MTN Nigeria on Thursday faulted the claim by the Central Bank of Nigeria (CBN) that it illegally repatriated $8.1 billion to South Africa, saying that the dividends it paid to its shareholders between 2007 and 2015 are approved by the apex bank.

The CBN had sanctioned the telecommunications company with $8.1 billion over alleged regulatory infractions involving it and some banks that were also sanctioned.

The CBN, in a letter to MTN, stated that its investigation showed that its shareholders had invested $402,590,261.03 in the company from 2001 to 2006 and that the investment was done through the inflow of foreign currency cash transfers and equipment importation, evidenced by the CCIs issued by Standard Chartered Bank (SCB), Citi Bank (CB) and Diamond Bank (DB).

The apex bank stated further that the CCIs issued at the time of the investment by the banks to MTN in respect of the $402,590,261.03 showed that $59,436,923.44 was invested as shareholders’ loan and $343,153,339.56 as equity.

However, the bank pointed out that “a review of your organisation’s financial statements for the year ended December 31, 2007 revealed that $399,594,146.00 was recorded/invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by the banks.

“Following a request by your organisation through Standard Chartered Bank for CBN’s approval to convert the shareholder’s loan to preference shares, an approval-in-principle was granted vide our letter dated November 13, 2007; with the grant of final approval made subject to the fulfillment of the following conditions by your organisation.

“Implementation of the decision…of your board resolution dated November 08, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the CBN; and provision of an 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,” the apex bank said.

In spite of the non-fulfillment of the stated conditions and consequently, the non-issuance, of a final approval, the apex bank alleged that MTN converted the shareholders’ loan to preference shares with Standard Charted Bank issuing new CCIs in respect of the illegal conversion.

“The action of your banker in aiding your organisation in the illegal conversion of the shareholders’ loan was later described by SCB in a letter to the CBN dated December 10, 2009 as an “unintended omission”.

“On account of the illegal conversion of your shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated on behalf of your company by the aforementioned banks between 2007 and 2015,” the CBN alleged.

The telco, while reacting to the claim of the apex bank that it illegally converted shareholder loans to preference share and repatriated $8.1 billion as dividends during the period, therefore vowed not to refund any money to the apex bank as demanded.

In a statement titled ‘Central Bank of Nigeria (CBN) correspondence regarding Certificates of Capital Importation (CCIs) in Nigeria’ issued the telecommunications company, strongly refuted the allegations and claims.

The statement reads: “MTN Nigeria Communications Limited (MTN Nigeria) received a letter on 29 August 2018 from CBN alleging that CCIs issued in respect of the conversion of shareholders’ loans in MTN Nigeria to preference shares in 2007 had been improperly issued. As a consequence, they claim that historic dividends repatriated by MTN Nigeria between 2007 and 2015 amounting to $8.1 billion need to be refunded to the CBN.

“MTN Nigeria strongly refutes these allegations and claims. No dividends have been declared or paid by MTN Nigeria other than pursuant to CCIs issued by our bankers and with the approval of the CBN as required by law,” the telco added.

MTN pointed out that the issues surrounding the CCIs had been the subject of a thorough enquiry by the Committee on Banking, Insurance and other Financial Institutions of the Senate.

“In September 2016, the Senate mandated the Committee on Banking, Insurance and other Financial Institutions to carry out a holistic investigation on compliance with the Foreign Exchange (Monitoring and Miscellaneous) Act by MTN Nigeria & Others. In its report issued in November 2017, the findings evidenced that MTN Nigeria did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria.

“MTN Nigeria, as a law-abiding citizen of Nigeria, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria. The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.

“We will engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available,” the telco said.

It would be recalled that in 2015, the Nigerian Communications Commission (NCC) fined MTN N1.04 trillion on the telco for failing to deactivate unregistered lines. The huge penalty was negotiated down to N330 billion.