CBN does NOT have power to sanction us, MTN tells court

MTN Nigeria has told the federal high court sitting in
Lagos that the Central Bank of Nigeria (CBN) does not have the
power to impose sanctions on it, according to court
papers.

MTN also said it was not accused of any wrongdoing or invited to
be a part of an investigation commissioned against it by the
banking regulator.

It further accused the CBN of not abiding by the principle of
fair hearing.

In August 2018, CBN had ordered MTN to refund $8.1
billion which it claimed the company repatriated
using irregular certificates of capital importation (CCIs) between
2007 and 2015.

It also ordered four banks — Diamond Bank, Standard Chartered
Bank, Stanbic IBTC and Citibank — to pay a fine of N5.87
billion.

MTN immediately filed a suit at the court against CBN and the
attorney-general of the federation seeking an injunctive relief to
protect its assets and shareholder rights.

In its statement of defence and counterclaim dated September 28,
2018 and also seen by TheCable, the CBN said it took the decision
in exercising its statutory functions over the foreign exchange
market “in order to enhance the welfare of the Federal Republic of
Nigeria”.

The CBN said it was its investigation against the banks that led
to the sanctions against MTN.

The bank pleaded immunity in performing its functions
of protecting Nigeria’s currency from inflammatory and
deflationary shocks and maintaining healthy external reserves.

The CBN team of lawyers is led by a senior advocate, Seyi
Sowemimo.

‘NO FAIR HEARING’

In MTN’s reply dated October 19, 2018 and filed by its team
of lawyers led by Wole Olanipekun, a senior advocate, the company
said the breach of fair hearing is obvious in that CBN stated that
it was the investigation against the banks led to the sanctions —
rather than an investigation of the telco.

It was wrong for the CBN to use an investigation against banks
to punish the telco, MTN said, insisting that it cannot be held
liable for the actions of the financial institutions.

MTN said it was not given the report of the investigation and
was not informed of the charges against the bank or that it was
under a joint investigation with the banks “in respect of a process
that would lead to decisions taken against the plaintiff”.

The company alleged that the CBN’s disposition that fair hearing
was given was a “mere ruse” and that the company “is not a threat
to Nigeria’s economy but adds considerable value to the economy
through the provision of direct and indirect employment as the
largest mobile telecommunications provider in Nigeria”.

On the letter tendered by CBN appearing to show that Standard
Bank admitted guilt, the telco rejected any liability,
saying it was not aware of the allegations against the bank
that led to the sanctions.

MTN also stated that CBN’s claim that the $8.1 billion is not a
fine but merely for the transaction to be reversed “is an
afterthought” and was not stated in its August 28 letter.

It noted that the CBN has already received the naira value for
all the foreign exchange MTN purchased, dismissing the reliefs
sought by the CBN as “incompetent and frivolous”.

‘NO WRONGDOING’

MTN said it was not informed by the CBN in its letter of
August 28, 2018 that it took the decision based on the need to
protect the naira from inflammatory and deflationary shocks as
stated in the bank’s statement of defence.

It alleged that the CBN’s reliance on its functions stated in
the statement of defence, which were not originally listed as
reasons for its actions, “shows bad faith”.

While denying any wrongdoing as alleged by the CBN, it insisted
the bankers’ bank has no power to regulate the company.

Standard Chartered’s letter to CBN, according to MTN, shows that
Nigeria’s largest mobile phone company performed all requirements
necessary for a final approval.

MTN wondered why, after admitting that the company had the right
to alter its share capital, the CBN still insisted another
approval was necessary.

The company specifically denied altering its financial statement
and shareholding structure to scam or defraud Nigeria as alleged by
the CBN, maintaining that it did not backdate any letter and
challenging the bank to prove the allegation.

It described the counterclaim of the CBN as “frivolous”, stating
that the CBN “as the seller of the foreign exchange has received
the Naira value for all the foreign exchange purchased from
it”.

MTN therefore argued that CBN’s counterclaim is frivolous
and should be dismissed.

HEARING FIXED FOR OCTOBER 30

Godwin Emefiele, the CBN governor, earlier said the bank may
reduce the refund requested.

“I want to believe that the figure will reduce. Whether it will
be dropped completely, I honestly cannot say at this time,” he said
during his visit to London in October.

Lai Mohammed, minster of information, also told Reuters about a
favourable resolution for both sides.

“I am sure there will be a settlement and I believe they are
getting closer to resolving it,” he said.

The court has fixed hearing for October 30, 2018.