The Central Bank of Nigeria (CBN) on Wednesday wielded the big stick on mobile telecom firm, MTN Nigeria Communications Limited, and four commercial banks for alleged financial infractions.

The CBN’s spokesperson, Isaac Okorafor, in a statement sent to PREMIUM TIMES on Wednesday said the apex bank wrote to MTN Nigeria demanding a refund of about $8.13 billion (about N2.5trillion at N306.15 to $) allegedly repatriated illegally out of Nigeria.

Mr Okorafor said the affected banks, including Standard Chartered Bank, Stanbic-IBTC, Citibank and Diamond Bank, would refund various amounts totaling N5.87 billion.

Standard Chartered was asked to refund N2.5 billion; Stanbic IBTC (N1.9 billion); Citibank (N1.3 billion and Diamond Bank (N250 million).

The banks were accused of committing “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.”

The CBN spokesperson said the Bank resolved to sanction the commercial banks following investigations in March 2018 which confirmed allegations of remittance of foreign exchange with irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria.

Details showed about $35.5billion was repatriated by Standard Chartered Bank based on illegally issued CCIs, while about $2.6billion, $1.8 billion and $348.9million fraudulently issued by Stanbic IBTC, Citibank and Diamond Bank respectively between 2007 and 2015.

Besides, the CBN said further investigations revealed that on account of illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) of $399.6million, about $8.13 billion was illegally repatriated by MTN.

Further details showed MTN shareholders invested about $402.6million between 2001 and 2006 through the inflow of foreign currency cash transfers and equipment importation evidenced by the CCIs issued by Standard Chartered, Citi Bank and Diamond Bank.

The CBN said the CCIs were issued with the investments by the three banks showed that about $59.4 million was invested as shareholders’ loan and $343.15million as equity.

Regardless, Mr Okorafor said a review of MTN’s financial statements for the year ended December 31, 2007 revealed that about $399.6 million was recorded/invested as shareholders’ loan.

Another $2.996 million was captured by MTN as equity investment, in accordance with the shareholder’s agreement contrary to the CCIs issued by the three banks.

Following a request by MTN through Standard Chartered for approval to convert the shareholder’s loan to preference shares, CBN said an approval-in-principle was granted on November 13, 2007.

The CBN said the final approval was granted subject to the fulfillment of certain conditions by MTN, namely implementation of November 08, 2007 board resolution submitted to the CBN’s Director, Trade and Exchange Department.

Other conditions included provision of undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

In spite of MTN’s refusal to meet the said conditions, and without a final approval by the CBN, MTN still proceeded to convert the shareholders’ loan to preference shares with Standard Charted Bank by issuing new CCIs in respect of the illegal conversion.

Mr. Okorafor advised all banks and multinational companies operating in Nigeria to always adhere strictly to the provisions of all extant laws and regulations of the country in their foreign exchange transactions.

He warned that the management of banks and companies which fail to abide by the existing guidelines risked appropriate sanctions, which may include denial of access to the Nigerian foreign exchange market.