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Senate may cancel deal as CBN, MTN brush down $8.1bn fine to $52.6m

After several intensive engagements in Lagos between telecoms giant, MTN and the Central Bank of Nigeria (CBN), both bodies have in separate statements issued on Monday, disclosed that the they have agreed to $52.6m in settlement of the $8.1bn foreign exchange repatriation dispute.
Whereas MTN said the settlement was based on the realisation that certain Certificates of Capital Importation (CCI) utilised in some private placement shares of about $1bn in 2008 were not properly issued as the company only got approval-in-principle from the CBN, similar statement signed by the Director, Corporate Communications at CBN, Isaac Okorafor, averred that “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 CBN assures foreign investors that the integrity of the CCIs issued by authorised dealers remains sacrosanct. Potential investors are encouraged to take advantage of the enormous investment opportunities that abound within Nigeria.”
Still on MTN statement, the company noted 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 N19.2bn – equivalent to $52.6m.”
“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.”
Closer looks at both statements failed to show any input from the Senate who had earlier in November, expressed anger on why it was not involved in deciding the fine crisis.
There had been clear indications of strong opposition against the almost concluded arrangements by the Federal Government to reduce the $8.1 billion fine imposed on MTN, to $800 million. The Red Chamber had argued that the planned reduction of the fine is a matter of interest to the Senate since it was the executive that imposed the fine on the company through a fresh investigation after one earlier conducted by the Senate in 2016.
Business Hilights in November gathered that the Senate was not particularly against whatever the government would want to do with the MTN fine, but it should be intimated why the reduction became necessary.
Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Senator Rafiu Ibrahim, PDP Kwara South, had told journalists on November 13, in Abuja that the committee would immediately demand CBN report on the matter to be better informed.
He stressed that “The only way Nigerians would know what transpired between the CBN and MTN on the $8.1 billion fine is through a detailed report.”
The Senate anger is coming from the discovery that the Federal Government, working through the CBN, may have concluded arrangements to cut the $8.1 billion fine to $800 million through the back door which forced it to have interest in knowing the percentage of reduction from $8.1 billion to $800, ab-initio.
However, it  is not yet clear on how the lawmakers will react especially now that the reduction has come even lower than the initially speculated $800m to $52.6m, as one of the Committee members who spoke to Business Hilights today (December 25, 2018), expressed anger and only added “until we meet after recess”.
Though Business Hilights gathered that both CBN and MTN had assured that they would continue discussions in relation to the issues dealt with in the resolution agreement, MTN on its own explained that the regulator reviewed additional documents it presented and it was resolved that the telco was no longer required “to reverse the historical dividend payments made to MTN Nigeria shareholders.”
Sequel to the new understanding, MTN said, “The CBN will regularise all the CCIs issued on the investment by shareholders of MTN Nigeria of circa $402,625,419 without regard to any historical disputes relating to those CCIs, thereby bringing to a final resolution all incidental disputes arising from this matter.”
On the other case of MTN/Accountant General of Federation dispute on back taxes, MTN told its shareholders that the legal process it initiated, seeking the restraining of the AGF from taking further action, was ongoing as it continues to maintain its innocence on the $2.1bn tax allegation, saying no additional payment, as claimed by the AGF, was due.
The AGF matter came up for initial mention before the Federal High Court of Nigeria Lagos Judicial Division on November 8, 2018, and has been adjourned to February 7, 2019.
It would be recalled that in late August, the CBN had alleged that MTN and four of its banks – Standard Chartered Plc, Citigroup Inc., Stanbic IBTC Plc and Diamond Bank Plc – illegally repatriated $8.1bn from Nigeria while the office of the Attorney General claimed the company failed to remit $2bn back taxes.
The four banks were fined a total fine of N5.87bn for allegedly remitting dividends with irregular CCIs on behalf of MTN Nigeria from 2007 to the end of 2015 financial year.