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INVESTIGATION: Secret memos and documents from MTN’s $14 Billion offshore transfers

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MTN building showing its logo
An MTN building used to illustrate the story [Photo Credit: allAfrica]

Exclusive documents give a rare insight into the business dealings of a telecoms giant and its four banks as a secret federal audit reports that MTN imported $834.4m less capital than was declared, and repatriated as much as $3bn more than was declared in one of many transactions that forced the Attorney General of the Federation to request the Department of Security Services (DSS) to step in.

Barely two and a half years after MTN was slammed with $5.2 billion in sanction by the Nigerian government for connecting millions of unregistered SIM cards to its network, the telecom giant is again under official scrutiny over $14 billion serially moved out of Nigeria using processes described by authorities as illegal and irregular.

Though the ripples of the inquiry may have touched a US bank, one of four named in the MTN multiple transactions, findings have been secretly guarded; until now. Neither the Central Bank of Nigeria (CBN) whose top official was quizzed by the Department of State Services (DSS) over what in financial circles is succinctly referred to as MTNgate nor the Nigerian Senate whose committee conducted an enquiry into the overseas transfers has so far felt duty-bound to make a pronouncement on MTN or make public the findings of its enquiry conducted using taxpayers’ money.

Attorney General of the Federation, AGF, Abubakar Malami

Secret memos and bank forensics exclusively obtained by SATELLITE TIMES show that the official investigation of MTN was initiated by the Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami. In a letter MJ/DSD/ASSRECOV/XIII, dated 26th September 2017 and addressed to the governor of the Central Bank, Malami informed the apex bank of his engagement of a law firm Messrs. Tope Adebayo “to carry out comprehensive audit services for the recovery of funds due to the Government with respect to illegally repatriated export revenues by MTN Communications Limited and her collaborators for and on behalf of the Federal Government of Nigeria …”

Letter of introduction

Messrs. Tope Adebayo is also one of the law firms engaged by the Nigerian government to help recover monies looted by the late military ruler, General Sani Abacha; among them the approximately $300 million hitherto held by the Canton of Geneva in Switzerland.

The investigators’ mandate was to forensically analyse how banks issued Certificate of Capital Importation (CCIs) to MTN from 2001 to 2005 and how banks used and (or) caused these CCIs to be used for remittances of foreign exchange to MTN offshore corporate shareholders from 2006 to 2015.

In total the auditors examined more than 300 CCIs issued to MTN by a series of banks among them Standard Chartered Bank, Citibank and Stanbic IBTC and Diamond Bank. The report of the investigation obtained by SATELLITE TIMES was explicit in saying that Standard Chartered Bank, Citibank and Stanbic IBTC breached sections of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act. 1995. The banks were also reported to have contravened different memoranda of the Foreign Exchange Manual as well as well as violating the Central Bank of Nigeria’s Approval-In-Principle.

CCIs of schedule Stanbic Bank transactions

The explosive audit report showed for instance that out of a total 110 CCIs issued to MTN by Standard Chartered Bank, 79 are tainted with irregularities. On its part, Stanbic IBTC issued to MTN a total 225 CCIs valued at $999.5 million but reported only 13 CCIs to the CBN. The 13 CCIs were valued at $52.8 million. The auditors’ findings suggest the scale of the paperwork irregularities over the years was widespread.

CCI mess

To fund their investments in Nigeria, foreign companies are free, subject to money laundering restrictions, to bring in any recognised foreign currency into Nigeria. Such funds will have to be brought in through an authorised dealer, usually a bank authorised by the CBN. The bank through which the funds were imported will need to issue a certificate of capital importation “CCI”to the investor to evidence the inflow of such funds into Nigeria. Where capital is not imported in form of funds but is imported in form of equipment, machinery or raw materials, a CCI will also be required. In the absence of a CCI, foreign exchange cannot be purchased from the official exchange market for an easy repatriation of the proceeds of the foreign company’s investment from Nigeria.

