Before the Senate Misfires

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Against the backdrop of the allegations that MTN violated the Foreign Exchange Monitoring and Miscellaneous Provisions Act, Davidson Iriekpen, while examining the provisions of the law vis-a- vis government’s investment drive, advises caution in national interest

After surviving a debilitating fine imposed on it by the Nigerian Communications Commission (NCC) last year, telecoms giant, MTN has since September been in the news again. This time, the Senate accused it of an alleged connivance with the Minister of Industry, Trade and Investment, Okechukwu Enelamah, and four commercial banks in the country by taking advantage of the porous Nigerian financial system to move the sum $13.9 billion out of the country without the required authorisation.

The upper legislative chamber, according to a motion moved by Senator Dino Melaye (Kogi West) on September 27, alleged that MTN beat the nation’s financial regulatory laws by failing to obtain a certificate of capital importation (CCI) as authorised by CBN Financial and Miscellaneous Act within 24 hours between 2006 and 2016 before moving the money out of the country.

The senator pointed out that MTN did not request for the CCI from its bankers, Standard Chartered Bank, within the regulatory period of 24 hours of the inflow, nor was the CBN notified of the inflow by the bank within 48 hours of receipt and conversion of the proceeds to naira as required by regulation.

CCI is a CBN certificate issued by banks for importation of cash (foreign currency inflow) for investment as equity or loan, and also for importation of machinery and equipment for investment as equity or loan. It is usually issued in the name of the investor within 24-48 hours of the inflow of the capital into Nigeria.

The primary purpose of the CCI is to guarantee access to the official foreign exchange market for repatriations of capital and returns on investment – dividend, interest, and capital on divestments. A copy of the CCI must be presented to the Nigerian bank to process a remittance by the requesting company.

But at the commencement of investigative hearing into the allegations before the Senate Committee on Banks, Insurance and Other Financial Institutions, MTN denied the allegation of violating the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, noting that its processes in acquiring CCIs had been transparent.

According to its Chief Executive Officer, Ferdinard Moolman, the monies repatriated by the company were in respect of dividend payments and capital investment originating from legitimate foreign direct investment. He also added that Elenemah did not connive with the company to move funds out of Nigeria.

“We would like to reiterate that at no point did MTN Nigeria (MTNN) illegally repatriate funds out of Nigeria or collaborate with Nigerians to loot the external reserves of the country. MTNN is a Nigerian company and is proud to be conducting business in Nigeria.

“It therefore categorically refutes any accusations of money laundering, economic sabotage or tax evasion levied against it. The dividend payments were made to shareholders, who imported foreign capital for investment in MTNN. We would like to state that Elenemah has never been a director or shareholder of MTNN.”

Moolman noted that whereas the telecoms company only requested for CCIs for foreign capital that was imported into Nigeria, dividends were neither declared nor paid until the CCIs were issued and finalised. He noted that, “Often for various reasons (such as not having all the required documentation for instance), it is not possible to issue a CCI within 24 hours, and the CBN’s Forex Manual contemplates such situations by asking that the banks refer to the CBN for approval.
“Besides, the requirement to issue a CCI within 24 hours of conversion is an administrative requirement. As such, the CBN has the authority, and indeed we believe, approved the banks’ applications to issue CCIs outside the recommended time frame.”

On his part, Mr. Pascal Dozie, Chairman of Diamond Bank, also denied the allegation of illegal repatriation by the telecoms company, arguing that MTN had invested $16 billion in Nigeria within 16 years. He said the money imported to Nigeria was done in three tranches, insisting that the allegation by the Senate “was completely false.”

According to him, when MTN came to Nigeria, it offered 40 per cent shares to Nigerians while it took the other 60 per cent only to find that it was difficult to get Nigerians to invest 12 per cent of the 40 per cent offer. He added that MTN had to bring other investors before it could secure 25 per cent of the offer.

Dozie further said these Nigerians constituted Celtelecom, adding that a conversion of Celtelecom investment was done in 2007 through its bankers with CBN approval, thus exonerating Enelamah too. He claimed the minister was not a shareholder in MTN but only a director of Celtelecom and CEO of Capital Alliance which he said midwifed the Celtelecom.

The questions many people are asking are: Does the late issuance of a CCI mean no capital was imported? Does the late issuance of a CCI mean that profits can no longer be repatriated and are essentially stuck in Nigeria? The Nigerian Investment Promotion Council (NIPC) Act and Foreign Exchange (Monitoring and Miscellaneous Provisions Act), are very clear on what the right of an investor is in Nigeria.

Section 24 of the NIPC Act states: “… A foreign investor in an enterprise to which this Act applies shall be guaranteed unconditional transferability of funds through any authorised dealer in freely convertible currency of (a) dividends and profits (net of all taxes) attributable to the investment…”

Section 15 of the Foreign Exchange (Monitoring and Miscellaneous Provisions Act) states, similarly, in addition to spelling out whose responsibility it is to issue the CCI, states: “Foreign currency imported into Nigeria and invested in any enterprise pursuant to subsection (1) of this section shall be guaranteed unconditional transferability of funds, through an authorised dealer in freely convertible currency, relating to— (a) dividends or profits (net of taxes) attributable to the investment…”

This is why observers feel that the NIPC should inform the lawmakers that if a foreign investor has brought in foreign investment, and pays all the relevant taxes, why can’t he repatriate all his dividends or profits? How does this amount to an illegality? How does the dividends and profits of a company concern the government. The only legitimate question the Senate can pose here is: has the foreign company under investigation paid its taxes?

