• Says no basis for N2.4bn fine imposed on the bank

Obinna Chima

Following fines totaling N5.87 billion which the Central Bank Nigeria (CBN) imposed on four commercial banks over alleged illegal repatriation, one of the affected banks, Stanbic IBTC Bank, has officially responded to the central bank saying the conclusion reached by the regulator on the allegations were based on “factually incorrect premises.”

Stanbic IBTC made the assertion in a letter dated August 30th, 2018, that was signed by its Chief Executive, Demola Sogunle and addressed the CBN Governor, Mr. Godwin Emefiele, a copy of which was obtained by THISDAY last night.
Going into a point-by-point rebuttal, the letter from the bank examined different allegations contained in the CBN letter.

Regarding the claim that the shareholders of MTN Nigeria invested the sum of $402,590,261.03 in the company from 2001 to 2006, the bank stated: “It is pertinent to state that the 20 Certificates of Capital Importation (CCIs) transferred to our bank by Standard Chartered Bank and which were in the above quoted sum, were re-issued from existing CCIs that had been issued by Standard Chartered Bank to the original investors in MTN Nigeria.
“These CCIs were transferred to our bank to facilitate the repatriation of the proceeds of MTN’s private placement, which took place in February 2008.”

The bank added that the repatriations effected in this case “were related to the sale of Linked Units (comprising ordinary shares and preference shares) by existing shareholders of MTN as well as dividends validly declared and paid by MTN,” and that the “repatriations were effected on the basis of the CCIs transferred to it by Standard Chartered Bank, which indicated they had been issued in respect of investments in such ordinary and preference shares.”

In addition, while responding to the central bank’s allegation that Stanbic IBTC Bank issued eight CCIs of $58,359,616.67 in respect of foreign exchange sourced locally as shareholders loan, which contravened the requirement of section 15 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and Memorandum 20(1.3) (III) of the Foreign Exchange Manual, which stipulate that CCIs should be issued on capital imported, Stanbic IBTC said it was not aware “at the relevant time that the affected investors in the MTN Private Placement had obtained foreign exchange loans from local banks for the purpose of their investments,” adding that in any case, it was not mandated by law to investigate whether an invested fund is borrowed or not but rather was obliged to ascertain that an investor had transferred the necessary funds to the stipulated accounts.

On the allegation of issuance of CCIs outside the stipulated time of 24 hours in contravention of Paragraph 4.1.1 (IV) of the Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2012 to 2013, Stanbic IBTC stated that it “acted in line with all known rules.”

It also debunked the allegation that it deliberately “failed to issue a letter of indemnity to the CBN against double remittance in respect of 20 CCIs transferred by Standard Chartered Bank as required by law.
According to Stanbic IBTC Bank, the delay was caused by Standard Chartered Bank’s “delay in issuing it the required indemnities” as specified by regulation.

On the allegation by the CBN that on account of the illegal conversion of the shareholders loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated by Stanbic IBTC Bank and other banks on behalf of MTN Nigeria between 2007 and 2015, Stanbic IBTC also denied it stating that it was “not involved in the conversion of the shareholders loans, nor did it carry out any amendments to the CCIs issued in respect of such loans to accommodate these conversions.”

In its conclusion, the bank stated: “The CBN may recall that it had previously issued a letter in relation to the transactions specified in your letter communicating its findings based on the special examination carried out in March 2018.
“Stanbic IBTC Bank had also provided a detailed response to all the issues raised in the special examination report. Our understanding was that, most of the findings made during the special examination, related to issues that were purely administrative in nature.

“No wrongdoing was ascertained on our part, and we complied with the extant regulations in our dealings.
“It is our humble submission that the CBN re-evaluates the facts and come to conclusion that there was no basis for the huge fines imposed on Stanbic IBTC Bank Plc; as well rescind the directive to refund sums of money duly repatriated to foreign direct investors over a period exceeding 13 years.”

The bank had, in a letter dated 30 August 2018 to the Nigerian Stock Exchange, pledged to hold “further engagements with the CBN, in relation to the issues it has raised,” while reassuring customers that the matter would not affect their ability to continue to conduct various business and corporate transactions with Stanbic IBTC Holdings or any of its subsidiaries, including the Bank.

Meanwhile, CBN sources yesterday disclosed that the banks as well as MTN have started engaging key CBN officials, especially the CBN Governor, with a view to resolving the matter.