Godwin Emefiele, governor of the Central Bank of Nigeria, says MTN was investigated over three allegations by the bank’s committee of governors.

In an interview with TheCable from China — where he is attending the Forum on China-Africa Cooperation with President Muhammadu Buhari — on Monday, the governor said the “painstaking investigation” into MTN’s forex repatriation lasted 30 months.

Emefiele told TheCable: “Our examiners had been investigating three charges of infractions against four banks — Citibank, Diamond Bank, Stanbic IBTC Nigeria and Standard Chartered Bank — in relation to repatriations involving MTN.

“The first charge was how Nigerian investors bought forex to pay for their shares in the telecoms company. The second was the failure of the banks to issue certificates of capital importation (CCIs) within 24 hours of receipt of funds in-flowed into Nigeria as stipulated in our regulations.

“Now, the third and the most critical is the unauthorised conversion of a loan of $399 million to preference shares by the MTN and the banks, which led to the repatriation of  $8.1 billion without CBN final approval over eight years, from 2007 to 2015.”

He said the issue of forex purchase to buy shares, in what amounted to round-tripping, was not punished because the regulations at the time allowed it.

“CBN examiners discovered that the local investors purchased forex from the Nigerian foreign exchange market, repatriated the funds and these funds formed part of the total funds in-flowed by MTN totalling $402 milion between 2001 and 2003,” he said.

“By our regulations, only funds in-flowed into Nigeria qualify for the issuance of CCI. However, examiners observed that the forex regulations at the time of investment allowed Nigerians to purchase shares with foreign currency. So the transactions were not voided by the CBN.

“On the second allegation, the regulation provides that banks must issue CCIs for in-flowed funds within 24 hours. The examiners reported that the banks failed to issue some of the CCIs within 24 hours. This should attract sanctions.

“Again, the CBN decided to overlook this offence since these transactions took place over 10 years ago. This informed the CBN letter dated February 22, 2017, which was published by the media on Monday, granting MTN the permission to continue paying dividends on the CCIs.

“When our directors were summoned by the senate to provide the CBN perspective, they told the senators that the CBN had pardoned the offences and based on this, the senate also cleared MTN and the banks. This is a completely differently matter. MTN and the banks are not being sanctioned over this issue.”

MTN’s sanctionable ‘offence’

The “crux of the matter”, he said, is the conversion of $399 million shareholders’ loans to preference shares in 2007, which led to the repatriation of over $8 billion as dividends by MTN.

CBN had granted a “provisional approval” in 2007, he said, but the banks did the transactions without getting the “crucial final approval”.

“The facts from the last examination which commenced in March 2018 is that, at the inception of the company, the shareholders in-flowed the sum of $402 million and reported that $343 million was equity and $59 million as loan,” Emefiele said.

“The examiners later discovered that in its 2007 audited accounts MTN’s auditors reported that the investment of $402 million was stated as $2.99 million in equity and $399 million as loan, a statement that was in conflict with their earlier disclosure and on the basis of which CCIs had long been issued to the company.

“Soon after, the company, through its bankers approached the CBN for the conversion of the loan of $399 million to preference shares. The CBN thereafter gave an approval in principle subject to fulfilling certain conditions.

“Notwithstanding, MTN and the banks went ahead and concluded the conversion to preference shares without CBN’s final approval and based on this, repatriated the sum of $8.1billion outside the country.

“In order to give the MTN and the banks a fair hearing, a meeting comprising the CBN committee of governors, the over 20 examiners, the MTN officials and the banks was held on May 25, 2018.

“At this meeting, we gave the company the opportunity to defend itself over the breach but unfortunately, it couldn’t. In fact, the bank that concluded the conversion and apologised, stating that it was an unintended error.

“The committee of governors  further directed  MTN and the banks to meet with the examiners to provide any evidence within one week that could convince the examiners to change their position. Indeed, the deadline for the submission of documents and evidence was extended to over 12 weeks.

“Despite granting these extensions, the examiners’ position never changed as MTN and the banks had no new evidence to provide. Based on this, the examiners concluded their reports and made their recommendations which was subsequently adopted by the CBN committee of governors.”

The apex bank has since ordered MTN to refund the $8.1 billion repatriated and meted out a fine of N5.8 billion to the four banks involved.

MTN has denied any wrongdoing.