$8.1bn Forex Remittances Infractions: MTN, FG Agree On Out Of Court Settlement
Justice Saliu Saidu of Federal High Court in Lagos on Tuesday fixed December 12 for a report of settlement in the suit filed by telecoms giant, MTN challenging the fine imposed on it by the Federal government of Nigeria.
Justice Saidu fixed the date after MTN and the Central Bank of Nigeria (CBN) through their lawyers told him that have agreed to explore an out of court settlement of the matter.
In the suit, marked FHC/L/CS/1475/2018, MTN is seeking a court declaration that it is not liable to pay the sum $8,134,312,397.63 demanded as penalty from it by the defendants vide his letter of 3rd September,2018.
While the apex bank in its statement of defence and counter-claim, has urged the judge to dismiss MTN’s suit, insisting that the telecommunications giant must refund $8.1bn to the Federal Government.
The judge had at the last sitting of the court adjourned till Tuesday to hear the preliminary objection filed by the CBN challenging the suit.
However, at the resumed hearing of the case yesterday, counsel to the telecommunications company, Wole Olanipekun (SAN) asked the court for an adjournment to enable both parties to conclude ongoing settlement talks.
Counsel to CBN, Seyi Sowemimo (SAN) confirmed the development and urged the court to grant a short adjournment for report of settlement especially as talks had reached an advanced stage.
Based on the development, Justice Saidu adjourned the case to the 12th of December for report of settlement. .
MTN, in its suit, is also seeking an order of injunction restraining the defendants ,their agents whatsoever acting on their authority from giving effect to the decisions, demands and directive contained in the letters of August 28,and September, issued by the defendants
The telecommunications company is further praying the court to declare that “the 1st defendant’s decision in its letter of August 28, 2018 with Ref No GBD/GOV/COM/DGF/118/121 addressed to the plaintiff and titled, ‘Investigation into the remittance of foreign exchange on the basis of the illegal capital importation certificates issued to MTN Nigeria Communications Limited’ were reached in breach of the plaintiff’s right to fair hearing.”
MTN urged Justice Saidu to hold that the CBN, “lacks the power to determine the civil obligations or penal liabilities of the plaintiff.”
It is urging the court to declare that the CBN acted ultra vires its statutory powers when it wrote the August 18 letter to it demanding a refund of $8.1bn.
The firm wants the court to hold that the $8.1bn demand was “illegal, oppressive, abusive, unauthorised and unconstitutional.”
In a statement of claim jointly filed before the court by Chief Wole Olanipekun and four other Senior Advocate of
Nigeria, MTN states that between 2001and 2006 its shareholders invested the total sum of $402,590,261.03 into it to meet the various obligations ,including statutory payments to the government of Nigeria which was confirmed by the CBN
According to the firm, the investment were issued by authorized dealers who are Standard Chartered bank, Diamond bank and Citibank, the CCI were converted into equity and preferential shares, as the article of the association allows it to alter its share capital it stated, however, that by a letter signed by the Governor of Central bank CBN communicated a decision to MTN through the Managing Director of Stanbic Chartered bank limited whereby it decided amongst others, against the plaintiff, that “the action of your company and the banks represent a flagrant violation of the extant laws and regulation of the Federal Republic of Nigeria on foreign exchange matters
The sum of $ 8,134,312,397.63illegally repatriated by MTNNon the basis of illegally issued of CCIs should be refunded to the covers of the central bank of Nigeria with immediate effect.”
MTN posits that the CBN lacks power to make a finding of illegality and it also has no power to penalise the plaintiff on its illegality in the sum of $8,134,312,397.63 or in any sum whatsoever.
But the Apex bank averred, in its preliminary objection, that MTN Nigeria communication limited deliberately withheld information on What proportion of the sum of $402,590,261,03 was imported into the Federal Republic of Nigeria as Shareholders loan and was equity.
In the course of its supervision of the foreign exchange market, an issue of foreign exchange with irregular CERTIFICATE OF CAPITAL IMPORTATION (CCI) arose in respect of certain foreign exchange transactions carried out by Standard Chartered bank Limited, Stanbic IBTC bank limited, Citi bank Nigeria limited and Diamond bank Plc collectively referred to as “the banks.
“CBN carried out a special investigation of the said transactions and it came to light that the banks had at the material time between 2007 and 2015 used irregular CCI to remit foreign exchange amounting to $8 134,312,397.63 on behalf of MTN Communications Limited and for the benefit of its shareholders.
“CBN met the banks and MTN’s representatives on 25th May,2018 on the issue and they each made copious representation to CBN. Upon consideration of all the relevant issues including MTN and the banks’ representations CBN demanded immediate refund of the foreign currencies repatriated to its account.
“Standard Chartered bank limited, one of the bank involved in the irregular transactions admitted in writing that it repatriated foreign exchange for MTN without obtaining a final approval from CBN, it further stated that its action was an unintentional omission which it regretted, and MTN conceded this in its statement of claim. CBN intended to rely on the Standard Chartered bank limited at the trial of this suit.
“CBN averred further that contrary to the statement of claim of MTN, it was condition precedent to obtain the CBN’s final approval before foreign exchange currency can be repatriated in the circumstances and MTN and the banks are aware of this condition.
“CBN contended that MTN would not make a similar claim of right as is being made in this suit in the United States Of America, in the United kingdom, the Republic of South Africa or other countries of the world.
“MTN did not comply with the conditions attached to the CBN approval in principle, as MTN refused to provide an undertaking that no remittance for both interest and principal would be made on loan to its shareholders from the date of the loan to the date of its conversion into preference shares.
“CBN averred that the names of the banks are cleverly omitted by MTN from this suit.
“The CBN did not deny that the plaintiff has a right to alter its share capital structure, but when such alteration has a corresponding effect of CCI from shareholders loan to equity, its approval became necessary.
“The action of the banks and the circumstances of MTN leads to the inference that the foreign investment transaction may have been premeditated and contrive as a scam to make maximise profits, defraud the Federal Republic of Nigeria and to enjoy unlimited foreign exchange laws and regulation.
“Contrary to the averments of the plaintiff, CBN averred that it is empowered by statute to summarily exercise certain disciplinary powers on the dealers and the participants of the foreign exchange for its Naira equivalent the foreign currencies irregularly repatriated through the banks by the MTN.
“Most importantly, and contrary to the averments of the plaintiffs, the $8,134,312,394.63 improperly repatriated by the plaintiff and the banks were purchased from the foreign reserve of the Federal Republic of Nigeria maintained by the CBN for the welfare and benefit of all Nigerians.
“CBN avers further that the amount improperly purchased signifies a large fraction of the current total reserves of the CBN which stood at $45,000,000,000.as at 20th September, 2018.
“The CBN maintains that MTN is not entitled to the award of any reliefs against it and shall prove at the trial that the plaintiff’s claims against it are frivolous, baseless and unmeritorious and a tactic to frustrate the enforcement of the directive of the CBN.
“Consequently, the defendants counter claim in the sum of $8,134,312,397.63 and the sum of N400million as the solicitor’s fees and litigation cost. Interest on same at the rate of 15 per cent per annum from 28th August, 2018 till judgement and thereafter, at the rate of10 per cent till final liquidation.
The dispute over $8.1bn repatriated funds started when the CBN alleged that MTN used improperly issued certificates to transfer funds out of Nigeria after the telecom giant converted shareholder loans in its Nigerian unit to preference shares in 2007, but MTN denied the allegations.
The apex bank said MTN’s banks failed to verify that the telecom group had met all the country’s foreign exchange regulations.
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