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MTN history of disregard for Nigerian Laws    By Henry Onyema

Since MTN officially entered into the Nigerian Telecoms Market in 2001, the company has had a notorious history of flagrant disregard for extant Nigerian Laws. Here are many instances. (1) N330 BILLION FINE FOR UNREGISTERED LINES As part of efforts to check terrorism, kidnapping and other heinous crimes in the country, the Nigerian Communications Commission, […]


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Since MTN officially entered into
the Nigerian Telecoms Market in 2001, the company has had a notorious history
of flagrant disregard for extant Nigerian Laws. Here are many instances.





(1)
N330 BILLION FINE FOR UNREGISTERED LINES





As part of efforts to check
terrorism, kidnapping and other heinous crimes in the country, the Nigerian
Communications Commission, NCC issued a directive to all telecoms companies
operating in the country to ensure that all active telephone lines in the
country were registered. A fine of N200, 000 per telephone line was fixed as a penalty
for non-compliance. While other telecom firms made significant effort to ensure
substantial compliance, MTN practically took the regulator for granted and
continued to allow unregistered Sim-cards to make active calls on its network.
The reckless action of MTN gave leeway to insurgents in the Northern parts of
the country to unleashed mayhem on the nation.





When NCC undertook its first
assessment of compliance in 2015, the regulator discovered that MTN was in
flagrant breach of its directive. According to NCC findings, about 5.2million
subscribers on MTN network were unregistered.





Irked by the barefaced disregard for
the country's laws, NCC slammed MTN with N1trillion ($255 million) fine. The
firm initially sued the regulator, but it backed down later and reached a deal
with the authorities to pay a reduced sum of NGN330 billion (around US$1
billion).





There were initial allegations of
back-channeling leading to the settlement. For instance, President Muhammadu
Buhari’s Chief of Staff Abba Kyari allegedly received a US$2 million bribe from
top MTN figures to influence government decision in favour of the firm. An
investigative panel, however, cleared Kyari of the allegation. The company was
later allowed to settle the fine in three instalments.





An in-house cleansing by the tech
firm led to a major resignations among the top echelon of the organization,
including the chief executive officer, Sifiso Dabengwa, the Head of Nigeria
Operation, Micheal Ikpoki and the Head of Cooperate Affairs, Akinwale Goodluck
being replaced with Phuthuma Nhleko, Ferdi Moolman and Amina Oyegbola as new
chairman, managing director and Head of Corporate and Regulation respectively.





(2)
ILLEGAL REPATRIATION OF N8.1 BILLION 





Three years after facing a
record-breaking $5.2 billion,  MTN,  again ran into trouble with the
Nigerian government over the illegal repatriation of $8,134,312,397.63 from the
country, in violation of the extant laws and regulations.





The illegal foreign exchange
remittances to MTN's parent company in South Africa, was allegedly done through
four Nigerian banks- Standard Chartered Bank, Citibank Nigeria Limited, Stanbic
IBTC Bank Limited and Diamond Bank Plc. 





The bank’s were found to have helped
MTN illegally repatriate $8.134 billion between 2007 and 2015, despite the fact
that the telecoms giant was in violation of the extant Nigerian foreign
exchange and anti-money laundering laws.





The four banks were directed by the
CBN to refund the $8.134 billion, with immediate effect and were respectively
fined  for the various violations regarding the remittances undertaken on
behalf of MTN Nigeria.





How
the illegal act was carried out





After the issuance of its operating
licence by the Nigerian Communications Commission (NCC) in 2001, the
shareholders of MTN Nigeria invested the sum of $402,590,261.03 between 2001
and 2006 to fund its investments in the country by way of inter-company loans
and equity investments.





The investments were carried out
through the inflow of foreign currency cash transfers and equipment
importation, which was evidenced through the Certificates of Capital
Importation (CCIs) issued by the four banks.





The CCIs issued at the time of the
investment of $402.6 million showed that $59,436,923.44 was invested by way of
a shareholder loan and $343,153,339.56 as equity.





