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BIG STORY

CBN Slams Heavy Sanctions On Diamond Bank, 3 Others For Aiding MTN’s Forex Infractions

Peter Okunoren

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The Central Bank of Nigeria says it has imposed heavy sanctions totaling N5.87 billion on four banks under its regulatory purview and asked same to refund the sum of $8,134,312,397.63 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 have come under the sledgehammer of the CBN for the violations are Standard Chartered Bank, Stanbic-IBTC, Citibank, and Diamond Bank.

Announcing the decision in Abuja on Wednesday, CBN’s Director, Corporate Communications, Isaac Okorafor, said the actions on 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.

Figures obtained from the CBN on Wednesday indicate that the highest fine of N2,470,604,767.13 was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria was fined the sum of N1,885,852,847.45.

For its punishment, Citibank Nigeria was penalized in the sum of N1,265,541,562.31, just as Diamond Bank was directed to pay the sum of N250 million for violating extant rules.

The CBN Spokesman further disclosed that the decision on the Bank followed thorough investigations by it into the allegations of remittances by the four banks of forex with irregular certificates of Capital Importation issued on behalf of some offshore investors of MTN Nigeria Communications Limited.

Okorafor said the investigations revealed that the sum of $3,448,119,321.72 was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs.

Similarly, he said the sums of $2,632,005,623.78, $1,766,263,212.75 and $348,914,501.30 were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, respectively during the period 2007 and 2015. Accordingly, he said the CBN had directed the affected banks to immediately refund the respective sums to the CBN.

The CBN 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.

While disclosing that the investigations by the CBN took a while in order to carry out thorough inquiry and give fair hearing to all parties involved, Mr. 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, which sanctions may include denial of access to the Nigerian foreign exchange market.

Details of the Investigations

CBN’s letter to MTN says:

Our investigation also revealed the following, among others:

i. The shareholders of your company 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 (SCB), Citi Bank (CB) and Diamond Bank (DB);

iii. The CCIs issued at the time of the investment by the above banks to your organization in respect of the $402,590,261.03 showed that $59,436,923.44 was invested as shareholders’ loan and $343,153,339.56 as equity;

iv. However, a review of your organization’s financial statements for the year ended December 31, 2007 revealed that $399,594,146.00 was recorded/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 the banks in (iii) above;

v. Following a request by your organization through Standard Chartered Bank for CBN’s approval to convert the shareholder’s loan to preference shares, an approval-in-principle was granted vide our letter dated November 13, 2007; with the grant of final approval made subject to the fulfillment of the following conditions by your organization.

a. Implementation of the decision in item 5B of your board resolution dated November 08, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the Central Bank of Nigeria; and

b. Provision of an undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

vi. In spite of the non-fulfillment of the conditions in (v) above and consequently, the non-issuance of a final approval by the CBN, your organization converted the shareholders’ loan to preference shares with Standard Charted Bank issuing new CCIs in respect of the illegal conversion;

vii. The action of your banker in aiding your organisation in the illegal conversion of the shareholders’ loan was later described by SCB in a letter to the CBN dated December 10, 2009 as an “unintended omission”; and

viii. On account of the illegal conversion of your shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated on behalf of your company by the aforementioned banks between 2007 and 2015.

CBN’s Letter to Standard Chartered 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 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.

iv. Your bank subsequently applied to the CBN on behalf of MTN Nigeria Communications Limited for the conversion of the shareholder’s loan to preference shares, for which an approval-in-principle was granted vide our letter dated November 13, 2007 with the grant of final approval made subject to the fulfillment of the following conditions by MTNN:

a. Implementation of the decision in item 5B of MTN Nigeria Communications Limited board resolution dated November 8, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the Central Bank of Nigeria; and

b. Provision of an undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

v. In spite of the non-fulfillment of the above conditions in (iv) above and consequently, the non-issuance of a final approval by the CBN, your bank issued new CCIs in support of the illegal conversion of the shareholders’ loan to preference shares; an action that was later described by your bank in a letter to the CBN dated December 10, 2009, as an “unintended omission”; and

vi. On account of the illegal conversion of the shareholder’s 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.

Other findings from our investigation included the following:

1. Your bank issued three (3) CCIs outside the regulatory 24 hours without the approval of the CBN;

2. In contravention of Memorandum 24 (ii) of the Foreign Exchange Manual, which requires that CCIs should be transferred based on customer’s instructions to a bank of the customer’s choice along with the transaction history of the CCI, you provided confirmation to two other banks, Citibank and Diamond Bank, instead of transferring the CCIs to them as required by the Foreign Exchange Manual.

