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  • Emefiele: CBN, FCA to regulate FinTechs

    Regulation of the Financial Technology (FinTech) firms operating in Nigeria will soon commence, the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, has said. He spoke after a meeting with the British Prime Minister, Theresa May, Wednesday night, in Lagos.

    Speaking to the media at the end of the meeting, Emefiele said it was an opportunity for the CBN to partner with the Financial Control Authority (FCA) of the United Kingdom to regulate the FinTech industry in Nigeria.

    “Basically it was a meeting where the Prime Minister met with leaders of businesses and financial services in Nigeria and we also had the opportunity of networking with some of the business leaders she came with from the UK. It was a good meeting and she had some one-on-one with some very important Nigerian business, all with a view to see how the Nigerian businesses can work, partner and collaborate with businesses from UK. It was a very successful one,” Emefiele said.

    “From our banking side, we spoke extensively with the Financial Control Authority, which is one of the agencies in UK that has some kind of regulations on Fintech businesses.  Nigeria being a country that has a lot of opportunities particularly because of our large population of young people who are interested in Fintech businesses, we had opportunity to hold discussions with them and we have agreed that we would meet some other time to think on how to set up acceptable regulation for FinTechs, regulations not as stringent as what the banks would be, but one way or the other, the fintechs have to be regulated,” he added.

     

  • Illegal repatriation of $8.1b: MTN denies CBN claims

    MTN Nigeria on Thursday refuted the claims by the Central Bank of Nigeria that it illegally, in collusion with four Nigerian banks repatriated $8.1billion from its Nigerian operations to offshore investors.

    The CBN said the remittances between 2007 and 2015, in tranches of of 2.63 billion dollars, 1.766 billion dollars and 348 million dollars were done in flagrant violation of the rule that says it can only be done with regular ‘Certificates of Capital Importation (CCIs)’ issued by the apex bank.

    The CBN said MTN did the repatriation after illegally converting shareholders’ loan of $399, 594,146 to preference shares.

    As part of the sanctions, four banks, Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, were fined by the CBN.

    Standard Chartered Bank would pay a fine of N2.47 billion, Stanbic IBTC, N1.88 billion, Citibank Nigeria, N1.26 billion and Diamond bank, N250 million.

    Mr Funso Aina, Public Relations Manager, Corporate Affairs/Corporate Relations MTN denied the claims by the CBN

    “MTN Nigeria received a letter on Aug 29 from Central Bank of Nigeria (CBN) alleging that Certificate of Capital Important (CCIs) issued in respect of the conversion of shareholders’ loans in MTN Nigeria to preference shares in 2007 had been improperly issued.

    `As a consequence they claim that historic dividends repatriated by MTN Nigeria between 2007 and 2015 amounting to $8.1 billion need to be refunded to the CBN.

    “MTN Nigeria strongly refutes these allegations and claims.

    Read Also: CBN fines four banks N5.8bn over MTN ’s transaction

    “No dividends have been declared or paid by MTN Nigeria other than pursuant to CCIs issued by our bankers and with the approval of the CBN as required by law,” he said.

    Aina said that the issues surrounding the CCIs had already been the subject of a thorough enquiry by the Senate of Nigeria.

    He added that in September 2016 the Senate mandated the Committee on Banking, Insurance and other Financial Institutions to carry out a holistic investigation on compliance with the Foreign exchange (monitoring and miscellaneous) Act by MTN Nigeria & Others.

    He said that in its report issued in November 2017, the findings evidenced that MTN Nigeria did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria.

    “MTN Nigeria, as a law-abiding citizen of Nigeria, is committed to good governance and to abide by the extant laws of the Federal Republic of Nigeria.

    “The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.

    “We will engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available.

    CBN’s spokesperson, Isaac Okorafor, said the apex bank has written MTN Nigeria demanding a refund of the $8.13 billion, repatriated.

    The Bank resolved to sanction the commercial banks following investigations in March 2018, which confirmed allegations of remittance of foreign exchange with irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria.

  • MTN to refund $8b as CBN fines four banks N5.87b

    Standard Chartered to pay N2.4b
    Stanbic IBTC N1.8b
    Citibank N1.2b Diamond Bank N0.25b

    MOBILE giant MTN Nigeria is to refund $8,134,312, 397.63 it illegally repatriated to the Central Bank of Nigeria (CBN), the apex bank said yesterday.

