Sunday, November 11, 2018 04.06AM / By Ejiofor Alike of Thisday /Additional reporting from Reuters
The Central Bank of Nigeria (CBN) and telecoms giant, MTN, have reached a tentative agreement on the $8 billion fines the apex bank imposed on the Nigerian subsidiary of the company, MTN Nigeria, for violating currency regulations, THISDAY learnt on Friday night.
According to reliable sources, the MTN Group CEO and President, Mr. Rob Shuter, was in Abuja yesterday and met with the CBN Governor, Mr. Godwin Emefiele, to discuss the fines, which the South African Reserve Bank (SARB) has said could increase the risks to the country’s financial system.
Based on unassailable findings, said a source, there was an agreement that the CBN would grant the telecoms a substantial reduction in the fines. Figure agree may be far off from the initial fine according to Proshare sources
Following the deal, the apex bank is to meet with the four banks affected by the hefty fines (meeting, and details not yet confirmed).
Reuters had reported that CBN emailed invitations on Thursday to the Nigeria heads of Standard Chartered, Citibank, Stanbic IBTC Bank and Diamond Bank to attend a meeting on Friday.
CBN had accused South Africa-based MTN of violating currency regulations by sending $8.1 billion abroad.
In August, the apex bank ordered the company and its banks to repatriate the funds.
MTN and the banks involved have denied any wrongdoing and the banks want the central bank to refund the money charged to their accounts in the form of fines.
Reuters had said the CBN and the banks declined to comment on today’s meeting, adding that a spokeswoman for MTN told it she did not know of the proposed meeting.
Escalating Battle amid Declining Reserves
Last week, the dispute escalated between MTN and the monetary authority in a market which accounts for a third of its annual core profit.
MTN’s dispute with Nigeria’s central bank had looked set to drag on, after court documents showed the CBN was persisting with its demand that the South African telecoms firm repatriates $8.1 billion.
The CBN had filed a counter claim to a court request by MTN which sought to stop the bank from forcing it to bring back the money, MTN’s lawyer, Wole Olanipekun had said on Friday.
In asking a Lagos court to throw out MTN’s case, the central bank also requested the firm pay 15 percent annual interest on the $8.1 billion, according to court documents seen by Reuters.
“MTN had gone to court, sued the central bank and the attorney general. The central bank has filed a response and a counter claim, meaning that nobody can resort to self-help in the matter any longer,” Wole Olanipekun told Reuters.
“With this development everybody has now surrendered ... the grievances to the court. Everybody has to wait for the decision of the court.” MTN’s next move will be to file a reply to the bank’s claim, he added
Nigeria has been battling to defend its currency and also shore up its reserves of around $44 billion, hobbled by lower oil prices.
“The improper depletion of our foreign reserves is a more serious problem for the entire country far above the claims of the Plaintiff (MTN) in its application,” the central bank’s lawyers argued in the document.
The Lagos court adjourned hearing on the $8.1 billion dispute between MTN and the CBN until December 4. See: MTN Nigeria Sues FGN and AGF For N3billion
Reuters quoted Emefiele as having said he was optimistic the MTN issue could be resolved.
Nigeria is MTN’s biggest market, accounting for a third of the lender’s annual core profit, but has proved to be problematic in recent years.
In a separate case, MTN faces a $2 billion tax demand from Nigeria’s Attorney-General; a claim which the firm has said is without merit. The Lagos court yesterday adjourned the case against the attorney general until December 3.
Africa’s biggest telecoms firm has a market valuation of roughly $12 billion and the two disputes total $10.1 billion.
The SARB Response
Meanwhile, South African Reserve Bank said on Wednesday that the country’s financial stability was threatened by the demands made on MTN by Nigerian authorities. CBN fined Standard Chartered N2.4 billion ($7.8 million) over the fund transfer; Stanbic IBTC Bank N1.8 billion; Citibank N1.2 billion and Diamond Bank N250 million.
The South African apex bank said the fines could increase the risk to the country’s financial system.
It said in its semi-annual review of financial stability that the repatriation claim and the $2 billion underpayment in tax amounted to approximately 100 percent of MTN’s market capitalisation.
“Any potential impact on the South African financial system arising from this event will depend on the eventual resolution of the matters raised and MTN Group’s ability to continue meeting its debt obligations,” the bank said.
“A potential worst-case scenario would be for the MTN Group to disinvest from Nigeria,” the central bank added.
1. CBN, MTN Reach Tentative Agreement on $8bn Fines - Thisday
2. Nigeria central bank hopeful on resolving MTN's $8.1 billion transfer claim: spokesman reuters Oct 05, 2018
Nigeria's central bank files counter claim in escalating MTN dispute Reuters Oct 05, 2018