South Africa’s MTN Group Limited said it remains resolute despite strong sanctions and illegal transfer allegations against its local unit in Nigeria.
The company has applied to a Nigerian High Court to seek a restraining order against the CBN and the Attorney General of the Federation from taking any action against it.
It would be recalled that after Nigerian authorities announced sanctions and illegal transfer charges against MTN Nigeria, Moody’s credit rating agency said it has placed MTN Group Limited’s Ba1 corporate family rating (CFR), Ba1-PD probability of default rating (PDR) and the Aa3.za national scale corporate family rating on review for downgrade.
MTN Group said in a statement that:
“On September 6, 2018, Moody’s placed MTN Group Limited’s Ba1 corporate family rating (CFR), Ba1-PD probability of default rating (PDR) and the Aa3.za national scale corporate family rating on review for downgrade.
All senior unsecured notes issued by MTN (Mauritius) Investments Limited have also been placed on the Ba1 rating and are also on review for downgrade.The rating review follows the recent SENS released by the Issuer on 30 August 2018 and 4 September 2018, in relation to the announcements made by the Central Bank of Nigeria (“CBN”) and Nigerian Attorney General (“NAG”) respectively.
Moody’s review rationale is based on the uncertainty with regards to these recent announcements and the potential implications on MTN’s credit profile. MTN’s management remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position.
MTN’s Management will continue to engage with the relevant authorities on all these matters and will provide further information as and when available.”
Less than two weeks ago, the Central Bank of Nigeria, CBN, had announced in a terse statement issued by the apex bank’s Director, Corporate Communications, CBN, Isaac Okorafor, he said it is a ‘flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006’.
The CBN spokesman added that actions of the bank 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.
“The CBN has therefore asked the managements of the banks and MTN Nigeria Communications Limited to immediately refund the sum of $8,134,312,397.63, illegally repatriated by the company to the coffers of the Central Bank of Nigeria,” it stated.
Data released by the CBN indicated that that the highest fine of N2.47 billion was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria was fined N1.885 billion.
Citibank Nigeria was penalised to the tune of N1.265bn, just as Diamond Bank was directed to pay N250m for violating extant rules.
He said that the investigations revealed that the sum of $3.448bn was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs.
Similarly, he added that the sums of $2.632bn, $1.766bn and $348.914m were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, respectively between 2007 and 2015.
He said the CBN had directed the affected banks to immediately refund the respective sums to the CBN.
“The CBN’s investigation further revealed that on account of illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated by the company,” the statement said.
It seems that the apex bank had concluded the matter before the sanctions as Okoroafor said that the investigations by the CBN took a while in order to carry out thorough inquiry and give a fair hearing to all parties involved.
He however warned that the failure by the management of banks and companies to abide by the existing guidelines would be appropriately sanctioned, adding that the sanctions would include denial of access to the Nigerian foreign exchange market.
The CBN has also sent out official letters to all the affected banks and what they needed to do to defray the fines and pursue compliance.