CBN Gives Details Of How MTN, Four Banks Did $8.13b Illegal Deal

The Central Bank of Nigeria (CBN) on Monday 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 was contained in a CBN’s letter to the organisations involved in the saga as it 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. Although 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, the CBN said 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.