The Central Bank of Nigeria has imposed heavy fines totaling N5.87bn on four banks under its regulatory purview for alleged
illegal funds repatriation.
It also directed the managements of the banks and MTN
Nigeria Communications Limited to immediately refund to the apex bank
$8,134,312,397.63, which was said to have been illegally repatriated by the
company.
A statement from the CBN on Wednesday said it asked
the banks and MTN to refund money for what it described as ‘flagrant violation
of extant laws and regulations of the Federal Republic of Nigeria, including
the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the
Federal Republic of Nigeria and the Foreign Exchange Manual, 2006’.
The four banks that came under the sledge hammer of
the CBN for the violations are Standard Chartered Bank, Stanbic-IBTC, Citibank
and Diamond Bank.
The Director, Corporate Communications, CBN, Isaac
Okorafor, said that the actions of the bank became necessary following
allegations of remittance of foreign exchange with irregular Certificates of
Capital Importation issued on behalf of some offshore investors of MTN Nigeria
Communications Limited and subsequent investigations carried out by the apex
bank in March 2018.
“The CBN has therefore asked the managements of the
banks and MTN Nigeria Communications Limited to immediately refund the sum of
$8,134,312,397.63, illegally repatriated by the company to the coffers of the
Central Bank of Nigeria,” it stated.
Figures obtained from the CBN on Wednesday indicated
that the highest fine of N2.47bn was slammed on Standard Chartered Bank, while
Stanbic IBTC Nigeria was fined N1.885bn.
Citibank Nigeria was penalised to the tune of
N1.265bn, just as Diamond Bank was directed to pay N250m for violating extant
rules.
The CBN spokesman further disclosed that the decision
of the bank followed its thorough investigations into the allegations.
Okorafor said the investigations revealed that the sum
of $3.448bn was repatriated by Standard Chartered Bank on the basis of the
illegally issued CCIs.
Similarly, he added that the sums of $2.632bn,
$1.766bn and $348.914m were repatriated by Stanbic IBTC Nigeria, Citibank
Nigeria and Diamond Bank Plc, respectively between 2007 and 2015.
He said the CBN had directed the affected banks to
immediately refund the respective sums to the CBN.
“The CBN’s investigation further revealed that on
account of illegal conversion of MTN shareholders’ loan to preference shares
(interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was
illegally repatriated by the company,” the statement said.
He said that the investigations by the CBN took a
while in order to carry out thorough inquiry and give a fair hearing to all
parties involved.
Okorafor advised all banks and multinational companies
in Nigeria to adhere strictly to the provisions of all extant laws and
regulations of Nigeria in their foreign exchange transactions.
He warned that failure by the management of banks and
companies to abide by the existing guidelines would be appropriately
sanctioned, adding that the sanctions would include denial of access to the
Nigerian foreign exchange market.
Several calls made by one of our correspondents to
spokespersons for the affected banks and MTN were not responded to as of 9.30pm
on Wednesday.
CBN’s letter to Standard Chartered Bank states, “Our
investigation also revealed the following, among others: i. The shareholders of MTN Nigeria
Communications Limited invested the sum of $402,590,261.03 in the company from
2001 to 2006;
ii. The
investment was carried out through the inflow of foreign currency cash
transfers and equipment importation, which was evidenced by the CCIs issued by
your bank, Citi Bank (CB) and Diamond Bank (DB) at the initial stage of the
investment.
iii. The CCIs
issued at the time of investment by your bank along with the other banks in
respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested
as shareholders’ loan and $343,153,339.56 as equity. This position was,
however, contrary to the position in the financial statements of MTN Nigeria
Communications Limited for the year ended December 31, 2007, which revealed
that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as
equity investment, in accordance with the shareholder’s agreement but contrary
to the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB). Your
action in this regard constituted a rendition of false returns to the Central
Bank of Nigeria.”
CBN’s letter to Stanbic-IBTC states, “Our
investigation also revealed the following, among others:
i, The shareholders of MTN Nigeria Communications
Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006;
ii. The investment was carried out through the inflow
of foreign currency cash transfers and equipment importation, which was
evidenced by the CCIs issued by Standard Chartered Bank, Diamond Bank and
Citibank, out of which eight of the CCIs totaling $377,216,508.30 were
transferred to your bank by Standard Chartered Bank. Consequently, your bank
repatriated the sum of $929,051,331.83 as proceeds of divestment from the CCIs
valued at $42,704,408.61.
iii. On account of the illegal conversion of the
shareholders loan to preference shares (interest free loan) of $399,594,146.00,
the sum of $8,134,312,397.63 was illegally repatriated by your bank and the
other banks on behalf of MTN Nigeria Communications Limited between 2007 and
2015.”
CBN’s letter to CitiBank says, “Our investigation also
revealed the following, among others:
i. The shareholders of MTN Nigeria Communications
Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006;
ii. The investment was carried out through the inflow
of foreign currency cash transfer and equipment importation evidenced by the
CCIs issued by your bank, Standard Chartered Bank and Diamond Bank;
iii. The CCIs issued by your bank along with the other
banks in respect of the $402,590,261.03 showed that $59,436,923.44 was
recorded/invested as shareholders’ loan and $343,153,339.56 as equity at the
time of the investment. This position was, however, contrary to the position in
the financial statements of MTN Nigeria Communications Limited for the year
ended December 31, 2007, which showed that $399,594,146.00 was invested as shareholders’
loan and $2,996,117.00 as equity investment, in accordance with the
shareholder’s agreement but contrary to the CCIs issued by your bank, Standard
Chartered Bank (SCB) and Diamond Bank (DB). Your action in this regard
constituted a rendition of false returns to the Central Bank of Nigeria…
“Your bank 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 CBN, as provided in Memorandum 24(5)(ii)(b)
of the Foreign Exchange Manual in respect of the CCIs received by your bank
from Standard Chartered Bank.”
CBN’s letter to Diamond Bank says, “Our investigation
also revealed the following, among others:
i. The
shareholders of MTN Nigeria Communications Limited invested the sum of
$402,590,261.03 in the company from 2011 to 2006;
ii. The
investment was carried out through the inflow of foreign currency cash transfer
and equipment importation, which was evidenced by the CCIs issued by your bank,
Citi Bank and Standard Chartered Bank;
III. The CCIs issued illegally by your bank along with
the other banks in respect of the $402,590,261.03 showed that $59,436,923.44
was recorded/invested as shareholders’ loan and $343,153,339.56 as equity. This
position was, however, contrary to the position in the financial statements of
MTN Nigeria Communications Limited for the year ended December 31, 2007, which
showed that $399,594,146.00 was invested as shareholders’ loan and
$2,996,117.00 as equity investment, in accordance with the shareholder’s
agreement but contrary to the CCIs issued by your bank, Citi Bank (CB) and
Standard Chartered Bank (SCB). Your action in this regard constituted a
rendition of false returns to the Central Bank of Nigeria.”
Illegal funds repatriation: CBN fines four banks N5.8bn, orders lenders, MTN to refund $8.1bn
Reviewed by Unknown
on
Thursday, August 30, 2018
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