Barely four months after telecoms giant, MTN Nigeria, was asked to return $8.1 billion it was said to have illegally repatriated from the country, the Central Bank of Nigeria, CBN, has announced that the foreign exchange remittances impasse has been resolved.
The apex bank said MTN is to now reverse the transactions notionally to bring it into full compliance with foreign exchange laws and regulations.
In terms of the resolution agreement, the CBN will regularise all the Certificates of Capital Importation, CCIs, issued on the investment by shareholders of MTN Nigeria of circa $402.625 million without regard to any historical disputes relating to those CCIs, thereby bringing to a final resolution all incidental disputes arising from the matter.
The CBN had in August 2018 directed MTN Communications Limited (MTN Nigeria) to reverse repatriations valued at $8.1 billion done on its behalf by four commercial banks between 2007 and 2015 on the basis of CCIs irregularly issued to MTN.
Standard Chartered Bank were slammed the heaviest fine of N2.47 billion, while Stanbic IBTC Nigeria was fined N1.88 billion. Citibank Nigeria and Diamond Bank were also fined N1.26 billion and N250 million each for violating foreign exchange rules.
The fines had sparked protest from MTN and foreign investors as well as the banks involved.
The apex bank had earlier said it was discussing with MTN Nigeria to reach an agreement on the issue.
And in a statement issued on Monday by its director of Corporate Communications, Isaac Okoroafor, CBN stated that following the keen interest shown by various stakeholders sequel to the regulatory action, it is committed to engage further with MTN Nigeria with a view to achieving an equitable resolution.
MTN Nigeria said it held various engagements in order to find an equitable resolution to the matter, adding that series of meetings were held in Lagos with CBN officials in November 2018, where it provided additional material documentation which satisfactorily clarified its remittances.
CBN upon review of the additional documentation concluded that MTN Nigeria, MTNN, is no longer required to reverse the historical dividend payments made to its shareholders.
However, the apex bank maintained that the proceeds from the preference shares in MTN Nigeria’s private placement remittances of 2008 of circa $1 billion were irregular having been based on CCIs that only had an approval-in-principle, but not final regulatory approval of CBN.
In the statement issued yesterday, CBN said, “Consequent upon the above, MTNN, led by its Nigerian shareholders, held intensive engagements with the CBN in the course of which it supplied additional material information, not previously offered to the Bank, satisfactorily clarifying its remittances.
“Having now reviewed the additional documentation provided by the company, the CBN has concluded that MTNN is no longer required to reverse the historical dividend payments made to MTN Nigeria shareholders.
“However, the CBN identified that the proceeds from the preference shares in MTN Nigeria’s private placement remittances of 2008 were irregular having been based on CCIs that were issued without the final approval of CBN.
“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 apex bank assured foreign investors that the integrity of the CCIs issued by authorized dealers remain sacrosanct, just as it said potential investors are encouraged to take advantage of the enormous investment opportunities that abound within Nigeria.
It also instructed MTN Nigeria to implement a notional reversal of the 2008 private placement of shares at a net cost of circa N19.2 billion, equivalent to US$52.6million (the notional reversal amount).
According to the CBN, this is on the basis that certain certificates of capital importation (CCIs) utilised in the private placement were not properly issued.
MTN Nigeria said it relied on certain commercial banks to ensure all approvals had been obtained prior to the CCIs being issued and to ensure the CCIs were properly utilised in the private placement.
MTN Nigeria will be engaging with the banks in relation to the issues dealt with in the resolution agreement.