MTN Group says it is nearing an out-of-court settlement with the Nigerian government over the sanctions imposed on its Nigerian subsidiary, MTN Communications Limited.
The chief executive officer of the MTN Group, Rob Shuter, who disclosed this in Johannesburg also announced plans by the company to seek a mobile-banking license in Nigeria in the near future. Last August 29, the Central Bank of Bank sanctioned four Nigerian banks after a regulatory examination of their operations revealed infractions of the country’s foreign exchange regulations.
The banks, namely Standard Chartered, Stanbic-IBTC, Citi and Diamond Banks were alleged to have connived with MTN to repatriate out of Nigeria about $8.1bn equivalent of profit realized from their operations in the country between 2007 and 2015. The four banks were accused of carrying out the remittances using irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria.
The CBN accused MTN of “flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.” Apart from the refund of various amounts as fines totaling N5.87 billion, the CBN asked the telecoms firm to reverse the $8.13 billion (about N2.5trillion at N306.15 to $) allegedly repatriated illegally out of Nigeria.
They were asked to return the money to the country and follow the legal process.
Also, the Office of the Attorney General of the Federation had also accused the company of reneging on its tax obligations valued at about N2 billion (about $1.3 billion) for import duties and withholding tax.
Following the sanctions, MTN followed up its threat to vigorously defend its rights with an N3 billion legal action against the CBN at the Federal High Court, Lagos. Hearing, on the case filed on September 10, 2018, to challenge the legality of N242 billion fine and $1.3 bn import duties and withholding tax demanded from it from the Nigerian government, is scheduled to commence early next month.
However, the chief executive officer of the South African Telecom firm, Rob Shuter, told Bloomberg in an interview in Cape Town on Tuesday that the company was close to an out-of-court settlement in the matter.
“We are narrowing down what the key issues are in ongoing discussions with Nigeria’s central bank and other institutions,” Mr. Shuter told Bloomberg. He said MTN’s strategy is two folds, namely seek legal action, while also exploring prospects for an amicable resolution of the matter.
“We would like a resolution out of court and with normal engagements as that would be faster than a court process,” he said. Following Mr. Shuter’s comment, MTN’s shares at the Johannesburg Stock Exchange rose by 1.5 percent to about 81.11 rands, paring the decline since the crisis erupted to 25 percent.
However, the Security and Exchange Commission on Monday confirmed for the umpteenth time MTN is yet to commence the process to enlist its stocks in the Nigerian Stock Exchange. The spokesperson of SEC, Even Ebelo, despite recent reports to the contrary, said MTN was yet to file a formal application to kick-start the enlistment process.
Mr. Shuter said although MTN was still committed to a listing on the Nigerian stock market, the process has become complicated.
“A resolution will help to get the listing on the way,” he said at a telecoms conference. He reaffirmed MTN’s commitment to the Nigerian economy, saying the company had no intention of walking away from the country.
On future plans for the country, the MTN CEO announced plans to seek a mobile-banking license in Nigeria
Reputed to be one of Nigeria’s three largest multinational Telecom’s operator, MTN considers Nigeria, Africa’s most populous nation, as its biggest market with more than 64 million customers. MTN reported a margin of 43 percent increase on its Nigerian earnings before interest, taxes, depreciation, and amortization in the third quarter of this year.