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How MTN, Four Banks Perpetrated $8.13 Illegal Deal, by CBN

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MTN
  • How MTN, Four Banks Perpetrated $8.13 Illegal Deal, by CBN

The Central Bank of Nigeria (CBN), yesterday, gave details of how MTN Nigeria Limited and four banks perpetrated the $8.13 billion illegal transactions, using false information and deliberate disregard for the rules.

The details, which were contained in a CBN’s letter to the organisations involved in the saga, became necessary following denial of culpability in the illegality that has been described as a crime against the country.

The apex bank said the first error was when the Certificate of Capital Importation (CCIs) at the time of investment by MTN Nigeria showed $59.436 million as shareholders’ loan and $343.153 million as equity, but turned to $399.594 million as shareholders’ loan and $2.996 million as equity investment as at December 2007.

This position was, however, contrary to the CCIs issued by Standard Chartered Bank Limited, Citi Bank and Diamond Bank, which constituted a rendition of false returns to the CBN.

According to the statement signed by the CBN Governor Godwin Emefiele, when Standard Chartered Bank Limited subsequently applied on behalf of MTN Nigeria for the conversion of the shareholder’s loan to preference shares, it did not wait for any board resolution or submit documentary evidence of the resolution to CBN before it hurriedly issued new CCIs in support of the illegal conversion of the shareholders’ loan to preference shares.

On December 10, 2009, Standard Chartered Bank Limited admitted its decision as error in a letter to the apex bank, in which it described the act as an “unintended omission.”

It was disclosed that the bank also issued three CCIs outside the regulatory 24 hours, without the approval of the CBN; failed to issue a procedural letter of indemnity to the CBN against double remittance; and aided the illegal repatriation of $3.448 billion, which it has now been ordered to refund to the CBN with immediate effect.

Stanbic IBTC Bank also reported 35 CCIs valued $313.683 million inappropriately as “other purchases” in a document to CBN in February 2008, instead of “capital importation”.

The bank also issued eight CCIs of $58.359 million in respect of foreign exchange sourced locally, as shareholders’ loan, violating the rule which stipulates that CCIs should only be issued on capital imported.

Like Standard Chartered Bank, it also issued eight CCIs for capital inflows in form of machinery outside the 24 hours regulatory requirement of receipt of shipping documents, as well as that of letter of indemnity to the CBN against double remittance in respect of 20 CCIs transferred.

In all, Stanbic IBTC Bank caused $2.632 billion to be repatriated on the basis of the illegally issued CCIs, hence it was ordered to refund the amount to CBN with immediate effect.

But a source at Stanbic Bank told said that sequel to the order by the CBN to pay a fine and refund the illegally repatriated funds, engagements with the regulator to restate the bank’s sides of the matter have begun.

According to the source, the bank said that the engagement had become necessary as they still claim that the apex bank vetted and approved the transactions in question.

For Diamond Bank, it remitted $348.914 million as dividend to MTN Nigeria 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.
This action is a violation of the provision of Memorandum 24(4)(b) of the Foreign Exchange Manual.

It also issued three CCIs outside the regulatory 24 hours, without the approval of the CBN, and illegally remitted $352.222 million on behalf of Standard Chartered Bank and Stanbic IBTC.

Citibank Nigeria Limited followed the bandwagon, as four of the CCIs it issued, which evidenced the inflow of capital imported as cash, were outside the period of 24 hours allowed by regulation upon the receipt of inflow.

The bank also 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 apex bank. CBN said the bank purchased $535 million on the basis of photocopies of a document bearing the name of Standard Chartered Bank as the applicant bank and the referenced CCIs.

In all, about $1.766 billion was repatriated by the bank on the basis of the illegally issued CCIs, which should be refunded to the coffers of the CBN with immediate effect.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

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Godwin Emefile

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

The Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has pledged to adopt accommodative monetary policy stance in 2021 in order to support economic growth in the country.

Emefiele, said this on Friday, while speaking at a CBN/Bankers’ Committee’s initiative for economic growth, which is a one-day special summit on the economy by bank chief executive officers.

The theme of the summit is: “How to Overcome the Pitfalls of Recession.”

Nigeria’s economy recently came out of recession, according to the Gross Domestic Product report for fourth quarter 2020 released by the National Bureau of Statistics.