However, this position was contrary
to MTN's financial statement for the year ended December 31, 2007, which showed
that $399,594,146 was invested in the firm by way of a shareholder loan and
$2,996,117 was invested as equity investment, in accordance with the
shareholder's agreement, but contrary to CCIs issued by StanChart, Citibank and
Diamond Bank.





This was deemed as a rendition of
false returns by the banks to the CBN.





Following  MTN's request
through StanChart for CBN's approval to convert the $399.6 million to
preference shares, an approval-in-principle was granted by the central bank
vide a letter dated November 13, 2017; with the grant of a final approval after
MTN must have fulfilled certain conditions.





The conditions were for the implementation
of the decision through a board resolution by MTN and the submission of
documentary evidence to that effect to the Director, Trade and Exchange
Department with the CBN.





The second condition was for the
provision of an undertaking that no remittances will be made for either of the
interest or the principal repayment would be made to the shareholders from the
date of the loan to the date they converted to preference shares.





But MTN failed to meet the
conditions, and despite its non-fulfillment of the conditions, which led to the
non-issuance of a final approval by the CBN, the telecoms firm went ahead to
convert the shareholders' loan to preference shares, following which StanChart
issued new CCIs in respect of the illegal conversion.





On account of the illegal conversion
of the interest-free shareholder loan of $399.6 million, the sum of $8.134
billion was illegally repatriated on behalf of MTN by the four banks between
2007 and 2015.





Other findings made by the CBN
included the discovery that StanChart issued three CCIs outside the regulatory
24 hours without the approval of the central bank.





StanChart, also in contravention of
Memorandum 24(ii) of the Foreign Exchange Manual, which stipulates that CCIs
should be transferred based on a customer's instructions to a bank of the
customer's choice along with the transaction history of the CCI, StanChart
provided confirmations to Citibank and Diamond Bank, instead of transferring
the CCIs to them as required by the FX Manual.





It was discovered that the two
banks, on the strength of StanChart's confirmation, subsequently remitted
various sums as dividend from MTN Nigeria at different times.





Owing to the hefty infractions
committed by StanChart, the Central Bank ordered the bank to refund $3.448
billion with immediate effect to the CBN, being the sum repatriated by the bank
on the basis of illegally issued CCIs.





It also fined the bank to the tune
of N2,470,604,767.13 for the various violations of the extant laws and
regulations in its foreign exchange dealings regarding the remittances on
behalf of MTN.





In September, 2018 MTN filed an
action before the Federal High Court, Lagos seeking to restraining CBN from
implementing sanctions against it over the alleged illegally repatriated fund.
The firm in December, however backed out of the suit and agreed to settle a
negotiated fined which was later reduced by CBN to $52.6 million.





(3)
$2 BILLION UNPAID TAX





MTN reputation was dealt a further
blow when the Federal Government after a thorough investigation, uncovered its
unpaid  $2bn in tax arrears on imported equipment and payments to
suppliers.





The Attorney General of the
Federation and Minister of Justice, Abubakar Malami, in a letter to the
company, said the import duties, Value Added Tax and withholding taxes on
foreign imports/payments dated back to 10 years.





The attorney general notified MTN
that his office made a high-level calculation that MTN Nigeria should have paid
approximately $2bn in taxes relating to the importation of foreign equipment
and payments to foreign suppliers over the last 10 years.





News of the unexpected tax bill sent
MTN shares tumbling by as much as 7.5 percent to an almost 10-year low in the
Johannesburg Stock Exchange.





Immediately the discovery was made,
MTN again ran to the court seeking a restraining order against the Federal
Government.





The matter is ongoing and as at the
last hearing, was adjourned to June, 26, 2019.





(4)
MASSIVE CASUALIZATION OF WORKER





Although Nigeria is MTN’s biggest market,
the company in total regard for Nigerian Labour Laws, has one of the largest
number of casual workers. 





MTN Nigeria, since it commenced
operations in Nigeria and in clear violation of extant national and
international labour laws, especially ILO Conventions 87 and 98 has denied its
workers the fundamental principles of the rights at work.





