What Wrong Has MTN Really Done?


Following the Senate’s allegations against MTN of moving $13.9 billion out of the country without the required authorisation, Davidson Iriekpen wonders why a foreign investor, who brings in funds into Nigeria, pays all the relevant taxes, cannot repatriate dividends or profits

For some time now, MTN has been in the news for the wrong reason. Precisely on September 27, the Senate accused the telecoms company of an alleged connivance with the Minister of Industry, Trade and Investment, Okechukwu Enelamah and four commercial banks to have taken advantage of the porous Nigerian financial system to move about $13.9 billion out of the country without the required authorisation.

The upper legislative chamber, according to a motion moved by Dino Melaye, the senator representing Kogi West in the Senate, alleged that MTN beat the nation’s financial regulatory laws by failing to obtain a certificate of capital importation (CCI) as authorised by Central Bank of Nigeria (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 document from the bank that processes the receipt of foreign investment capital into Nigeria. It states the day on which the cash arrived, how much it was, and how much local currency the bank converted it into.

But when the Senate Committee on Banks, Insurance and Other Financial Institutions opened an investigative hearing into the allegations, MTN denied the allegations. It said it did not violate the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, insisting 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 added that Enelamah did not connive with the company to move funds out of Nigeria.

He said: “We would like to reiterate that at no point did MTN illegally repatriate funds out of Nigeria or collaborate with Nigerians to loot the external reserves of the country. MTN 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 leveled against it. The dividend payments were made to shareholders who imported foreign capital for investment in MTN. We would like to state that Enelamah has never been a director or shareholder of MTN.”
Moolman said 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 said: “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.”

Speaking in the same vein, the Chairman of the company, Mr. Pascal Dozie, 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 as he insisted 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 it was these Nigerians who constituted Celtelecom, adding that a conversion of Celtelecom investment was done in 2007 through its bankers with CBN approval .
He exonerated Enelamah, saying he was not a shareholder in MTN but only a director of Celtelecom and CEO of Capital Alliance which he said initiated the Celtelecom.

The questions begging for answer here are: Did MTN really breach the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act? Where was the CBN when these were taking place?

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 Obazee, absolved the company from blame, saying the regulatory agencies should be blamed for the company’s infraction.
He added the Department of State Services (DSS) had investigated the issue and pledged to make a copy of the report available to the committee.

MTN is one of the telecommunications companies in the country. It is South African company which invested in the country following federal government’s investment drive. In fact, it was the second to roll out GSM services in the country in 2002. The questions many analysts are asking are: Does the late issuance of a CCI mean no capital was imported or does the late issuance of a CCI mean that an investor can no longer repatriate its profits. Is it proper for the profits of an investor to be stuck in Nigeria?

The position of the Act

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) dividend 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, “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 dividend 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?

Observers’ position

Observers believe that MTN’s current travail should worry the president and his economic team because they are constantly travelling round the world telling people that Nigeria is open for business and that Nigeria is friendly to investors. The president recently returned from one of such trips to inform Nigerians that foreign investors are ‘falling over themselves’ to invest in Nigeria.

Analysts believe that the president and his team can rest be assured that prospective investors talk to those who are already here and that all foreign company subsidiaries established in Nigeria have it as a primary aim to send profits and dividends back home. They stated that if profits and dividends cannot be converted and transferred freely as the country’s laws currently provide, foreign investors have little incentive to invest in Nigeria.

Whose money was repatriated?

The only legitimate question the Senate can pose here is, has the foreign company under investigation paid its taxes? The question begging for answer is if a foreign investor has brought in foreign investment, paid all the relevant taxes, what is the business of the government if he repatriates all his dividends or profits?
Many analysts believe that one of the major reasons why investors stay away from Nigeria is because of the country’s policy inconsistency and weak and parochial implementation of the laws by the authorities.

For instance, the latest report released 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 report the country moved up by one point from 170th position on the 2016 ranking to 169th position for the 2017 ranking, many analysts feel it is still a far cry from where it should be. 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 political leaders to woo foreign investors to the country.

Many analysts feel that the principal reason for the country’s poor ranking in the easy of doing business index is due to among others, the ineffectiveness of regulatory agencies.
Like a public affairs analyst, Mr. Rotimi Fawole, asked recently, “If you file your passport application dutifully, and your passport took longer to be issued than the immigration guidelines, can you be said to be travelling illegally? If your ‘C of O’ took longer to be issued than the guidelines prescribe, are you holding your property illegally? When it took longer than three months for your permanent licence to arrive after the temporary one expired, did that fact mean that you were driving illegally even though you had the licence? Whose responsibility was it to issue the CCI on time and who is being investigated?”