The turmoil surrounding MTN’s potentially improper repatriation of US$ 8.1 billion, and an additional US$ 2 billion in additional taxes it was ordered to pay is a serious issue, according to Sovereign Wealth Fund Institute (SWFI).
SWFI, a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues said that “This complex issue entangles South Africa, Nigeria, and the important communications sector”
MTN Nigeria, subsidiary of South-Africa’s telecommunications conglomerate MTN Group, is facing a multi-billion financial dispute with the Central Bank of Nigeria (CBN) and the Attorney General of the Federation.
As a result, MTN Nigeria has sued them both.
According to SWFI. The lawsuit concerns the turmoil surrounding MTN’s potentially improper repatriation of US$ 8.1 billion, and an additional US$ 2 billion in additional taxes it was ordered to pay.
MTN Nigeria is currently seeking an injunction to prevent the duo from collecting on the disputed monies. MTN claims to have always complied with tax law and other financial obligations.
This complex issue entangles South Africa, Nigeria, and the important communications sector. MTN’s legal battle with Nigeria’s central bank and Attorney General could augment risk in South Africa’s financial system.
A near-term repatriation of billions to Nigeria could impact MTN’s ability to meet its debt obligations, thus creating a cascading effect into South Africa’s banking sector. The South African Reserve Bank is on watch over this legal/geopolitical issue.
MTN also finds claims by the two entities to be unclear and conflicting.
Tobe Okigbo, Head of Corporate Relations for MTN Nigeria, stated, “The allegations being made involve issues that appear to be complex and so are easily misunderstood and misinterpreted. They are made even more confusing when the relevant authorities send conflicting messages and instructions and act in a way that appears uncoordinated and at cross purposes. The Attorney General, while communicating us, has directed that the payment of the US$ 8.1 billion is dealt with through his office rather than as directed by the CBN. . . With situations like this, it is vital for both the government, regulators and the company to have absolute clarity on the nature of both the allegations being made and the processes that are being followed.”
MTN has vowed to continue to fight any charges connected to the CBN and AGF investigations. MTN also has no intentions of paying any of the money being sought.
The AGF is holding firm to its accusation that MTN evaded its obligation to pay the US$ 2 billion in taxes. If the AGF and Central Bank are successful, MTN will be on the hook for the sum of US$ 10.134 billion.
According to the Central Bank of Nigeria, MTN and four banks flouted the laws and regulations including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.
The Central Bank of Nigeria highlighted the four banks accused of facilitating the alleged illegal transfers – Standard Chartered Plc, Citigroup Inc, Stanbic IBTC Plc and Diamond Bank Plc. All the banks denied any wrongdoing
