What $8.1bn illegal MTN repatriation could cost Diamond Bank, others



The Central Bank of Nigeria (CBN) on Wednesday fined Citibank, Diamond Bank, Stanbic IBTC Nigeria and Standard Chartered Bank a total of N5.86 billion for allegedly breaching Nigeria’s extant laws and forex rules when they facilitated illegal repatriation of funds to South Africa on behalf of MTN.

The Apex bank also requested that they refund the sum of $8,134,312,397.63 which “was illegally repatriated on behalf of MTN by the aforementioned banks between 2007 and 2015.

Asides the potential need to pay penalties of about N5.8 billion, the 4 banks and MTN are also on the hook to refund a whopping $8 billion to the coffers of the CBN. While $8 billion is expected to be refunded to the CBN the true cost to the CBN might be about 66% of this amount in terms of differentials.

To refund the amount, the banks and MTN will refund the $8.1 billion while the CBN credits them with the naira equivalent. The CBN did not state what the exchange rate for the refund will be but the worst case scenario is that it could cost the banks and MTN as much as N1.9 trillion.

National Daily gathered that the average official exchange rate at the time was about N124/$1 compared to N365/$1 today. Thus, while the banks and MTN might have to source the $8.1 billion at an exchange rate cost of N365, the CBN might refund the naira equivalent at N124/$1.

This in effect, National Daily gathered, is costing the banks about $5.3 billion or 66% of the $8.1 billion in FX loss. This is an astronomically high cost to incur by any of the companies accused individually or combined.

Meanwhile, MTN Nigeria has kicked against the sanctions, saying all dividends it paid to its shareholders between 2007 and 2015 were approved by the Central Bank of Nigeria (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,” Nigeria’s leading telco said in a statement issued on Thursday morning.

Commenting on the sanction, Isaac Okorafor, CBN’s Director, Corporate Communications, said the fine was necessary after allegations of remittance of foreign exchange with irregular certificates of capital importation issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March 2018.

He said the investigations revealed that the sum of $3,448,119,321.72 was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs.

Similarly, he said the sums of $2,632,005,623.78, $1,766,263,212.75 and $348,914,501.30 were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, between 2007 and 2015.

He said the CBN had directed the affected banks to immediately refund the respective sums to the CBN.