The questions begging for answers here are: did MTN really breach the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act? Was the law meant to suffocate investors or encourage them? Today, is the law serving the purpose for which it was enacted?
The law, which was originally enacted by the late military Head of State, General Sani Abacha, under Decree No. 17 of 1995, became an Act when the country returned democracy in 1999. THISDAY gathered that the law was enacted by Abacha to facilitate the ease of doing business in the country.

It learnt that when the late military ruler noticed that investors and investments were not coming to the country under his regime based on his despotic posture, he was worried. He later convened a forum with local and international investors where they unanimously told him to protect their investments and guarantee them free movement of their funds, hence the law.

THISDAY gathered that as soon as the law was enacted, investors started moving into the country in droves. The question many observers are further asking is, where was the central bank when the alleged offence was committed or what role did the bank play in all of this?
Section 15 (1) of Act states that “Any person may invest in any enterprise or security, with foreign currency or capital imported into Nigeria through an authorised dealer either by telegraphic transfer, cheques or other negotiable instruments and converted into the naira in the market in accordance with the provisions of this Act.

Subsection states 2: “The authorised dealer through which the foreign currency or capital for the investment referred to in subsection (1) of this section is imported shall, within 24 hours of the importation, issue certificate of capital importation to the investor and shall, within 48 hours thereafter, make returns to the central bank giving such information as the central bank may from time to time require.”

Subsection 3 went ahead to state: “The central bank shall furnish to the minister, on a quarterly basis, detailed reports on the returns furnished to the central bank under subsection (2) of this section for information and statistical purposes only.”

While subsection 4 says: “Foreign currency imported into Nigeria and invested in any enterprise pursuant to subsection (1) of this section shall be guaranteed unconstitutional transferability of funds, through an unauthorised dealer in freely convertible currency, relating to (a) dividends or profits (net of taxes) attributable to the investment (b) payments in respect of loan servicing where a foreign loan has been obtained and (c) the remittance of proceeds (net of all taxes) and other obligations in the event of sale or liquidation of the enterprise or any interest attributable to the investment.”

Section 15 states that “The repatriation referred to in subsection (4) of the section shall be communicated by an authorised dealer to the central bank, within 14 days of the repatriation and the central bank shall furnish same to the minister on a monthly basis for information and statistical purposes only.”

To show the importance the federal government attached to the law during its conception, it states in section 37 (1) that “Notwithstanding the provisions of this Act, the relevant provisions of all existing enactments, including the Bill of Exchange Act, CBN Act, Banks and Other Financial Institutions Act (BOFIA) and the National Economic Intelligence Committee (Establishment, etc) Act shall be read with such modifications as to bring them into conformity with the provisions of this Act.”

The law in section 37 (2) states that “If the provisions of any other law including the enactments specified in subsection (10 of this section are inconsistent with those of this Act, the provisions of this Act shall prevail and provisions of that other law shall, to the extent of the inconsistency, be void.”

This was perhaps why in making his submission at the Senate committee hearing, the Executive Secretary of the Financial Reporting Council of Nigeria (FRCN), Mr. Jim Obaze, gave MTN a reprieve, saying the regulatory agencies should be blamed for the company’s infraction. He added that the Department of State Services (DSS) had investigated the issue and pledged to make a copy of the report available to the committee.

It is believed that one of the major reasons investors stay away from Nigeria is because the country’s laws are not being followed to the letter by the authorities. Everything is subjected to politics as against the rule of law. Rather than for regulatory agencies to effectively monitor their sectors and provide guidance towards ensuring that companies are on the right track always, they choose to set traps for them in order to descend on them heavily.

The latest report released last week by the World Bank ranked Nigeria in the 169th position out of 190 countries on the Ease of Doing Business index for 2017. The bank stated this in its Ease of Doing Business report titled: ‘Doing Business 2017: Equal Opportunity for All’.
Though in the latest report, the country moved up by one point from 170th position on the 2016 ranking to 169th position for the 2017 ranking, it is still a far cry from where it should be, it is believed.

In sub-Saharan Africa, the country was ranked 36th out of 47 countries, with Mauritius, Rwanda and South Africa as the three leading countries in the region. This is despite the numerous foreign trips by the country’s leaders to woo foreign investors to the country.

It is on the basis of this, that observers feel the principal reason for the country’s poor ranking in the ease of doing business index is due largely to among others, the ineffectiveness of the regulatory agencies.

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This is why observers feel that the NIPC should inform the lawmakers that if a foreign investor has brought in foreign investment, and pays all the relevant taxes, why can’t he repatriate all his dividends or profits? How does this amount to an illegality? How does the dividends and profits of a company concern the government. The only legitimate question the Senate can pose here is: has the foreign company under investigation paid its taxes?