Nigeria to Investigate MTN’s Alleged $13.9bn Offshore Transfer Over a Decade

The South African telecom titan MTN is once again under scrutiny in Nigeria. Earlier in the year, MTN made significant headlines following a highly publicized disagreement with the federal government regarding excessive fines. Eventually, the telecom conglomerate yielded to governmental pressure, settling on a considerably reduced penalty with plans to list on the Nigerian Stock Exchange in Lagos next year.

However, it wasn’t long after this resolution that allegations emerged regarding MTN’s monetary activities. The telecom powerhouse has been accused of funneling the staggering sum of $13.9 billion out of Nigeria to other countries between 2006 and 2016. This has sparked significant outrage among Nigerians, who find it irksome that a company with its most substantial business operation in Nigeria would siphon off such astronomical amounts of capital, particularly in a period of biting economic recession.

As the initial furore began to subside, the Punch, a Nigerian news outlet, reignited the controversy. They reported that the Nigerian Senate had elected to launch an investigation into these off-shore transfers, focusing on ensuring they complied with monetary transfer guidelines. The Senate has decided to invite members of the Central Bank of Nigeria, MTN, and local banks to share their insights into the matter.

The Senate Committee on Banking, Insurance, and Other Financial Institutions has been directed to conduct a thorough investigation of the suspicious transfers, particularly regarding potential violations of the Foreign Exchange (Monitoring and Miscellaneous) Act. This investigative hearing will happen on the 20th of October, 2016.

A breakdown of the alleged transfer shows that Stanbic IBTC accounted for $4.87bn; Standard Chartered Bank, $5.72bn; Citi Bank, $2.98bn; and Diamond Bank, $0.35bn of the total sum. The claim suggests an apparent disregard of regulatory requirements by MTN, including acquiring a Certificate of Capital Importation from its bankers, Standard Chartered Bank, within the stipulated 24 hours of the inflow. Furthermore, the Central Bank of Nigeria was not promptly notified of this inflow by Standard Chartered Bank within 48 hours of receipt and conversion of the proceeds to the local Naira as required by regulations.

Senator Rafiu Ibrahim, the Chairman of the committee, categorically stated that these actions by MTN’s bankers constitute a flagrant violation of Section 15 of the Foreign Exchange (Monitoring and Miscellaneous) Act of 1995.

Following these developments, MTN, and the implicated banking institutions are legally required to respond to the allegations. Failure to do so could result in further penalties, which MTN will seek to avoid, as it is yet to complete the payment of previous fines.

The investigative probe could, depending on its findings, be extended to other governmental agencies like the Securities and Exchange Commission (SEC) given the fact that some of these accused banks are listed on the stock exchange. The investigation will attempt to ascertain if MTN did indeed breach the law, and if they were aided by local banks. This inquiry could potentially exacerbate existing troubles for banks still reeling from President Buhari’s directive to migrate government funds from private banks to the Central Bank of Nigeria.

This ongoing saga has various interpretations with some speculating this as an official witch-hunt while others believe Nigeria is merely being economically protectionist. This gives rise to the debate that Nigeria is striving to confer an advantage to local companies like Glo.

Regardless of differing opinions, the salient point remains that corporate discipline needs to be enforced to ensure transparent business conduct. Possibly, Nigeria could have in MTN, the ideal case study to drive its economic reform narrative moving forward. The continuation of this investigation into MTN’s financial transactions indicates a clear messaging from the Nigerian government of its unerring commitment to financial discipline and corporate conduct in line with formal regulations.