MTN no longer required to return ‘illegally’ repatriated funds, Nigerian regulator says

The Central Bank of Nigeria (CBN) says it has settled with MTN Group’s Nigerian unit MTN Nigeria Communications Limited following an alleged illegal repatriation of funds leveled against the telco by the central bank.

Although MTN denied any wrongdoing, the central bank directed the telco to reverse the $8.1 billion repatriation and fined banks involved in the transactions. The issue, which to many, looked like a shake down, degenerated into a court case which, however, did not drag on for too long as MTN later said it would settle with the CBN out of court.

“Following the keen interest shown by various stakeholders sequel to the regulatory action, the CBN committed to engage further with MTNN with a view to achieving an equitable resolution,” the statement by the CBN said.

According to the regulator, it had reviewed the additional documentation provided by MTN and the company is no longer required to reverse the historical dividend payments made to its shareholders.

“The CBN and MTNN have mutually agreed that the aforementioned transaction be reversed notionally to bring it into full compliance with foreign exchange laws and regulations. The parties have resolved that execution of the terms of the agreement will lead to amicable disposal of the pending legal suit between the parties and final resolution of the matter,” the statement added.

Having claimed that four commercial banks irregularly issued Certificates of Capital Importation (CCIs) to MTN between 2007 and 2015, the CBN, however, assured foreign investors of the integrity of the CCIs issued by authorized dealers such as the banks fined by the regulator.

“Potential investors are encouraged to take advantage of the enormous investment opportunities that abound within Nigeria,” the central bank added.

The actions of the CBN has been a topic of discussion for the international investment community for months, with many worried about the safety of their investments in the country if regulators could, on a whim, clampdown on an important company like MTN. The resolution of the matter, while good, is also an indication that those claiming that it was a shake down may not be totally wrong.

MTN says the case instituted against the AGF is ongoing.

“Shareholders are advised that the legal process initiated by MTN Nigeria for injunctive relief restraining the AGF from taking further action in respect of its orders for back taxes is continuing,” the company said in a statement. “The AGF matter came up for initial mention before the Federal High Court of Nigeria Lagos Judicial Division on 8 November 2018 and has been adjourned to 7 February 2019.

“MTN Nigeria continues to maintain that its tax matters are up to date and no additional payment, as claimed by the AGF, is due, and consequently no provisions or contingent liabilities are being raised in the accounts of MTN Nigeria for the AGF back taxes claim.”

MTN also confirmed resolution of the matter with the CBN.

The telco said in a statement that the CBN instructed MTN Nigeria to implement a notional reversal of the 2008 private placement of shares in MTN Nigeria at a net cost of circa N19.2 billion – equivalent to $52.6m (the notional reversal amount).

“This is on the basis that certain certificates of capital importation (CCIs) utilised in the private placement were not properly issued.

“MTN Nigeria and the CBN have agreed that they will resolve the matter on the basis that MTN Nigeria will pay the notional reversal amount without admission of liability,” the statement read.