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Illegal cash repatriation claims haunt MTN

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 02 Dec 2016
MTN Nigeria is looking to list on the country's stock exchange next year.
MTN Nigeria is looking to list on the country's stock exchange next year.

MTN's plans of listing its Nigerian business unit on the country's bourse are in jeopardy following accusations that the telco illegally moved $14 billion (R195 billion) out of the country over 10 years.

Citing unnamed sources, Bloomberg reports the alleged illegal movement of the funds may result in a lengthy legal process to dispute the claims and the initial public offering may be delayed indefinitely.

This week, MTN told ITWeb it aims to list MTN Nigeria on the Nigerian Stock Exchange during 2017 and has established a management task team with the responsibility to guide the company towards such a listing.

"The proposed listing is subject to suitable market prevailing circumstances and conditions, and the appropriate approvals from relevant regulators and other stakeholders," it said.

The mobile operator has since vehemently denied any unlawful money transfers, with MTN Nigeria CEO Ferdi Moolman calling the allegations "completely unfounded and without any merit".

The original allegation came from a motion submitted to the upper house by senator Dino Melaye in September 2016, which said the funds had allegedly been repatriated illegally out of Nigeria between 2006 and 2016 in collusion with four commercial banks. Last week, the Senate heard the amount might be even higher than previously thought, with a lawmaker calling the sum "mind-boggling".

Nigeria is MTN's biggest market, and at the end of September, it had 60.5 million subscribers in the country. According to the latest quarterly update, the MTN group has a total of 234.7 million customers in 22 countries across Africa and the Middle East.

Commenting specifically on the point of Certificates of Capital Importation (CCIs) in the matter of alleged repatriation of funds out of Nigeria, Moolman says no dividends were declared or paid until the CCIs were issued and finalised.

Moolman adds MTN Nigeria only requested for CCIs for foreign capital that was imported into Nigeria, and dividends were externalised on CCIs.

"Often for various reasons, such as not having all the required documentation for instance, it is not possible to issue a CCI within 24 hours, and the Central Bank of Nigeria's (CBN's) Forex Manual contemplates such situations by asking that the banks refer to the CBN for approval. Besides, the requirement to issue a CCI within 24 hours of conversion is an administrative requirement. As such, the CBN has the authority, and indeed we believe, approved the banks' applications to issue CCIs outside the recommended time frame."

Richard Hurst, director of enterprise research at Africa Analysis, says entities such as MTN, which have been under scrutiny will be required to comply with all the appropriate listing regulations, and these would probably be stock standard such as financial records in good standing, etc.

He believes the challenge will be to convince the regulators that the listing requirements have been met and that all relevant information is being disclosed.

"While the allegations levelled against MTN are serious, the fact that the company is seeking a listing in Nigeria shows that it is willing to comply with various regulations, such as tax, and begin to share its revenue growth with local investors," Hurst notes.

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