Tunji Andrews, a Lead Economist at Time, Trade and Commodities (TTAC), has said that the Central bank of Nigeria (CBN) may not be making the best decision after all  with the harassment and heavy fines on MTN Nigeria.

Andrews was reacting in a letter as the debate over the tax compliance of MTN and the alleged illegal transfer of equity through four banks continued to dominate the tabloids.

He wrote “The findings were brought to public knowledge when the letters sent by CBN to the four banks in question were released to the public.

These accusations have caused serious turmoil for MTN and its operations, so much so that Paul Theron – Veteran TV host and CEO of Vestact, a financial asset management company, has called out the Nigerian government in a statement saying “You could expect this kind of behavior from really third-string countries, but Nigeria is supposedly a country that takes itself seriously — it doesn’t seem to be consistent at all.”

The letters revealed by the CBN detailed a number of transactions which may have violated foreign exchange laws, especially those regarding the repatriation of MTN assets via what has been called “illegal” CCIs (Certificates of Capital Importation).

What this means in layman’s terms is that MTN transferred some of its assets from its country of origin to Nigeria, courtesy of a couple of banks and CBN is looking into the situation to validate if this process complied with its foreign exchange policies.

These accusations have seriously hurt the market share of the telco giants, as recent reports show a plunge in the company’s share price with about $3 billion knocked off from its market capitalisation, after tumbling by 14 percent to a nine-year low of 2,030.76 NGN.

It is safe to say the last 2 weeks have been less than pleasant for MTN Nigeria, and CEO Rob Shuter has decried the “peculiar and coincidental timing” of what appears to be a regulatory assault on its business in the country, but also reinforced MTN’s stance in proving its innocence of all allegations.

The first part of this bizarre saga is how such high-level information has been able to become so public. Considering the media coverage that has followed this story, one may have confused this for a gossip feature. The “confidential” letters sent to these banks were rather unusually released to the public and the CBN further corroborated the story by tweeting about the investigations.

The second interesting aspect of this story is how quickly the story has developed. From rumors and leaks to outright fines and even debiting of bank accounts, the speed with which this story has taken a turn for the worse, particularly for the banks, has been rather uncharacteristic of our usual tepid government.

To provide a quick retrospective look and to put this into proper context, let’s look back at how the story has evolved since the CBN released those letters.

The regulator immediately asked MTN to refund the sum of $8.1 billion dollars which it claims may have been illegally repatriated by the telecommunication company. While the 4 banks (Stanbic IBTC, Diamond Bank, Standard Chartered and CitiBank) were slapped with hefty fines ranging from NGN 250 million to NGN 2.4 million dollars.

MTN on its part expressed its innocence explaining that the MTN Group and the original shareholders injected a total of $402, 625,419 into MTN Nigeria between 2001 and 2006 in the form of loans and equity. These initial inflows were the basis for the issuance of various legacy CCIs obtained from Authorized Dealers in accordance with regulations. All of these, including the inflow of capital, has long been confirmed by the CBN.

The subject of “illegally” obtained CCIs has also been addressed. The reality is that the CCI process is essentially in place both for the protection of investors as well as to provide the CBN with documentary evidence for monitoring capital inflows and outflows.

Although over time the CCIs have been reissued, consolidated and reconstituted to reflect the changing MTN capital and shareholding structure, the amount of NGN 402,625,419, has remained the same.

One aspect of the changing capital structure was the conversion of shareholder loans to preference shares, meaning the latest transfer of equity is in no way a violation of the law.

Section 15 (5) of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, states that, “The repatriation referred to in subsection (4) –  which deals with foreign exchange imported into Nigeria and its remittance  – of this section shall be communicated by an authorized dealer to the Central Bank, within fourteen days of the repatriation and the Central Bank shall furnish same to the Minister on a monthly basis for information and statistical purposes only.”

According to this law, this means that the dispute should be between the four banks and the CBN, not MTN, but once again, the brand’s name has been dragged through the mud without a proper investigation into the issue.

Even after all parties expressed their innocence and provided substantial proof, the attorney general, reprimanded MTN again and slapped the company with $2.0 billion fine.