    The CBN said it had imposed N5.87 billion sanctions on four banks, which are to refund $8,134,312, 397.63 for “flagrant violation of extant laws and regulations of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006”.

    So far, the telco has paid N165 billion out of N330 billion fine, representing 60 per cent of total payment, according to the CEO of NCC, Prof Umar Danbatta.

    CBN’s Director, Corporate Communications, Isaac Okorafor, in a statement in Abuja, said the actions of the apex bank became necessary following allegations of remittance of foreign exchange (forex) with irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March this year.

    The four lenders also came under the sledge hammer of the CBN for violations of extant forex regulations. The lenders are Standard Chartered Bank, Stanbic-IBTC, Citibank, and Diamond Bank.

    Figures obtained from the CBN yesterday indicate that the highest fine of N2,470,604,767.13 was slammed on Standard Chartered Bank. Stanbic IBTC Nigeria was fined N1,885,852,847.45. Citibank Nigeria was penalised N1,265,541,562.31. Diamond Bank was directed to pay N250 million.

    Okoroafor said the decision followed thorough investigations into the allegations of remittances by the four banks of forex with irregular certificates of CCIs issued on behalf of some offshore investors of MTN Nigeria Communications Limited.

    He said $3,448,119,321.72 was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs. Similarly, $2,632,005,623.78, $1,766,263,212.75 and $348,914,501.30 were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc between 2007 and 2015. The CBN directed the banks to immediately refund the sums.

    The apex bank’s investigation revealed that on account of illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, $8,134,312,397.63 was illegally repatriated by the telco.

    Okoroafor  said investigations by the CBN took a while in order to carry out a thorough inquiry and give fair hearing to all parties involved. He advised all banks and multinational companies to adhere strictly to the provisions of all extant laws and regulations in their forex transactions. He warned that failure by the management of banks and companies to abide by existing guidelines would be appropriately sanctioned. Sanctions may include denial of access to local forex market.

    About two years ago, the telco was accused of illegally repatriating $13.8 billion. It blamed its failure to comply with the law requiring issuance of CCIs within 24 hours of conversion on “administrative requirement”.

    During the opening of investigative hearing by the Senate Committee on Banks, Insurance and Other Financial Institutions into the transfer, MTN said circumstances beyond its control necessitated its decision to move funds without following the law.

    A lawmaker had accused MTN of flouting its host country’s financial regulatory laws to obtain a CCI within 24 hours before moving the money out of the country without the required authorisation.

    The repatriation was allegedly carried out between 2006 and 2016 in connivance with the Minister of Trade and Investment, Okechukwu Enelamah, and four commercial banks – Standard Chartered Bank, Stanbic IBTC, Diamond Bank and Citi Bank.

    The CCI is a requirement under the Central Bank of Nigeria (CBN) financial and miscellaneous provisions Act.

    The telco’s Chief Executive Officer (CEO), Ferdi Moolman, had said it was practically impossible for the firm to comply with the 24 hours required to issue the CCI before moving funds.

    “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.

    “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 Central Bank of Nigeria’s Forex Manual contemplates such situations by asking that the banks refer to the CBN for approval,” Mr. Moolman had explained in a statement from Johannesburg, South Africa.

    He said no dividends were declared or paid until the CCIs were issued and finalised, adding that MTN Nigeria only requested CCIs for Foreign Capital that was imported into Nigeria, and dividends were externalised on CCIs.

    MTN Nigeria

    CBN’s letter to MTN reads: “Our investigation also revealed the following, among others: that the shareholders of your company invested the sum of $402,590,261.03 in the company from 2001 to 2006; The investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by Standard Chartered Bank (SCB), Citi Bank (CB) and Diamond Bank (DB);  and the CCIs issued at the time of the investment by the above banks to your organisation in respect of the $402,590,261.03 showed that $59,436,923.44 was invested as shareholders’ loan and $343,153,339.56 as equity.

    “However, a review of your organisation’s financial statements for the year ended December 31, 2007 revealed that $399,594,146.00 was recorded/invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by the banks in (iii) above;

    “Following a request by your organisation through Standard Chartered Bank for CBN’s approval to convert the shareholder’s loan to preference shares, an approval-in-principle was granted vide our letter dated November 13, 2007; with the grant of final approval made subject to the fulfillment of the following conditions by your organisation.