For reasons unclear MTN never obtained a capital importation licence when they first started doing business in Nigeria. Banks are required to issue CCIs within 24 hours of a legitimate capital inflow, and to inform the Central Bank within a further 48 hours of its issue.

Banks are also required to declare the corresponding repatriations to the Central Bank on a monthly basis.

The forensic auditors found that 87% of all CCIs the commercial banks issued to MTN between 2001 and 2015 were irregular. Investigations revealed that MTN declared capital inflows of $2.18 billion and dividend outflows of $13.19 billion but the audit suggests that MTN actually imported $834.4m less than was declared, and repatriated as much as $3bn more than was declared.

One of MTN bankers, Standard Chartered could not produce “verifiable evidence” to the auditors of $93.1 million in capital and equipment it claimed MTN had imported into Nigeria.

The MTN case was viewed as a national security matter because of the implications for Nigeria’s economic stability forcing the DSS to step in. The DSS carried out a joint investigation with the country’s banking supervisor, Nigeria Deposit Insurance Corporation (NDIC) in 2016.

The joint report sighted by SATELLITE TIMES and titled “Investigation report on the alleged depletion of Nigeria external reserves by MTN, Stanbic IBTC Bank, Standard Chartered Bank in collaboration with CBN officials” uses even stronger language than the subsequent forensic audit.

The DSS/NDIC report accuses MTN of “fraudulent” remittance of foreign exchange and the Central Bank of “reckless” approvals. This newspaper was unable to get information on its final conclusions and recommendations.

MTN has previously said the allegations it illegally repatriated about $13 billion from Nigeria were “completely unfounded and without any merit”.

MTN Nigeria CEO Ferdi Moolman reportedly told a Senate enquiry that it was practically impossible to comply with Nigeria’s foreign exchange declaration regime, whose regulations in any case MTN believed were “administrative”.

What exactly does the law say?

According to the forensic analysis we obtained, the commercial banks breached sections of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act and the Central Bank’s Foreign Exchange Manual.

The key is S15 of the Foreign Exchange Act, which states that any person or entity can invest in Nigeria “with foreign currency or capital imported into [the country] through an Authorised Dealer” [i.e. a licenced bank, authorised to deal in foreign exchange]; the investment is converted into naira in the market.

It goes on: “The Authorised Dealer through which the foreign currency or capital for the investment … shall, within 24 hours of the importation, issue a Certificate of Capital Importation to the investor and shall, within 48 hours thereafter, make returns to the Central Bank giving such information as the Central Bank may, from time to time, require.” [S15.2]

Provided this requirement is met, the foreign investor is “guaranteed unconditional transferability of funds, through an Authorised Dealer in freely convertible currency” when they subsequently need to: pay dividends or profits from the investment; service foreign loans obtained for the investment; and/or pay proceeds from the sale or liquidation of the investment. [S15.4]

As with capital importation, the bank has 14 days to notify the Central Bank about capital repatriation. [S15.5.a-c.].

A whistleblower who drew the Attorney General’s attention to the CCI transactions alleged that some of the MTN paperwork was filed more than five years late.

The Act explicitly states that its purpose is to “determine and monitor the flow of foreign currencies into Nigeria” and sets a threshold of $10,000 above which banks must declare any cash transfer “to or from a foreign country” to the Central Bank [S25].

It is a criminal offence for banks to “fail, neglect, or refuse to submit these returns” [S16.3]; and to “forge or produce as genuine to the Central Bank … any false document with a view to utilising the document in any transaction” [S29.1.d]

AGF-CBN faceoff

There are no suggestions so far of the office of the Attorney General and the CBN being on the same page in the MTN saga. SATELLITE TIMES gathered that after the AGF was notified by the whistleblower, he requested the DSS/NDIC to investigate. The report of the investigation and the documents obtained therefrom were passed to the law firm for forensic audit and recommendations of actions that will lead to recoveries of sums found to have been illegally repatriated.