It similarly indulges in other
anti-labour practices such as casualisation for nearly all types of work,
fixed- term contract work for Nigerian workers, worst forms of precarious work,
etc.





Last year, the Nigeria Labour
Congress, after series of appeal decided to picket office of the company
Nationwide to press home their demand to end the wicked labour practice. Many
offices of the company were shut down by labour leaders in effort to force it
to comply with Nigerian Labour Laws.





(5)
ILLEGAL CAPITAL MARKET LISTING





MTN Nigeria, officially listed its
shares on the floors of the Nigerian Stock Market, MTN, last week, but unknown
to many Nigerians the entire process is a big sham waiting to be exposed.





Contrary to Security and Exchange
Commission, SEC,  guidelines, the company failed to disclose to regulators,
legal disputes which, when  decided by the court may adversely affect the
true share value and structure of the company. By implication, such suits, when
decided, may ultimately render the listing of MTN shares null and void.





One of such suits, is the one filed
by a senior legal practitioner, Dr. Charles Mekwunye before a Federal High
Court sitting in Abuja seeking to stop the planned listing of MTN shares on the
floor of the Nigeria Stock Exchange.





In the suit marked as
FHC/ABJ/CS/2019, Dr Mekwunye is asking the court for a perpetual injunction
restraining SEC from going ahead with the listing of MTN shares pending the
determination of a suit number  before the Supreme Court bothering on
alleged breach of contract in the massive divestment of MTN assets filed at the
Federal High Court, Lagos and two other appeals no SC/502/2018 and SC/503/2018.





The plaintiff is also asking the
court to direct the defendants to maintain the status quo ante regarding the
listing of MTN shares and a further order nullifying all approvals given to MTN
by SEC and NSE towards facilitating the listing of its shares.





Mekwunye is also praying the court
for an order of mandatory/ restorative injunction setting aside and or
nullifying all actions taken, including notices, resolutions and authorizations
etc by MTN with a view to facilitating the listing of its shares.





Dr. Mekwunye had in 2008 dragged
MTN, Lotus Capital and Stanbic IBTC Asset Management, IHS Holding LTD and INT
Towers Ltd before the Federal High Court over alleged breach of contract and
the alleged unlawful massive divestment of MTN assets to INT Towers





Mekwunye claimed at the lower court
that MTN through its appointed nominee, Stanbic IBTC Asset Management and LOTUS
Capital defaulted in a share investment agreement with him.He urged the court
then, to restrain MTN from listing its shares on the stock market pending the determination
of the suit.





But ruling on a preliminary
objection raised by MTN on the competence of the suit, the trial Judge, Justice
Mojisola Olateru, asked parties in the suit to explore the arbitration clause
embedded in the contract between Dr. Mekwunye and Lotus Capital, Stanbic IBTC
and MTN.





Dissatisfied with the ruling of the
lower court, Mekwunye filed a motion on notice on February 26, 2018 at the
Court of Appeal arguing that an arbitration clause in the agreement between him
and MTN cannot be used to determine the suit involving IHS Holdings Ltd and INT
Towers Ltd who are not parties to the arbitration clause. The Court of Appeal
in its ruling also asked parties in the suit to pursue arbitration earlier
pointed out by the lower court.





Still not satisfied with the ruling
of the Court of Appeal, Mekwunye took the matter to the Supreme Court,
insisting that the crux of the matter is the failure of the respondents to list
MTN shares in NSE in 2011 as agreed by the parties and that until the suit is
properly determined, MTN ought not to be allowed to list its shares at the
stock market.





In total disregard of this court
action which was served on SEC and NSE and was received by Okpobia Oghenekevwe,
NSE Head of legal at about 9:12am on May 16 before the listing of MTN
shares  in accordance with the affidavit of service file by the bailiff of
the court which has grave consequences on its share structure, MTN forged ahead
with its listing agenda. 





These pending litigations should be
of concern to regulators, Nigerians and foreign investors as Nigeria is surely
a nation of the rule of law.





Henry Onyema, a media consultant
write from Lagos


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Source: MTN history of disregard for Nigerian Laws    By Henry Onyema,Here On Furious Forum