    “Implementation of the decision in item 5B of your board resolution dated November 08, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the CBN; and

    “Provision of an undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

    “In spite of the non-fulfillment of the conditions in (v) above and consequently, the non-issuance of a final approval by the CBN, your organisation converted the shareholders’ loan to preference shares with Standard Chartered Bank issuing new CCIs in respect of the illegal conversion;

    “The action of your banker in aiding your organisation in the illegal conversion of the shareholders’ loan was later described by SCB in a letter to the CBN dated December 10, 2009 as an “unintended omission”; and

    “On account of the illegal conversion of your shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated on behalf of your company by the aforementioned banks between 2007 and 2015.”

    Standard Chartered

    In a letter to Standard Chartered, the apex bank said that its investigation also revealed that shareholders of MTN Nigeria Communications Limited invested $402,590,261.03 in the company from 2001 to 2006; the investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB) at the initial stage of the investment; the CCIs issued at the time of investment by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity. “This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which revealed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria.

    “Your bank subsequently applied to the CBN on behalf of MTN Nigeria Communications Limited for the conversion of the shareholder’s loan to preference shares, for which an approval-in-principle was granted vide our letter dated November 13, 2007 with the grant of final approval made subject to the fulfillment of the following conditions by MTNN:

    “Implementation of the decision in item 5B of MTN Nigeria Communications Limited board resolution dated November 8, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the Central Bank of Nigeria; and provision of an undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

    “In spite of the non-fulfillment of the above conditions in (iv) above and consequently, the non-issuance of a final approval by the CBN, your bank issued new CCIs in support of the illegal conversion of the shareholders’ loan to preference shares; an action that was later described by your bank in a letter to the CBN dated December 10, 2009, as an “unintended omission”; and 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 your bank and the other banks on behalf of MTN Nigeria Communications Limited between 2007 and 2015,” the apex bank said.

    Other findings from its investigation showed that bank issued three  CCIs outside the regulatory 24 hours without the approval of the CBN; in contravention of Memorandum 24 of the Foreign Exchange Manual, which requires that CCIs should be transferred based on customer’s instructions to a bank of the customer’s choice along with the transaction history of the CCI, you provided confirmation to two other banks, Citibank and Diamond Bank, instead of transferring the CCIs to them as required by the Foreign Exchange Manual.

    “The two banks on the strength of your confirmation subsequently remitted various sums as dividend for MTN Nigeria Communications Limited at different times; and

    ‘Your bank failed to issue a letter of indemnity to the CBN against double remittance in respect of ten CCIs transferred by Diamond Bank and Citibank to your bank as required under subsection 5(iii) of Memorandum 24 of the Foreign Exchange Manual.

    “Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matter,” the apex said.

    Stanbic IBTC

    On Stanbic-IBTC, the CBN said its investigation also revealed that the shareholders of MTN Nigeria Communications Limited invested $402,590,261.03 in the company from 2001 to 2006. The investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by Standard Chartered Bank, Diamond Bank and Citibank, out of which eight of the CCIs totaling $377,216,508.30 were transferred to your bank by Standard Chartered Bank.  Consequently, your bank repatriated the sum of $929,051,331.83 as proceeds of divestment from the CCIs valued at $42,704,408.61.”

    On account of the illegal conversion of the shareholders loan to preference shares (interest free loan) of $399,594,146.00, $8,134,312,397.63 was illegally repatriated by your bank and the other banks on behalf of MTN Nigeria Communications Limited between 2007 and 2015.”

    Other findings from the investigation also showed that  the bank falsely reported 35 CCIs valued $313,683,925.84 inappropriately as “other purchases” in your MTR 203 returns for February 2008 instead of “capital importation”;

    “Your bank issued eight CCIs of $58,359,616.67 in respect of foreign exchange sourced locally as shareholders’ loan. This constituted a contravention of 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 stipulates that CCIs should only be issued on capital imported;

    “Your bank issued eight CCIs for capital inflows in form of machinery outside the 24 hours regulatory requirement of receipt of shipping documents in contravention of paragraph 4.1.1 (IV) of the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2012 to 2013;

    “Your bank failed to issue a letter of indemnity to the CBN against double remittance in respect of twenty CCIs transferred by Standard Chartered Bank to your bank as required under subsection 5(iii) of Memorandum 24 of the Foreign Exchange Manual; and

    “Your bank repatriated dividends totaling $905,260.20 in respect of CCIs illegally issued on the strength of locally sourced capital.