It was further gathered that the audit was conducted and recommendations passed on to CBN for actions. But since October 2017 when the recommendations were transmitted, the investigators have been waiting for the CBN to sanction erring banks. Five months down the line, accusations are that the CBN may want to sweep the matter under the carpet.

This newspaper further gathered that in a letter dated 20th October 2017 and addressed to Messrs. Tope Adebayo, the CBN acknowledged receiving the report, adding it had set up a committee to verify the facts contained in the report. If the committee has concluded its sitting, its report is not known yet to anybody including the fund-recovery law firm which reportedly had written three reminders but got no response from the apex bank.

Sources close to the Ministry of Justice told SATELLITE TIMES that the AGF is determined to ensure that no organization is allowed to toy with the law of Nigeria. Email queries and SMS sent to CBN’s Acting Director, Corporate Communications, Isaac Okoroafor were not responded to.

In response to questions sent to MTN by Finance Uncovered and Satellite Times, MTN Group sent a written response saying:

“Further to your request for a response from MTN with regard to the report commissioned by the Attorney General (AG) of the Federal Government of Nigeria, we are not in a position to comment on it. We have not been approached by the AG or his surrogates and are therefore unaware of any investigation with respect to the said report. We would also like to draw your attention to our SENS announcement dated 28 September 2016 where MTN Nigeria refuted allegations of any improper repatriation of funds. MTN has not at any material time participated in any improper repatriation of funds from any jurisdiction.

MTN has the greatest respect for the countries within which it operates and remains unflinchingly committed to conducting its business within the parameters of all pertinent local and international laws.”

MTN timeline in Nigeria

MTN was incorporated in Nigeria in November 2000 and obtained a prized digital GSM (Global System for Mobile Telecommunications) licence to operate in February 2001, for which it paid US$285m.

It began commercial operations in Nigeria in August that year.

In September 2006 MTN Nigeria declared its first dividend, and it began to repatriate money from Nigeria to its shareholders in Mauritius, the BVI and the Cayman Islands. Between 2006 and 2016 it repatriated more than $10bn to its shareholders.

In March 2007 MTN Nigeria obtained a 3G licence, for which it paid $150m.

In September 2016 a Nigerian lawmaker, Dino Melaye, alleged in the Senate that MTN had illegally repatriated $13,92bn from Nigeria between 2006 and 2016; and that “some influential and unpatriotic Nigerians” were involved, including the current minister of trade Okechukwu Enelamah. MTN and Enelemah denied any wrongdoing.

A Senate committee investigated the allegations, and issued a report in July 2017 that exonerated MTN but criticised the Central Bank of Nigeria and Stanbic IBTC Bank. The committee swiftly withdrew the report amid protests by lawmakers claiming it had not investigated all parties to the transactions.

This Investigation was made possible with technical support from Finance Uncovered.

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deji oso

This is a well thought out illuminating and balanced report. Transnational corporations anywhere in the word are essentially established for profit making purposes. The oligopolistic tendencies of same establishments make it difficult to operate in their host nations without the flare to exploit which therefore often create fraction between the multinational companies and the host nation. Yet, I only hope the Nigerian government will be fair in its investigation.

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Secret recruitment: 1,046 federal civil servants employed through the back door

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Head of Service building
Head of Service building

A total of 1,046 workers are now discovered to have made their way into the payroll of the Federal Civil Service, no thanks to the clandestine arrangements of top-level syndicates operating within and outside the Federal Civil Service Commission.

Documents exclusively obtained by SATELLITE TIMES showed that the 1,046 civil servants, employed and placed on positions between Grade Levels 8 to 12 had received salaries, some for four years before they were found out. All of them had had their names captured under the Integrated and Personnel Information System (IPPIS).

In stunning numbers, they were secretly and illegally employed and deployed to the Office of the Accountant General of the Federation (OAGF), Ministry of Environment, Ministry of Petroleum, Ministry of Communications Technology, Ministry of Education, Ministry of Works, Ministry of Youths and Sports and Ministry of Women Affairs and Social Development, among other MDAs (Ministries, Departments and Agencies).

