MTN and CBN reach agreement over the company's illegal remittances on preference shares

TELECOMMUNICATIONS giant MTN Communications and the Central Bank of Nigeria (CBN) have resolved the ongoing dispute between them under an agreement whereby the company will now only atone for  the illegal remittances on preference shares issued in 2008.

Four months ago, the CBN had instructed MTN to return to Nigerian coffers $8.1bn repatriated between 2007 and 2015 because of capital importation certificate irregularities. In addition to MTN, four banks involved in the repatriation, including Standard Bank, Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank, were fined by the CBN.

Under the terms of the punishment meted by the CBN, Standard Chartered Bank was fined N2.47bn, Stanbic IBTC N1.88bn, Citibank N1.26bn and Diamond Bank, N250m. However, MTN has since then protested the size of the fine and after months of tough negotiating between both sides, an amicable settlement has been reached.

Following their agreement, under the terms of settlement, 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 ($52.6m). This notional reversal amount was agreed upon on the basis that certain certificates of capital importation (CCI) utilised in the private placement were not properly issued.

An MTN spokesman said: “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. In terms of the resolution agreement, 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."

A CBN spokesman added: "The Central Bank of Nigeria (CBN) in August 2018 directed MTN Communications (MTN) to reverse repatriations valued at $8.1bn done on its behalf by four commercial banks between 2007 and 2015 on the basis of certificates of capital importation (CCIs) irregularly issued to MTN Nigeria. 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.

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."

He added that 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. According to the CBN, both parties have resolved that execution of the terms of the agreement will lead to amicable disposal of the pending legal suit between them and bring about a final resolution of the matter.