24- 48 hours of the inflow of the capital into Nigeria. The primary purpose of the CCI is to guarantee access to the official foreign exchange market for repatriations of capital and returns on investment – dividend, interest, and capital on divestments. A copy of the CCI must be presented to the Nigerian bank to process a remittance by the requesting company.
2. Senator Dino Melaye’s motion against MTN
In 2016, Nigerian lawmaker, Senator Dino Melaye, (Kogi West) alerted the National Assembly on how MTN repatriated about $12 billion out of the country over a 10-year period.
He accused the telecommunications firm of ‘Unscrupulous Violation of the Foreign Exchange (Monitoring and Miscellaneous) Act’ by repatriating about $13.9bn from Nigeria to other countries over a 10-year period.
The senator said the amount moved by MTN was about half of the nation's forex reserves.
3. Reactions trail MTN’s illegal repatriation
Melaye's motion generated reactions from every quarter because it was less than a year after the telecoms giant was slammed a record fine of $5.2 billion for failing to deactivate unregistered sims. It was during the same period Africa's largest economy was battling with the economic recession in the face of low crude oil price.
The motion paved way for investigation.
4. MTN Nigeria denies allegations
MTN Nigeria denied involvement in any wrongdoing. The telecommunication giant had said it only requested for CCIs for Foreign Capital that was imported into Nigeria, dividends were neither declared nor paid until the CCIs were issued and finalised.
Ferdi Moolman, the then MTN Nigeria CEO, said, “the requirement to issue a CCI within 24 hours of conversion is an administrative requirement. As such, the CBN has the authority, and indeed we believe, approved the banks’ applications to issue CCIs outside the recommended time frame.”
5. Standard Chartered Bank plays gentleman’s role
Standard Chartered Bank promised to cooperate with regulators looking into the alleged illegal repatriation of funds by MTN.
6. Nigerian senate exonerates MTN
Nigerian senate exonerated South Africa telecoms company, MTN Group Ltd's Nigerian unit in 2017 and asked the Central Bank to sanction Stanbic IBTC “for improper documentation in respect of capital repatriation and loan repayments” on behalf of MTN.
7. Senators disagree with report
The report caused rancour at the floor of the National Assembly as some senators did not understand why the report largely condemned the CBN and exonerated MTN wholly after the investigation.
8. CBN concludes investigations
Fast forward to 2018, Nigeria's central bank slammed a fine on the four Nigerian banks involved in the repatriation. Isaac Okoroafor, CBN's spokesperson, said the fine was necessary after 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.
9. MTN playing giant role
MTN denied the allegations stating the apex bank duly approved all dividends it paid to its shareholders between 2007 and 2015.
The telco further stated that the Nigerian Senate had exonerated the company from breaching foreign exchange laws.
10. Nigerian banks romance regulatory authority
Stanbic IBTC Holdings PLC (a member of Standard Bank Group) informed investors that it is holding further engagements with the CBN, in relation to the fine.
In a statement issued by Chidi Okezie, the Company's Secretary, the bank did not deny the allegations but assured investors that the issue will not affect the business conduct.
Diamond Bank noted that the transaction occurred between 2001 and 2006 and promised to co-operate with the apex regulator to ensure the matter is resolved.
11. MTN Group faces another demand from the Nigeria government over the payment of $2 billion in tax arrears.
In a background note on the capital repatriation, MTN said it had received a letter from Abubakar Malami, Nigeria's attorney-general requesting full payment of the tax bill.
In various correspondence between the office of the Attorney General and MTN Nigeria, the AGF noted that MTN should have paid approximately $2 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers since 2008.
12. Nigeria's central bank deducts fines from banks account for breaking forex rules in MTN fund repatriation
The affected banks and their fines are Standard Chartered Bank (N2.4 billion), Stanbic IBTC (N1.8bn), Citibank (N1.2bn) and Diamond bank with N0.25 billion.
13. CBN says refund will be in dollar
Isaac Okoroafor, CBN's spokesperson told Business Insider Sub-Saharan Africa on Tuesday morning, September 4, 2018, that the regulatory authority's demand is very clear on the matter.
“The report is very clear, what we have here is in dollar terms and not naira”, he said in a phone conversation.
Experts believed that the sanction which is about half of MTN’s market capitalisation will affect market conditions in Nigeria and could threaten the country's financial institutions.
13. Access Bank CEO says MTN repaying $8.1 billion could lead to a banking crisis
Herbert Wigwe, Access Bank CEO, told Reuters on Thursday, August 30, 2018, “...the banking industry will hold its regular Bankers Committee meeting soon to discuss MTN’s repayment of $8.1 billion, on the orders of the CBN.”
He said he expected a resolution on the matter to avoid a systemic banking crisis given that the repayment of $8.1 billion, which is about half of MTN’s market capitalisation, could threaten its Nigerian bankers.
14. MTN drags Nigerian government to court over a multi billion-dollar dispute
MTN Nigeria filed legal suit concerning demands from the Central Bank of Nigeria (CBN) and the office of the Attorney General of the Federation on foreign exchange repatriation and taxes.
15. Nigeria's central bank engages MTN and 4 banks over $8.1 billion claims
Nigeria's central bank (CBN) said it is engaging with Africa's mobile phone firm, MTN Ltd. and four banks over $8. 1 billion claims.
The regulatory body stated this in a statement issued by Isaac Okorafor, its director of communications, on Wednesday, September 19, 2018, in Abuja, the nation's capital.
Okorafor said the apex bank is currently reviewing documents submitted by banks with a view to arriving at an equitable resolution.