Of AGF’s Withdrawal from MTN’s Alleged Indebtedness

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Abubakar Malami
Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami (SAN),

The recent decision taken by the Attorney General of the Federation and Minister of Justice, Abubakar Malami, to redirect the case of alleged MTN’s revenue indebtedness to the Federal Inland Revenue Service and Customs, for proper investigation, has been described as a welcome development by telecoms operators, who are of the view that MTN will get justice over the matter, reports Emma Okonji

Although it took the Attorney General and Minister of Justice, Abubakar Malami, 17 months to leave MTN off the hook, on matters bordering on alleged revenue indebtedness, which he had tenaciously held against the telco for over one and half years, the telecoms industry players, in their jubilation, hailed the new decision and believed such decision will ultimately bring justice to MTN.

Penultimate week, Malami wrote MTN Nigeria, informing the telecoms company of his decision to transfer the matter of alleged MTN revenue indebtedness to the Federal Inland Revenue Service and the Nigerian Customs Service, a decision that has elicited wide commendations from the industry.

Although the telecoms industry players blamed the Attorney General for initially crossing boundaries to intervene in matters that ought to have been handled by appropriate agencies of government, they however hailed him on his decision to hands-off from the matter and to transfer it to the appropriate quarters, which they said, was a clear example of democratic system of governance which must prevail in all circumstances.

The Allegations

Malami, the attorney-general of the federation and minister of justice, had in September 2018, accused MTN Nigeria of two separate revenue indebtedness to the tune of N242,244,452,215.97 and $1,283,610,357.86, which MTN vehemently refuted at that time and went to court to challenge the allegation.

During the same period, the Central Bank of Nigerian (CBN) also ordered MTN Nigeria to refund $8.134 billion allegedly repatriated out of Nigeria between 2007 and 2015. Throughout the period of the accusations from the regulatory authorities, MTN kept saying that the figures were misinterpreted and that it had never repatriated any illegal funds out of Nigeria, where it has operated for 19 years.

Having concluded the necessary investigations, AGF wrote MTN to announce the formal withdrawal of his demand on the said amounts on alleged revenue indebtedness.

In the letter, the AGF decided to refer the matter to FIRS and NCS with a view to resolving contentious issues.

The Special Assistant on Media and Public Relations to AGF, Dr. Umar Jibrilu Gwandu, said the minister made the latest development on the dispute known in a letter dated 8th January, 2020 addressed to MTN Nigeria’s Counsel, Messrs Wole Olanipekun & Co.

The letter sent to MTN Nigeria by Malami reads in part: “Having carefully and painstakingly reviewed the correspondence reference and following due consultation with relevant statutory agencies, the Office of the Honourable Attorney-General of the Federation and Minister of Justice has decided to refer the matter under reference to Federal Inland Revenue Service and Nigeria Customs Service with a view to resolving contentious issues.

“You may wish to be informed and be guided for the time being, pending the outcome of the interrogation of the relevant statutory agencies.

“The Federal Inland Revenue and Nigerian Customs Service are the regulatory authorities vested with the powers of monitoring foreign exchange utilisation and assessment of taxes among others as canvassed and contended by the parties in their respective submissions. The development is in line with oversight functions of Customs and Excise Management Act and Federal Inland Revenue Service relating to monitoring foreign exchange utilisation and prevention of illegal trade, in case of customs, and assessment, collection and accounting for tax and other revenues accruing to the Federal Government, as it relates to Federal Inland Revenue Service.

“With this, the Attorney-General of the Federation and Minister of Justice demonstrates unflinching commitment to the rule of law where all statutory agencies will be allowed to independently work with a view to fulfilling their mandates and recourse to them in contentious cases, as regulatory agencies of government on issues that border on their statutory mandate.”

MTN’s Reaction

Expressing satisfaction at the development, MTN Nigeria CEO, Mr. Ferdi Moolman, said: “We are very pleased with the decision of the AGF and we commend him for his wisdom. We maintain our dedication to building and maintaining cordial relationships with all regulatory authorities in Nigeria and remain fully committed to meeting our fiscal responsibilities and contributing to the social and economic development of Nigeria.”

MTN celebrated the latest step at resolving its legal woes with the Nigerian authorities in a press statement signed by its Company Secretary, Uto Ukpanah, saying the attorney general’s office had “withdrawn its letter of demand” for the back taxes, and that the company would consequently follow due court process to withdraw its legal action against the AGF and engage with the FIRS and Customs on the issues.”

Part of the press statement by MTN Nigeria, reads: “MTN Nigeria is pleased to report that its legal counsel has received a letter dated 8 January 2020 from the Attorney General of the Federation and Minister of Justice (the AGF) formally withdrawing his demand for N242,244,452,215.97 and $1,283,610,357.86 alleged revenue indebtedness.

