Business
$8.1bn scandal: MTN shares appreciate, reaches truce with CBN
MTN shares surged as high as 8.2 percent on Thursday after it reached a truce with the CBN over allegations that it illegally transferred $8.1 billion of funds out of Nigeria.
The embattled teleco had seen more than $3 billion of its market value erased since the news of the fund-transfer allegations came to light in August, with the stock losing more than a third of its value.
Recall that the Central Bank of Nigeria (CBN) in August fined four banks a total of N5.86 billion for breaching Nigeria’s extant laws and forex rules when they facilitated illegal repatriation of funds to South Africa on behalf of MTN.
The CBN sanctioned the bank after evidence emerged about how they used irregular Certificates of Capital Importation (CCIs) to remit funds on behalf of MTN’s offshore investors.
The apex bank then asked the banks and MTN Nigeria to immediately repatriate a total of $8.134 billion; being part of funds that were illegally taken out of the country.
Upon review of the additional documentation, the CBN concluded that MTN Nigeria was no longer required to reverse the historical dividend payments made to MTN Nigeria shareholders.
The apex bank however maintained that proceeds from the preference shares in MTN Nigeria’s private placement remittances of 2008 of circa USD$ 1 billion were irregular having been based on CCIs that only had an approval-in-principle, but not final regulatory approval of CBN.
Meanwhile, there is still one hurdle for MTN as it still has to contend with Attorney General of the Federation accusation that it failed to taxes amounting to $2.0 billion.
The taxes span over a ten-year period and are related to the importation of foreign equipment into the country as well as payments to the suppliers of the said equipment.
But MTN has maintained its tax payments were up to date, and it had made no provisions for the back taxes the AGF alleged the company was owing.
