MTN agrees settlement with Nigerian Central Bank

News Wireless Nigeria 27 DEC 2018
MTN agrees settlement with Nigerian Central Bank

MTN Group said it has reached an agreement with the Central Bank of Nigeria (CBN) over the repatriation of USD 8.1 billion from Nigeria to South Africa allegedly in breach of forex rules, and is withdrawing its cautionary share trading warning. It has agreed to pay a notional reversal of the 2008 private placement of shares in MTN Nigeria at a net cost of some NGN 19.2 billion (USD 52.6 million) but without admission of liability. The CBN said that certain certificates of capital importation (CCIs) used in the private placement had not been properly issued.

The CBN had alleged improper repatriation by MTN Nigeria of USD 8.1 billion between 2007 and 2015. At meetings in Lagos in November, MTN Nigeria provided more documentation that satisfactorily clarified its remittances, it says. Upon review of this documentation, CBN concluded that MTN Nigeria is no longer required to reverse the historical dividend payments made to MTN Nigeria shareholders.

However, the CBN maintains that the 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 from CBN.

MTN Nigeria will pay the notional reversal amount without admission of liability and the CBN will regularise all the CCIs issued on the investment of approximately USD 402.63 million without regard to any historical disputes relating to those CCIs.

MTN Nigeria now says it relied on certain commercial banks to ensure all approvals had been obtained prior to the CCIs being issued and to ensure the CCIs were properly used in the private placement. MTN Nigeria will be engaging with the banks in relation to the issues dealt with in the resolution agreement.

The group said that the legal process initiated by MTN Nigeria for an injunction restraining the Attorney-General of the Federation (AGF) from taking any more action in respect of its orders for back taxes is continuing. The AGF case came up for initial hearing at the Federal High Court of Nigeria Lagos Judicial Division on 08 November and has been adjourned until 07 February 2019.

MTN Nigeria continues to maintain that its tax matters are up to date and no extra payment, as claimed by the AGF, is due. Consequently, no provisions or contingent liabilities are being raised in the accounts of MTN Nigeria for the AGF back taxes claim.

Categories:

Mobile

Companies:

MTN,  MTN Nigeria

Countries:

Nigeria,  South Africa

Tags:

Shareholders & subsidiaries, Regulations, Wireless

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