    “Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matter,” the letter read.

    On its findings in its letter to CitiBank, the CBN said its investigation also revealed that the shareholders of MTN Nigeria Communications Limited invested $402,590,261.03 in the company from 2001 to 2006;           the investment was carried out through the inflow of foreign currency cash transfer and equipment importation evidenced by the CCIs issued by your bank, Standard Chartered Bank and Diamond Bank;

    The CCIs issued by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity at the time of the investment. This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which showed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Standard Chartered Bank (SCB) and Diamond Bank (DB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria;

    “Your bank issued seven (7) CCIs to MTN Nigeria (MTNN) totaling $42,126,803.04 that were subsequently transferred to Standard Chartered Bank Limited at the request of your customer (MTNN) on February 6, 2006, which constituted part of the CCIs that were consequently irregularly re-issued;

    “Four of the CCIs issued by your bank evidencing the inflow of capital imported as cash were issued outside the period of 24 hours allowed by regulation upon the receipt of inflow, in flagrant contravention of Memorandum 22 of the Foreign Exchange Manual;

    “Your bank failed to comply with extant regulations on the issuance of letter of indemnity to the CBN in addition to forwarding the transaction history of the CCIs to the CBN, as provided in Memorandum 24(5)(ii)(b) of the Foreign Exchange Manual in respect of the CCIs received by your bank from Standard Chartered Bank; and

    “Your bank purchased $535,000,000 on the basis of photocopies of Form “A” bearing the name of Standard Chartered Bank as the applicant bank and the referenced CCIs in contravention of Memorandum 24 (4) (a) of the Foreign Exchange Manual 2006.

    “Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matters,” the letter read.

    CBN’s letter to Diamond Bank stated that its investigation also revealed that the shareholders of MTN Nigeria Communications Limited invested $402,590,261.03 in the company from 2011 to 2006; .

    “The investment was carried out through the inflow of foreign currency cash transfer and equipment importation, which was evidenced by the CCIs issued by your bank, Citi Bank and Standard Chartered Bank; the CCIs issued illegally by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity. This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which showed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Citi Bank (CB) and Standard Chartered Bank (SCB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria.”

     

    ; and

    “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 your bank and the other banks on behalf of MTN Nigeria Communications Limited, within a period of six years,” the apex bank said, adding that its findings showed that the bank issued three CCIs in favour of Dantata Investment for the sum of $5million without converting the foreign exchange received into Naira as required by our regulations.  “On the basis of these illegally issued CCIs, your bank repatriated the sum of $102,545,336.77 in respect of these CCIs.”

    “A further review of the CCIs also showed that no Form “M” was opened as evidence of the utilisation of the FX for the importation of goods (as “Not valid for FX”) into the country;

    “Your bank remitted the sum of $348,914,501.38 as dividend to MTN Nigeria Communications Limited offshore corporate shareholders without any documentary evidence of the audited account of the company to justify the basis of the payment of the dividend declared and paid by MTNN. This action was a violation of the provision of Memorandum 24(4)(b) of the Foreign Exchange Manual;

    “Your bank failed to indemnify SCB for losses and/or liabilities that may arise from the use of the CCIs you transferred to SCB in violation of the provisions of the Foreign Exchange Manual 2006;

    “Your bank issued three CCIs outside the regulatory 24 hours without the approval of the CBN contrary to provisions of Memorandum 22 of the Foreign Exchange Manual 2006; and

    “Your bank illegally remitted the sum of $352,222,358.39 on behalf of Standard Chartered Bank and Stanbic IBTC Bank in respect of the various CCIs issued to MTN Nigeria Communications Limited.

    Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matte,” the letter explained.

     

     

  • CBN maintains N15b T-Bills collateral for settlement banks

    The Central Bank of Nigeria (CBN) has asked settlement banks to provide clearing collateral of not less than N15 billion worth of treasury bills for them to perform settlement roles.

    The directive was contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2018/2019 released by the regulator.

    The CBN said it will continue to categorise banks into settlement and non-settlement banks for the purpose of clearing and settlement. It said settlement banks participate directly in the clearing houses and receive their net clearing position in their settlement account with the CBN while non-settlement banks receive their net clearing position through the settlement account of their settlement bank.

    “Any bank applying for direct participation as a settlement bank shall be required to possess the capacity to provide the required clearing collateral of N15 billion, subject to periodic review. It shall have the ability to offer agency facilities to other banks and to clear and settle on their behalf. It shall also have adequate branch network, in all the CBN locations,” the CBN said.

