Its MTN again. After a widely publicised disagreement with the federal government over fines it saw as overbearing earlier in the year, the South African telecom giant finally bowed to pressure from the Nigerian government to now pay a much lower fine with plans to list on the Nigerian Stock Exchange in Lagos next year.
But it wasn’t long after this that the media started reporting that MTN transferred the sum of $13.9b out of Nigeria to other countries between 2006 and 2016. Now Nigerians are not happy with the fact that a company which has its biggest business operation in Nigeria would be engaged in such capital flight even as the country continues to go through a painful recession.
The news began to fade gradually but last week, the Punch (a Nigerian news company) reported that the Nigerian senate has now decided to investigate the transfers to see if they meet guidelines. They have one decided to invite officials from the Central Bank of Nigeria, MTN and local banks to come and explain this further.
The Senate Committee on Banking, Insurance and Other Financial Institutions was mandated to carry out the probe by conducting an investigative hearing on the “unscrupulous violation of the Foreign Exchange (Monitoring and Miscellaneous) Act.”
“Pursuant to Senate Resolution S/Res/017/02/16 of 27th of September, 2016 on the above subject matter, the organisations and individuals listed below are invited to appear before the Senate Committee on Banking, Insurance and other Financial Institutions on Thursday, 20th of October, 2016.
So here is how the money was allegedly transferred out of Nigeria; Stanbic IBTC the sum of $4.87bn; Standard Chartered Bank, $5.72bn; Citi Bank, $2.98bn; and Diamond Bank, $0.35bn.
The allegation continued that “The Senate observes that MTN did not request for the Certificate of Capital Importation from its bankers, Standard Chartered Bank, within the regulatory period of 24 hours of the inflow. The Senate observes also that the CBN was not notified of this inflow by Standard Chartered Bank within 48 hours of receipt and conversion of the proceeds to naira as required by regulations.
Chairman of the committee, Senator Rafiu Ibrahim said MTN’s bankers did was in strict violation of Section 15 of the Foreign Exchange (Monitoring and Miscellaneous) Act of1995.
So what next?
MTN and the bankers are obliged under the law to respond to the notice and failure to do so could attract penalties and sanctions which MTN might want to avoid for now seeing as they haven’t finished paying the last fine according to sources.
This probe could spread to other agencies of government by the Securities and Exchange Commission (SEC) as some of the banks are listed on the stock exchange. The investigation would border on if MTYN truly broke the law and if they were helped by Nigerian banks which would further spell more trouble for banks that have reeling from a decision by the Buhari led government to withdraw government funds from private banks to the CBN. This administration is not shy of placing fines on erring companies and we have seen this across different sectors of the economy.
MTN could be facing yet another fine in the near future.
Some have interpreted the fate of MTN so far in Nigeria at least since the new government came into power as a witch hunt while others have said Nigeria is being economically protectionist. This means that Nigeria wants to give the advantage to local companies like Glo. But whichever side of the debate you fall into, this will continue to be unsolved and maybe just once, Nigeria is ready to enforce corporate discipline.