Business
MTN’s basket of corporate malfeasance
By ODUNEWU SEGUN
AFRICA’S biggest telecom company, MTN Group, is in dire battle to stay afloat following series of misconducts levelled against it by some countries in which it operates, the latest being from Nigeria, its biggest market where it is being accused of bribing top government officials to reduce the N330 billion fine imposed it for failing to disconnect about 5.1 million unregistered lines last year.
Already as a result of the latest scandal, its shares fell as much as 4, 4%, which would be the biggest fall on a closing basis since 27 June, and traded 3, 4% lower at R119, 77 in South Africa. MTN shares had fallen earlier last week after the Nigerian telecommunications regulator blocked the carrier’s attempt to take over Internet spectrum owned by closely held Visafone, which it had agreed to buy in January.
The latest scandal which broke out penultimate week alleged that the telecom giant bribed a top official in the presidency with a princely sum of N500 to help broker a more favourable terms of agreement in the payment of the fine.
Recall that the Nigerian Communication commission, the government agency that imposed a fine of N1.04 trillion last year for failing to disconnect about 5.1 million unregistered lines as directed by the NCC. The fine was later reduced to N330 billion, and MTN was allowed to pay the fine in a staggered payment plan that would last till May31, 2019.
With the agreement, MTN is expected to pay N30 billion to the NCC, 30 days from the date the agreement was entered into on June 10, 2016. Another batch is expected by March 31, 2017 and another N30bn on March 31, 2018 with an additional N55bn on December 31, 2018, and a balance of N55bn expected to be paid on March 31, 2019.
Although MTN, through its Chief Executive Officer in Nigeria, Ferdi Moolman has come out to refute the allegation, National Daily gathered that there are evidences before President Muhammadu Buhari linking his Chief of Staff, Abba Kyari to receiving N500m bribe allegedly from MTN.
National Daily gathered that this is not the first time the telecom giant would be involved in bribery allegation, not only in Nigeria but also in other countries where it operates.
For instance, in 2012, a rival company, Turkcell had accused it of bribing officials in Iran in other to win its operational license in that country. The charges were part of a broader corruption case that led to the suspension of the South Africa ambassador to Iran.
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Also in 2011, some of its staff were alleged to have manipulated the Mobile Money platform to steal 16 billion shillings ($160m) in Uganda. MTN also came under fire in Zambia for an IT specialist that had allegedly manipulated its ‘Let’s Go BEEG’ promotion to allow his girlfriend to win the $500m prize. Similarly, in 2013, in South Africa, MTN’s chief corporate services officer, Robert Madzonga, was at the centre of a storm where he was accused of diverting sponsorship money for an ICT indaba.
In Nigeria, MTN’s series of misconducts also included tax evasion and illegal transfer of funds out of the country. Last week, a Senator, Dino Melaye accused the telecom giant of transferring a staggering $14bn illegally out of the country in connivance with some four banks over a ten-year period—2006-2010.
According to Melaye, Stanbic IBTC, Standard Chartered Bank, Citigroup and Diamond Bank allegedly helped MTN to ferry the said money out of Nigeria. And as expected, MTN has refuted the allegation.
According to National Daily investigations, this is not the first time such an allegation would be levelled against MTN. in 2015, it was reported that MTN Nigeria has been making payments to two overseas companies MTN Dubai and MTN International in Mauritius both located in tax havens.
MTN was said to have set aside N11.398 Billion from MTN Nigeria to pay to MTN Dubai. A similar transfer of N11.789 Billion was made by MTN Ghana to the same MTN Dubai, making it a total of N23.187 Billion that was shipped to the Dubai offshore account.
MTN in 2013 admitted it made unauthorized payments of N37.6 Billion to MTN Dubai between 2010 and 2013. The transfers were then “on-paid” to Mauritius, a shell company with zero number of staff and which physical presence in the capital Port Louis is nothing more than a post office letter box. The disclosure amounted to a confession given that MTN made the dodgy transfers without seeking approval from the National Office for Technology Acquisition and Promotion (NOTAP), the body mandated to oversight such transfers.
On the basis of an earlier management fees agreement that was technically quashed by NOTAP and on the basis of MTN’s reported revenues, it is estimated that N90.2 Billion could have been transferred out of Nigeria in management fees alone since the company was founded in 2002.