    “Banks that meet the specified criteria shall continue to be designated as “Settlement Banks.” Consequently, non-settlement banks, called “Clearing Banks” shall continue to carry out clearing operations through the settlement banks under agency arrangement. The terms of agency arrangements shall be mutually agreed between the Settlement Banks and the Clearing Banks,” the CBN said.

    The CBN said it would continue to adopt the risk-based supervision (RBS) approach in the supervision of institutions under its regulatory purview. “The objective of the RBS approach is to provide an effective process to assess the safety and soundness of banks and other financial institutions. This is achieved by evaluating their risk profile, financial condition, risk management practices and compliance with applicable laws and regulations,” it said.

    It enjoined banks to pursue profitability in their business models through efficient operations adding that they should charge competitive rather than excessive rates of interest in the course of their transactions. The lenders are also to disclose their prime and maximum lending rates as fixed spreads over the Monetary Policy Rate.

  • CBN fines four banks N5.8bn over MTN’s transaction

    .Standard Chartered      N2.4b
    .Stanbic IBTC                        N1.8b
    .Citibank                                N1.2b
    .Diamond Bank                  N250m
    writes MTN to refund $8b

    The Central Bank of Nigeria ( CBN ) on Wednesday fined four banks N5.87b for violation of its capital importation policy.

    The apex bank said the affected lenders were asked to refund $8,134,312,397.63 for what it described as ‘flagrant violation of extant laws and regulations of the country, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006’.

    A certificate of capital importation (“CCI”) is a certificate issued by a Nigerian bank confirming an inflow of foreign capital either in the form of cash (loan or equity) or goods. A CCI is usually issued in the name of the investor within 24- 48 hours of the inflow of the capital into Nigeria in line with CBN’s guidlines.

    The four banks that have come under the sledge hammer of the CBN for the violations are Standard Chartered Bank, Stanbic-IBTC, Citibank, and Diamond Bank.

    Announcing the decision in Abuja , CBN’s Director, Corporate Communications, Isaac Okorafor, said the actions of the bank became necessary following allegations of remittance of foreign exchange with irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March 2018.

    The CBN has therefore asked the managements of the banks and MTN Nigeria Communications Limited to immediately refund the sum of $8,134,312,397.63, illegally repatriated by the company to the coffers of the Central Bank of Nigeria.

    Figures obtained from the CBN indicated that the highest fine of N2,470,604,767.13 was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria was fined the sum of N1,885,852,847.45. For its punishment, Citibank Nigeria was penalized in the sum of N1,265,541,562.31, just as Diamond Bank was directed to pay the sum of N250 million for violating extant rules.

    Okorafor further disclosed that the decision of the bank followed thorough investigations by it into the allegations of remittances by the four banks of forex with irregular certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria Communications Limited.

    He said the investigations revealed that the sum of $3,448,119,321.72 was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs. Similarly, he said the sums of $2,632,005,623.78, $1,766,263,212.75 and $348,914,501.30 were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, respectively during the period 2007 and 2015. Accordingly, he said the CBN had directed the affected banks to immediately refund the respective sums to the CBN.

    The CBN investigation further revealed that on account of illegal conversion of MTN 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 the company.

    While disclosing that the investigations by the CBN took a while in order to carry out thorough inquiry and give fair hearing to all parties involved, Okorafor advised all banks and multinational companies in Nigeria to adhere strictly to the provisions of all extant laws and regulations of Nigeria in their foreign exchange transactions. He warned that failure by the management of banks and companies to abide by the existing guidelines would be appropriately sanctioned, which sanctions may include denial of access to the Nigerian foreign exchange market.

    In a letter by the CBN to MTN, the financial sector regulator told the telecom giant that its investigation also revealed that shareholders of the company invested t $402,590,261.03 in the company from 2001 to 2006. The investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by Standard Chartered Bank (SCB), Citi Bank (CB) and Diamond Bank (DB) and that the CCIs issued at the time of the investment by the above banks to your organization in respect of the $402,590,261.03 showed that $59,436,923.44 was invested as shareholders’ loan and $343,153,339.56 as equity.

    “However, a review of your organization’s financial statements for the year ended December 31, 2007 revealed that $399,594,146.00 was recorded/invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by the banks,” it said.