The fine is due to alleged lack of tax compliance by the telco and this comes after the company has revealed its books detailing an assessment of the full period in question. The numbers indicate that the total payments made to the tax authorities in regard to these foreign imports and payments in aggregate are $700 million and also detailed the valid reasons for the differences between the actual payments and the Attorney general’s assessment.

Through it all, the brand has remained calm and consistent with CEO Rob Shuter quoted by Bloomberg as saying that, “We have a proud history of being a major partner to the people of Nigeria and notwithstanding our current difficulties are firmly resolved to continue to do so”.

One of the key talking points about this story is how MTN has once again become the scapegoat in yet another episode of what many are calling a witch-hunt. The banks who were involved in this saga have been relegated to a sub-plot in a story which MTN is front and center and continually being labeled a villain.

This would have been somewhat justifiable if the facts actually added up; but all indications suggest that the CBN may not have done proper investigations before name-dropping these brands.

On MTN’s side of the story, the telecommunications giant has been open with their books, revealing their tax payments over the course of their operations in Nigeria, and even detailing their $18 billion-dollar investment in the country since it began operations. This is in addition to the N2 trillion paid in taxes and levies since it began operation in Nigeria.

This is particularly worrying considering the latest revelations of dwindling foreign investment in Nigeria. In recent years, Nigeria’s FDI has been struggling. It reached a mediocre $981mn in 2017, a far cry from its previous peak of $5bn in 2008.

The plummeting FDI situation is worsened by a poor investment climate characterized by overly stringent or impromptu government policies, bureaucratic bottlenecks for securing permits, and a weak legal framework.

MTN is one of our most successful foreign investors and instead of encouraging the multi-national company, it seems like the government is hell-bent on frustrating the company.

MTN has been slammed with fine after fine for some rather ludicrous reasons. Such punishments cannot be encouraging for would-be investors, many of whom already hold the notion that they are regarded as cash cows for exploitation by African governments.

It is also noteworthy that Nigeria’s GDP hasn’t been impressive of late; the country has suffered a yearly dip since 2014 when it peaked at $568.5 billion. Even with the 0.82 percent increase 2017, the nation’s gross domestic output is still suffering from the inconsistency of oil prices. The real take away from these numbers is, looking at how much MTN has paid in taxes and levies (in excess of 2 trillion Naira), and realising just how big a contributor they are to Nigeria’s GDP.

MTN has directly and indirectly, provided 500,000 jobs in Nigeria and has contributed immensely to the economy and it’s somewhat bizarre that such a huge company is being dragged in the mud before an appropriate investigation is even carried out.

If MTN is guilty of these crimes then, by all means, they should face the penalty, but considering just how much facts have been provided by the telecom giant, they seem pretty convinced of their innocence.

Furthermore, neither the CBN nor the attorney general has provided a direct response to the facts provided by MTN, making this whole ordeal even more worrisome.

The reasoning for this inexplicable witch-hunt is up for anyone’s guess. This may be due to a lack of oversight by the government or to protect private interests. However, the fact still remains, if the government and its policies continue to deter foreign investors, it is only a matter of time before we lose these multinationals.

In a bid to protect its assets and investors against further action from the Attorney General of the Federation and the Central Bank of Nigeria, MTN on Monday, September 10th filed for an injunctive relief with the Federal High Court in Lagos.

In a statement issued by the company, Tobe Okigbo, MTN Nigeria’s Corporate Relations Executive was quoted as saying;

“MTN Nigeria Communications Limited (MTN Nigeria) continues to categorically and unequivocally deny all charges related to the Central Bank of Nigeria (CBN) and Attorney General of the Federation (AGF) investigations into the company’s CCIs and unpaid taxes respectively.

“The simple reality is that MTN Nigeria has never repatriated dividends on the CCIs referenced by the CBN and that MTN is fully compliant with Nigerian tax law.

“In order to protect MTN Nigeria’s assets and shareholder rights within the confines of the law, we have applied today in the Federal High Court of Nigeria for injunctive relief restraining the CBN and the AGF from taking further action in respect of their orders, while we continue to engage with the relevant authorities on these matters.”

Only time will tell how this story will eventually end; but if history has taught us anything, it is that MTN will persist through this just like they have in previous occasions or maybe, just maybe this may be the straw that breaks the camel’s back.

* Tunji Andrews, a Lead Economist at Time, Trade and Commodities (TTAC), writes from Lagos.