“The letter confirmed that following careful review and due consultation with relevant statutory agencies, the AGF has decided to refer the matter to the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) with a view to resolving contentious issues. MTN Nigeria will consequently follow due court process to withdraw its legal action against the AGF and engage with the FIRS and NC on the issues. MTN Nigeria remains committed to conducting its business in accordance with applicable laws in Nigeria.”

Telco’s Reaction

Reacting to the AGF’s decision, the telecoms operators under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON), commended the AGF for his decision to transfer the case to the appropriate quarters, while also blaming him for delving into a matter outside of his jurisdiction for a long period of 17 months.

Chairman of ALTON, Mr. Gbenga Adebayo, told THISDAY that the AGF acted well to have referred the matter to the appropriate quarters. He also said the initial tussle between the office of the AGF and MTN Nigeria over the alleged revenue indebtedness, was something that Nigerians must learn from.

According to Adebayo, the federal government must empower all statutory agencies of government, including industry regulators, and ensure they are given free hands to operate according to the Acts and Laws that established them. “The idea of not allowing agencies of government and industry regulatory bodies to exercise their statutory powers in matters that affect them, should be discouraged. In the case of the Attorney General and MTN Nigeria over the alleged revenue indebtedness, the AGF had in the first instance, no business in the case and would have allowed the Federal Inland Revenue Service and the Nigerian Customs Service to handle the matter from the beginning. Matters relating to the monitoring of foreign exchange utilisation and prevention of illegal trade, should be left with the Nigerian Customs, while matters relating to the assessment, collection and accounting for tax and other revenues accruing to the federal government, should be left in the hands of members of FIRS,” Adebayo said. He further explained that if regulatory bodies were not allowed to exercise their powers, it could lead to conflict of duties and usurp of powers, which must be discouraged, no matter how powerful an Attorney General could be.

Adebayo who commended the AGF for his new decision to transfer the case to FIRS and Customs, was however optimistic that MTN would get justice, given the calibre of people that oversee both agencies of government. He said he expected that the matter would be resolved to the best interest of the telecoms industry and the Nigerian economy.

MTN Challenges

MTN Nigeria has battled a string of financial claims from the Nigerian authorities, including fines from the telecoms regulatory body. In 2018, it agreed to pay a separate $53 million fine after being accused of illegally repatriating $8.13 billion to South Africa. Also in 2018, the Nigerian Labour Congress (NLC), forced MTN to close offices nationwide, when it picket MTN offices across the country for breaching labour laws, local content law and for security issues. NLC had accused MTN Nigeria of not only engaging in the exploitation of Nigerian workers and turning them into slaves, but also extended their frontiers to unwholesome economic exploitation and sabotage, by not paying its taxes, yet it was involved in repatriating funds out of the country. The NLC had in 2018, called on MTN Nigeria to obey federal government’s order to pay the alleged repatriated funds and the unpaid tax arrears, a case that will now be investigated by FIRS and Customs, according to the recent directives of the Attorney General of the Federation.

In 2015, MTN Nigeria was fined a whopping N1.04 trillion by the Nigerian Communications Commission (NCC), the telecoms industry regulator, for its refusal to comply with the directive of the NCC to deactivate improperly registered SIM cards on its network, which was regarded as security threat to the nation. NCC discovered 5.2 million improperly registered SIM cards on the MTN network, while infraction on each SIM card attracts a fine of N200,000, totaling a whopping N1.04 trillion as fine. Although the fine was later reduced to N330 billion after a plea bargain by MTN, the telecoms company decided to pay the N330 billion in a staggered payment arrangement, and had since completed the payment.

The disputes with MTN have rattled investor confidence in Africa’s most populous nation and tarnished diplomatic relations between continental powerhouses in Nigeria and South Africa.

But in spite of its many challenges, MTN still remains the biggest telecoms company in Nigeria by subscriber number of over 67 million and by volume of revenue generation, a position it maintained since the inception of Global System for Mobile Communications (GSM) service rollout in 2001. Last year, MTN Nigeria raked N460.1 billion in revenue in third quarter, which ended September 30, 2019. The telecoms giant recorded increased Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) by 39.3 per cent to N460.1 billion and an increased subscriber number by 0.1 million to reach 61.6 million subscribers on its network, with increased active data subscribers by 1.6 million to reach 22.3 million active data users on its network.

According to the Q3 financial report, the telecoms company’s service revenue increased by 12.1 per cent to N854.9 billion, even though EBITDA grew by 39.3 per cent to N460.1 billion. The EBITDA margin increased to 53.7 per cent, while earnings per share rose by 29 per cent to N7.29k, with increased capital expenditure (Capex) by 39.5 per cent to N154.1 billion.

Moolman, MTN Nigeria CEO, while analysing the Q3 financial results, said the bottom-line remained strong with growth of 24.0 per cent and 28.9 per cent respectively in profit before and after tax.

According to him, “Our company’s performance is very encouraging, demonstrating the resilience of our business despite a challenging operating environment. We sustained double-digit growth in service revenue led by growth in voice and data revenue.”