    “Following a request by your organization through Standard Chartered Bank for CBN’s approval to convert the shareholder’s loan to preference shares, an approval-in-principle was granted vide our letter dated November 13, 2007; with the grant of final approval made subject to the fulfillment of the following conditions by your organization.”

    It said MTN’s implementation of the decision in item 5B of its board resolution dated November 08, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the Central Bank of Nigeria; and provision of an undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

    In spite of the non-fulfillment of the above conditions, and consequently, the non-issuance of a final approval by the CBN, the apex bank claimed that MTN converted the shareholders’ loan to preference shares with Standard Charted Bank issuing new CCIs in respect of the illegal conversion.

    Also, the action of its banker in aiding your organisation in the illegal conversion of the shareholders’ loan was later described by SCB in a letter to the CBN dated December 10, 2009 as an “unintended omission”; and        On account of the illegal conversion of your shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated on behalf of your company by the aforementioned banks between 2007 and 2015.

    CBN’s Letter to Standard Chartered bank claimed that the shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006; and that the investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB) at the initial stage of the investment.

    “The CCIs issued at the time of investment by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity. This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which revealed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria”.

    CBN’s letter to Stanbic-IBTC said the shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006. The investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by Standard Chartered Bank, Diamond Bank and Citibank, out of which eight of the CCIs totaling $377,216,508.30 were transferred to your bank by Standard Chartered Bank.  Consequently, your bank repatriated the sum of $929,051,331.83 as proceeds of divestment from the CCIs valued at $42,704,408.61.

    “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 your bank and the other banks on behalf of MTN Nigeria Communications Limited between 2007 and 2015. Your bank falsely reported thirty five CCIs valued $313,683,925.84 inappropriately as “other purchases” in your MTR 203 returns for February 2008 instead of “capital importation,” it said.

    CBN’s letter to CitiBank said the shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006. The investment was carried out through the inflow of foreign currency cash transfer and equipment importation evidenced by the CCIs issued by your bank, Standard Chartered Bank and Diamond Bank.

    CBN’s letter to Diamond Bank said the shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2011 to 2006. The investment was carried out through the inflow of foreign currency cash transfer and equipment importation, which was evidenced by the CCIs issued by your bank, Citi Bank and Standard Chartered Bank.

    Other findings from our investigation included that Diamond Bank issued three CCIs in favour of Dantata Investment for the sum of $5 million without converting the foreign exchange received into Naira as required by our regulations.  On the basis of these illegally issued CCIs, your bank repatriated the sum of $102,545,336.77 in respect of these CCIs. A further review of the CCIs also showed that no Form “M” was opened as evidence of the utilization of the FX for the importation of goods (as “Not valid for FX”) into the country.

    Diamond Bank was also accused of remitting the sum of $348,914,501.38 as dividend to MTN Nigeria Communications Limited offshore corporate shareholders without any documentary evidence of the audited account of the company to justify the basis of the payment of the dividend declared and paid by MTNN. This action was a violation of the provision of Memorandum 24(4)(b) of the Foreign Exchange Manual.

    The bank also failed to indemnify SCB for losses and/or liabilities that may arise from the use of the CCIs you transferred to SCB in violation of the provisions of the Foreign Exchange Manual 2006 among other violations.

    “Your bank illegally remitted the sum of $352,222,358.39 on behalf of Standard Chartered Bank and Stanbic IBTC Bank in respect of the various CCIs issued to MTN Nigeria Communications Limited.        Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matter,” it said.

     

  • CBN pumps $543m, CNY 63m into forex market

    The Central Bank of Nigeria (CBN) has injected $543.22 million and Chinese Yuan (CNY) 63.21 million into the inter-bank foreign exchange market.

    At the last trading, the apex bank offered  $100 millon as wholesale interventions and allocated the sum of $55 million to the Small and Medium Enterprises (SMEs) forex window. Also, the invisibles window, which caters for customers requiring forex for Business/Personal Travel Allowances, tuition and medical fees, among others, received $55 million.

    Similarly, on Friday, August 24,  the bank injected the sum of $323.22 million into the interbank retail Secondary Market Intervention Sales and sold a total of CNY 63.21 million in the spot and short-tenored forwards, arising from bids received from authorised dealers

    The CBN spokesperson, Isaac Okorafor, who confirmed the figures, said the Bank remained committed to maintaining the country’s external reserves to safeguard the international value of the naira in line with the bank’s mandate. According to him, the bank’s management of the forex market had entrenched transparency in the market and continued to strengthen the value of the naira against other major currencies of the world.