Following serious allegations of irregular recruitment exercises levelled against the Federal Civil Service Commission (FCSC) by the Federal Character Commission (FCC) which also alleged breach of the federal character principles in employment exercises carried out between 2013 and 2015, the FCSC appointed an Ad hoc committee to investigate the allegations.

The 10-man committee headed byHon, Commissioner Alhaji Yahaya Yusuf, the then FCSC commissioner in charge of Bauchi, Borno and Yobe States commenced deliberations on 12th August 2016. The committee which members included H.O Ikiriko, Dr. Hamidu B. Mohammed, Prof. A.D. Sheidu, Dr. Ngozi A. Etolue, Ibrahim Mohammed, Tope Olufintuyi, Alhaji Mustapha L. Suleiman, A. A. Tsafe and Ibrahim El-Yakubu, had as its terms of reference to unearth “the sources of irregular recruitment within the Federal Civil Service Commission and sources of irregular recruitment outside the Commission”.

A copy of the report of the Committee obtained by SATELLITE TIMES showed that the Committee identified as culprits the Chairman of the Federal Civil Service Commission, some FCSC Commissioners, the Permanent Secretary of the Commission, the Director (Recruitment & Appointment) and the MDAs where “the Committee observed that there appears to be a syndicate working between the MDAs and the Commission, which made it possible for illegally recruited officers to (have) found their ways to be captured into the IPPIS”.

On the Office of the Permanent Secretary of the Federal Civil Service Commission, the report is bold in saying that “Appointment letters were typed/prepared and taken to the Perm. Secretary’s office for ‘sealing’ without due process for recruitment of officers. The Permanent Secretary also generated recruitment in his office, without recourse to either the Chairman or Hon. Commissioners in collaboration with the Director (Recruitment and Appointment)”.

Findings showed that a total of 1,046 civil servants were delisted from the Integrated and Personnel Information System (IPPIS). Of these, 329 workers from the Office of the Accountant General of the Federation were delisted; 180 from the Ministry of Environment; 23 from the Ministry of Petroleum; 64 from the Ministry of Communications & Technology; 261 from the Ministry of Education; 66 from the Ministry of Works; 51 from the Ministry of Youths and Sports; and 116 from the Ministry of Women Affairs and Social Development.

Though the committee was hailed for doing a good job, SATELLITE TIMES can authoritatively reveal that clandestine efforts are going on to upturn its efforts. The pressure on the Federal Civil Service Commission to reinstate the 1,046 illegally recruited civil servants is coming strongest from the National Assembly. Most of the delisted workers are said to be “candidates” of very influential persons, including Senators and House of Reps members. In an ironic twist, the same committee that confirmed illegal recruitments by syndicates has since added to its “suggestions” that “75% (of the illegally recruited workers are) to be forgiven”; which translates to 952 workers to be reinstated.

Now, a total of 108 civil servants, also illegally recruited, are asking for their names to be captured under the IPPIS. Evidence was found in a letter dated 27th March 2018, written by the FCSC with reference number FC. 3418/S.124/VOL.1/7. The letter addressed to the Chairman, Senate Committee on Public Petitions stated that the 108 persons had petitioned the federal lawmakers seeking the intervention of the National Assembly for their inclusion under the IPPIS.

Paragraph 9 of the response letter by the FCSC to the Senate reads in part, “The Commission is hereby assuring the distinguished Senators that the case of the one hundred and eight (108) officers of Federal Ministry of Health yet to be captured under the IPPIS platform and indeed cases of delistment in all MDA’s will be given accelerated attention”.

The letter was signed by the Permanent Secretary, Mrs. Ekaro Comfort on behalf of the acting chairman.

A staff in the Recruitment & Appointment office of the FCSC who pleaded anonymity told this newspaper: “Even as I speak to you, recruitment is ongoing.”

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