Owing to the slump GDP growth of 0.11 per cent that lifted the economy out of recession, Emefiele said it was imperative that, “we do all we can in 2021 and beyond to ensure that we build on the positive momentum and strengthen our efforts at stimulating growth.”

He expressed optimism that with the discovery and deployment of vaccines worldwide, 2021 would be a year of massive global recovery and Nigeria must not be left out.

“The banks CEOs are here, whether by moral suasion or by force, they will have to participate in this journey. In order to drive and sustain this recovery therefore, we need to sustain the accommodative fiscal and monetary policy measures aimed at improving access to finance for households and businesses.

“Secondly, we must prevent a resurgence in Covid-19 related cases. Thirdly, we must ensure that a significant number of our population is significantly vaccinated and also improve foreign exchange inflows into our country,” he added.

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Banking Sector

CIT Microfinance Bank Disburses Over N16bn Loans

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micro-finance-bank

CIT Microfinance Bank Disburses Over N16bn Loans

CIT Microfinance Bank Limited says it has disbursed about N16bn loans since it commenced operations as part of its contributions to the financial sector and empowerment of businesses.

The Managing Director of the microfinance bank, Mr Kingsley Eremionkhale, disclosed this during the company’s 10th anniversary in Lagos recently.

He reiterated that the bank was committed to supporting the growth of small and medium-scale enterprises in the country.

“Since inception, we have disbursed loans worth about N16bn. Our operation is not just about profit-making, but we have impacted many lives, empowered many businesses, and done a lot in terms of our core mandate as a microfinance bank.”

While appreciating its customers who had been loyal to it for years, he said it was concerned about their business success.

The managing director said, “We are part of our customers’ businesses. We provide services beyond lending and savings products and we also give financial advisory services.”

He appreciated the customers who had stayed with the financial institution for many years.

The managing director noted that the MfB is a state-licensed bank operating in Lagos, and a subsidiary of Capitalfield Investment Group.

He also attributed the success of the MfB to the board of directors which it said had been supportive, the management team and its workforce in the past 10 years.

While saying that the bank could lay claims to exponential growth, he said the public should expect more from it.

He also said that it was driving its operations through its digital offerings and our e-channels, to improve its services to our customers.

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Finance

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

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FMDQ

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

FMDQ Securities Exchange Limited has announced the approval of the quotation of the Valency Agro Nigeria Limited N5.12bn Series 1 Commercial Paper under its N20bn CP Programme on its platform.

The Exchange said in fostering the development of the Nigerian debt capital markets, it had continued to avail its credible and efficient platform as well as tailor its listings and quotations services to suit the needs of issuers and registration members through innovative and uninterrupted service delivery.

It said in a statement on Thursday that the Valency Agro Nigeria CP debut issue came at a time when the Nigerian economy was bedeviled with soaring food prices, amidst compounding challenges of insecurity.

It said the agricultural sector and its attendant transformation agenda had never been more important in driving increased and sustainable production of agricultural products as well as the derived foreign earnings through exports.

The Exchange said the proceeds from the issue of the CP would be applied by Valency Agro towards meeting the mid-term working capital requirements of the various agricultural produce under its portfolio such as cashew, sesame, cocoa and in value addition prior to export.

The Executive Director, Valency Agro Nigeria Limited, Mr Sumit Jain, was quoted as saying, “We are thankful to our investors towards showing their faith in our agenda to grow the agriculture-focused business with a clear aim to maximise value addition and create employment opportunities in Nigeria.

“We would also like to commend the efforts made by FBNQuest Merchant Bank Limited’s team to build the reach and FMDQ for their unconditional support for the industry”.

The Head, Capital Markets, FBNQuest Merchant Bank, Mr Oluseun Olatidoye, said, “FBNQuest Merchant Bank Limited is delighted with the successful debut of the N5.12bn Series 1 CP issued by Valency Agro Nigeria Limited. This reiterates our effort to enable underserved sectors access the debt markets, optimise their capital structure and further deepen the domestic capital markets.

“We are proud of the instrumental role FBNQuest Merchant Bank played in this transaction and appreciate the trust the management of Valency Agro placed in us to assist them. Our clients remain our priority, and we strongly believe their success is our success.”

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