    On the sale of Chinese Yuan (Renminbi), Okorafor disclosed that it was in line with the CBN guidelines, which stipulate that it would be for the payment of Renminbi denominated Letters of Credit for agriculture as well as raw materials.

  • CBN releases credit guidelines for manufacturing, agric

    • Pegs maximum loan at N10b

    The Central Bank of Nigeria (CBN) yesterday released new lending guidelines for manufacturing and agricultural sectors. The new guidelines also pegged maximum loan access to the sectors at N10 billion.

    The Monetary Policy Committee (MPC) at its meeting on July 23 and July 24 introduced revised guidelines for Accessing Real Sector Support Facility (RSSDF) through Cash Reserves Requirement (CRR) or Corporate Bonds (CBs).

    The CBN said that commercial banks would, henceforth, be incentivised to direct affordable, long-term bank credit to the real sector.

    It  said that priority sectors included the manufacturing, agriculture and other sectors considered by the CBN as employment and growth stimulating.

    CBN Spokesman, Isaac Okorafor said that Corporate/Triple-A rated companies would be encouraged to issue long-term Corporate Bonds (CBs), adding that a Corporate Bonds (CB) Funding Programme had been put in place.

    The programme, according to him, involves investment by the CBN and the general public in CBs issued by corporate organizations subject to the intensified transparency requirements for participating corporates.

    The apex bank said it will be refunding CRR to banks that fund projects in agriculture and manufacturing sectors, its Director of Banking Supervision, Abdullahi Ahmad, has said.

    The CRR is a portion of banks’ deposits kept with the CBN. He said the CBN has been very supportive to banks adding that banks should be able to lend to companies that are doing new capital expenditures and expansions to factories using some of their Cash Reserve Ratio (CRR) at nine per cent. These, he added, are not short term loans but long term loans of seven year loans, two year moratorium on principal.

    “It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years which means they would be able to plan. The volatility that they fear for all kinds of risks would be taken out and I think these are very laudable steps in improving and growing the economy,” Ahmad said.

    For him, the idea is to have job creating activities in the economy and also to bring interest rate down. Although agric and manufacturing are the initial sectors that are being considered, later on or now, a bank can apply if there is a job creating sector that bank is operating in, it may be considered.

    “We can refund the CRR of a bank that has engaged in lending in a new project or an existing one in the agriculture or manufacturing sector as a way of utilising the CRR. So, anytime a bank lends to manufacturing or agric at the rate the CBN has prescribed, it would have its CRR refunded up to the amount it has lend. The guidelines are coming up any moment from now and once they do it take off,” he said.

  • CBN orders banks to give loans to agric, manufacturers at 9%

    The Central Bank of Nigeria (CBN) will be refunding Cash Reserve Ratio (CRR) to banks that fund projects in agriculture and manufacturing sectors, its Director of Banking Supervision, Abdullahi Ahmad, has said.

    Speaking yesterday at the end of the Bankers’ Committee meeting in Lagos, Ahmad said the outlook for the economy in 2018 is much better than 2017. The CRR is a portion of banks’ deposits kept with the CBN.

    He said the CBN has been very supportive to banks adding that banks should be able to lend to companies that are doing new capital expenditures and expansions to factories using some of their Cash Reserve Ratio (CRR) at nine per cent. These, he added, are not short term loans but long term loans of seven year loans, two year moratorium on principal.

    “It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years which means they would be able to plan. The volatility that they fear for all kinds of risks would be taken out and I think these are very laudable steps in improving and growing the economy,” Ahmad said.

    For him, the idea is to have job creating activities in the economy and also to bring interest rate down. Although agric and manufacturing are the initial sectors that are being considered, later on or now, a bank can apply if there is a job creating sector that bank is operating in, it may be considered.

    “We can refund the CRR of a bank that has engaged in lending in a new project or an existing one in the agriculture or manufacturing sector as a way of utilising the CRR. So, anytime a bank lends to manufacturing or agric at the rate the CBN has prescribed, it would have its CRR refunded up to the amount it has lend. The guidelines are coming up any moment from now and once they do it take off,” he said.

