Nigeria’s central bank fines four banks $15.6m for illegal capital repatriation for MTN

Nigeria’s central bank, CBN has fined four banks N5.65 billion ($15.58 million) for breaching Nigeria’s forex regulations on illegal capital repatriation by telecommunications company MTN.

The CBN has also directed the banks to refund a total of $8.134 billion which MTN took out of the country through the banks.

The fines come few days after online news platform Sahara Reporters reported that central bank governor Godwin Emefiele blocked the CBN from imposing $6.5bn fine on banks that exported forex illegally.

In the report, the online news platform stated that Lagos-based law firm Tope Adebayo LLP undertook forensic analysis of all available certificates of capital importation (CCIs) and foreign exchange documentations for remittances and (or) repatriation of dividends to offshore corporate shareholders of MTN Communication Nigeria Ltd, with a view to tracing and recovering illegal remittances.

CCIs are CBN’s certificates issued by banks for importation of cash (foreign currency Inflow) for investment as Equity or Loan, and also for importation of machinery and equipment for investment as Equity or Loan. They legitimize and facilitate the repatriation of dividends and capital to a foreign investor.

According to the report, the firm’s findings showed that 10 individuals and corporate entities were involved in the forgery of false CCIs to the CBN and the foreign exchange market, contrary to Section 29 (1)(d) of the Foreign Exchange (Monitoring and Miscellaneous) Provisions Act Cap. F34 LFN, 2004. According to section 29 (2) (a&b), a person convicted of an offence under subsection (1) of this section is liable to imprisonment for a term of five years or a fine of five times the amount of foreign currency involved, and in the case of a corporate body, to a fine of ten times the amount of the foreign currency involved.

CBN examiners had reportedly confirmed the findings of Tope Adebayo LLP, with the CBN eventually deciding that the affected banks return $6.5 billion. However, CBN announced that the banks are to return a total of $8.134 billion.

Mails sent to officials of two of the affected banks have not been replied as at the time of filing this report.

The CBN fined Standard Chartered Bank N2.4 billion, Stanbic IBTC Bank N1.8 billion, Citibank N1.2 billion and Diamond Bank N250 million.

A statement by Nigeria’s central bank said that following investigations, it was revealed that between 2007 and 2015, Standard Chartered Bank helped MTN to repatriate the sum of $3.448 billion, while the sums of $2.632bn, $1.766bn and $348.914m were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc., respectively.

“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.

UK-based account Feyi Fawehinmi commented on the fine. “This issue goes back to a share reconstruction MTN did in 2001. No money was undeclared or hidden – they mixed up CCIs but later rectified it. I don’t know why exactly but they (and the banks) have been pursued relentlessly over this matter,” he wrote on Twitter.

“The funniest part is CBN is asking the banks to bring back $8 billion which they will convert at the exchange rate at the time (2006). The banks presumably are supposed to ask MTN for the money. I think I know what MTN will tell the banks.”

Nigeria’s largest telco MTN had agreed to pay a $1 billion fine over failure to disconnect subscribers with improper registration. As part of the deal that cut the fine from an initial $5.2 billion, MTN must list on the Nigeria Stock Exchange latest May 2019.

UPDATE

An official of one of the affected banks got back to The Nerve Africa, declining comment on the matter.

A statement by StanbicIBTC’s parent firm StanbicIBTC Holdings says “the Bank is holding further engagements with the CBN, in relation to the issues it has raised”.