These are not the best of times for MTN Nigeria, the leading telecommunications operator in the country, and a subsidiary of Africa’s largest telecoms network with operation in about 22 countries. In recent times, the company has faced many challenges ranging from allegations of infractions for which it incurred the wrath of the Nigerian Communication Commission (NCC) to claims of unfair labour practices for which the Nigeria Labour Congress (NLC) shut down its offices. Now, the telecoms giant is confronted with fresh allegations of unlawful transfer of foreign exchange from Nigeria through four commercial banks.
In recent times, some of the crises have taken a toll on the company – depleting its fortunes and having negative impact on its corporate image.
According to the Central Bank of Nigeria (CBN), MTN in connivance with three foreign banks with local subsidiaries in Nigeria – Standard Chartered Bank, Citi Bank, Stanbic IBTC Bank and one indigenous operator, Diamond Bank – flouted its laws and regulations. This, the CBN said, includes the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.
The apex bank accused MTN of conniving with the banks, using irregular Certificates of Capital Importation to illegally transfer foreign exchange out of Nigeria. Consequently, the CBN slammed a N5.87 billion fine on the four banks combined. It also landed a sledgehammer on MTN Nigeria, ordering it to repatriate $8.1 billion, which it was said to have inappropriately sent out of the country. Without much ado, the CBN went ahead and debited the accounts of the affected banks domiciled with it.
Although the affected banks have raised objection to the allegations raised against them, CBN Governor, Godwin Emefiele insists that the sanctions were imposed after a 30-month-long investigation.
The most weighty charge, however, is unauthorised conversion of a loan of $399 million to Preference Shares by the telecoms company and the banks and, subsequent repatriation of $8.1 billion without final approval from the CBN. When the money is recovered, the CBN says it will remit the naira equivalent, using the prevailing exchange rate at the time of the illegal transfers to the coffers of MTN Nigeria.
In a more curious twist, MTN is also facing charges of tax evasion for which the Office of the Attorney General of the Federation is compelling it to pay $2 billion in tax arrears.
MTN is not new to sanctions by regulators in Nigeria. In 2016, the NCC imposed a fine of $5.2 billion on the company for violating its regulations by issuing 5.2 million unregistered SIM cards. However, after series of negotiations, the fine was reduced to $1.7 billion. But that did not happen without the authorities extracting a commitment from the telecoms giant to list its shares on the Nigerian Stock Exchange (NSE). That agreement gladdened the hearts of many Nigerians especially, players in the capital market. However, that commitment to list on the NSE is now being threatened by the new sanctions as MTN has so far, paid only N330 billion out of the imposed $1.7 billion.
Only recently, the NLC and its affiliate bodies brought business activities at various MTN offices across the country to a standstill. Labour unionists who picketed MTN offices in Lagos, Kano, Abia, Bauchi, Kogi, Bayelsa and Oyo, accused the South African company of unfair labour practices such as casualisation of its workforce, not allowing its workers to join labour union in accordance with the Trade Union Act and section 40 of the 1999 constitution of Nigeria as well as adopting attitudes suggestive of discrimination against its Nigerian workers.
Ayuba Wabba, President of the NLC declared that over 80 per cent of MTN workers were engaged as casual workers. Wabba also lamented that it was only in Nigeria that MTN engaged in such unfair labour practices.
While stressing that MTN had violated labour laws in the land, he also accused the company of denying its workers social protection by hiring and firing them within three-month intervals. MTN, he said, also failed to address the labour issues as itemised in the series of letters written to its management by the leadership of the NLC. That was not the first time the labour union was engaging in a showdown with the company. A similar thing happened last year on October 7.
While describing the owners of MTN as capitalist who are not ready for dialogue, Wabba who led the protest further accused the company of treating its Nigerian workers as “slaves without benefit of employment.” That is not all.
In the wake of xenophobic attacks against Nigerians in South Africa last year, South African businesses in Nigeria came under threat. MTN was a prime target, being the biggest South African company in Nigeria. But danger was averted. MTN also paid heavily for that as it deployed media campaigns to show how good a corporate citizen it is in Nigeria.
Now, with fresh huddles to cross, there are concerns over a possible reprisal against Nigerian businesses in South Africa that could lead to a possible diplomatic faceoff between the two countries. On the other hand, what is the future of MTN in Nigeria? Will the MTN crisis have any impact on foreign direct investment flow into Nigeria? Whether the company will still go ahead to have its shares listed on the NSE as planned, to the delight of investors can only be determined after the litigation arising from the latest sanctions has been decided.