    Also speaking, Executive Director, Finance at First City Monument Bank (FCMB) Mrs. Yemisi Edun, said the CRR that is taken from banks would be positively deployed to grow the real sector as well as the agriculture sector in the economy. “This is very positive for the economy and also positive for banks because we would be able to access these funds and earn on it. And because it would be coming at single digit rate, it would be positive for the economy,” she said.

    “For now, it would be channeled to agricultural sector and manufacturing but it for growth expansions enhance creation of jobs. the focus it ensure the economy grow now that we have achieved stability we need to now see a positive trend of growth and that is what we are committed to do at this time,” she said.

    “We have seen stability in the exchange rate being sustained, Gross Domestic Product (GDP) growth higher than 2017 and although there are capital reversals in our capital market, it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies is a sign there is high confidence in the Nigeria economy,” Ahmad said.

  • CBN plans CRR refund to banks financing agric, manufacturing

    The Central Bank of Nigeria (CBN) will be refunding Cash Reserve Ratio (CRR) to banks that fund projects in agriculture and manufacturing sectors, its Director of Banking Supervision, Abdullahi Ahmad has said.

    Speaking yesterday at the end of Bankers’ Committee meeting in Lagos, he said the outlook for the economy in 2018 is much better than 2017. The CRR is a portion of banks’ deposits kept with the CBN.

    He said the CBN has been very supportive to banks adding that banks should be able to lend to companies that are doing new capital expenditures and expansions to factories using some of their Cash Reserve Ratio (CRR) at nine per cent. These, he added, are not short term loans but long term loans of seven year loans, two year moratorium on principal.

    “It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years which means they would be able to plan. The volatility that they fear for all kinds of risks would be taken out and I think these are very laudable steps in improving and growing the economy,” Ahmad said.

    For him, the idea is to have job creating activities in the economy and also to bring interest rate down. Although agric and manufacturing are the initial sectors that are being considered, later on or now, a bank can apply if there is a job creating sector that bank is operating in, it may be considered.

    “We can refund the CRR of a bank that has engaged in lending in a new project or an existing one in the agriculture or manufacturing sector as a way of utilising the CRR. So, anytime a bank lends to manufacturing or agric at the rate the CBN has prescribed, it would have its CRR refunded up to the amount it has lend. The guidelines are coming up any moment from now and once they do it take off,” he said.

    Also speaking, Executive Director, Finance at First City Monument Bank (FCMB) Mrs. Yemisi Edun, said the CRR that is taken from banks would be positively deployed to grow the real sector as well as the agriculture sector in the economy. “This is very positive for the economy and also positive for banks because we would be able to access these funds and earn on it. And because it would be coming at single digit rate, it would be positive for the economy,” she said.

    “For now, it would be channeled to agricultural sector and manufacturing but it for growth expansions enhance creation of jobs. the focus it ensure the economy grow now that we have achieved stability we need to now see a positive trend of growth and that is what we are committed to do at this time,” she said.

    “We have seen stability in the exchange rate being sustained, Gross Domestic Product (GDP) growth higher than 2017 and although there are capital reversals in our capital market, it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies is a sign there is high confidence in the Nigeria economy,” Ahmad said.

  • Rivers by-election: INEC receives sensitive materials

    The Resident Electoral Commissioner in Rivers State, Mr Obo Effanga, said on Thursday that the commission had received the sensitive materials for the conduct of the Port Harcourt Constituency III State Assembly by-election.

    Effanga told newsmen at the INEC’s State Headquarters in Port Harcourt that he received the materials at the Central Bank amid tight security.

    He said that movement would be restricted on Saturday between 8 a.m. and 6 p.m. within the area for the conduct of the by-election.

    Effanga, while urging voters to exercise their franchise with their Permanent Voter Cards, assured them of adequate security, adding that there would be free, fair and credible electoral process using the Smart Cards.

    He said that the participating political parties had also assured the commission that they would play the game by the rule, to ensure a peaceful electoral process.

    Also speaking, an agent of the All Progressives Congress (APC), Mr Michael Igolima, said he was satisfied with the procedure for handing over the materials to INEC officials.

    “We went to CBN to collect the sensitive materials; I am okay with the process; everything was okay.”

    Igolima urged his party members to come out en masse and vote for candidates of their choice.

    In his remarks, Mr Gospel Nwigbara, an agent of another political party, the Mass Movement of Nigeria (MMN), also commended the way the sensitive materials were received at the CBN.

    He urged his party members to come out in their numbers for the election.