The two banks on the strength of your confirmation subsequently remitted various sums as dividend for MTN Nigeria Communications Limited at different times; and

3. Your bank failed to issue a letter of indemnity to the CBN against double remittance in respect of ten CCIs transferred by Diamond Bank and Citibank to your bank as required under subsection 5(iii) of Memorandum 24 of the Foreign Exchange Manual.

Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matter.

CBN’s letter to Stanbic-IBTC 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 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.

Other findings from our investigation included the following:

a). Your bank falsely reported thirty-five CCIs valued $313,683,925.84 inappropriately as “other purchases” in your MTR 203 returns for February 2008 instead of “capital importation”;

b) Your bank issued eight CCIs of $58,359,616.67 in respect of foreign exchange sourced locally as shareholders’ loan. This constituted a contravention of the requirement of Section 15 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and Memorandum 20 (1.3) (iii) of the Foreign Exchange Manual, which stipulates that CCIs should only be issued on capital imported;

c). Your bank issued eight CCIs for capital inflows in form of machinery outside the 24 hours regulatory requirement of receipt of shipping documents in contravention of paragraph 4.1.1 (IV) of the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2012 to 2013;

d) Your bank failed to issue a letter of indemnity to the CBN against double remittance in respect of twenty CCIs transferred by Standard Chartered Bank to your bank as required under subsection 5(iii) of Memorandum 24 of the Foreign Exchange Manual; and

e) Your bank repatriated dividends totaling $905,260.20 in respect of CCIs illegally issued on the strength of locally sourced capital.

Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matter.

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 CCI 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;

iv. Your bank issued seven (7) CCIs to MTN Nigeria (MTNN) totalling $42,126,803.04 that were subsequently transferred to Standard Chartered Bank Limited at the request of your customer (MTNN) on February 6, 2006, which constituted part of the CCIs that were consequently irregularly re-issued;

v. Four of the CCIs issued by your bank evidencing the inflow of capital imported as cash were issued outside the period of 24 hours allowed by regulation upon the receipt of inflow, in flagrant contravention of Memorandum 22 of the Foreign Exchange Manual;

vi. 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 CCI received by your bank from Standard Chartered Bank; and

vii. Your bank purchased $535,000,000 on the basis of photocopies of Form “A” bearing the name of Standard Chartered Bank as the applicant bank and the referenced CCIs in contravention of Memorandum 24 (4) (a) of the Foreign Exchange Manual 2006.

Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matters.

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 CCI 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; and

IV. On account of the illegal conversion of the shareholder’s 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, within a period of six years.
Other findings from our investigation included the following:

a) Your bank issued three CCIs in favour of Dantata Investment for the sum of $5million without converting the foreign exchange received into Naira as required by our regulations. On the basis of these illegally issued CCIs, your bank repatriated the sum of $102,545,336.77 in respect of these CCIs;

b) A further review of the CCIs also showed that no Form “M” was opened as evidence of the utilization of the FX for the importation of goods (as “Not valid for FX”) into the country;

c) Your bank remitted the sum of $348,914,501.38 as the dividend to MTN Nigeria Communications Limited offshore corporate shareholders without any documentary evidence of the audited account of the company to justify the basis of the payment of the dividend declared and paid by MTNN. This action was a violation of the provision of Memorandum 24(4)(b) of the Foreign Exchange Manual;

d) Your bank failed to indemnify SCB for losses and/or liabilities that may arise from the use of the CCIs you transferred to SCB in violation of the provisions of the Foreign Exchange Manual 2006;

e) Your bank issued three CCIs outside the regulatory 24 hours without the approval of the CBN contrary to provisions of Memorandum 22 of the Foreign Exchange Manual 2006; and

f) Your bank illegally remitted the sum of $352,222,358.39 on behalf of Standard Chartered Bank and Stanbic IBTC Bank in respect of the various CCI issued to MTN Nigeria Communications Limited.

Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018.

This was to give all the parties fair hearing, towards taking an informed decision on the matter.

BIG STORY

Director Demoted By Magu Emerges Head Of EFCC Academy

Peter Okunoren

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A Director with the Economic and Financial Crimes Commission, Ayo Olowonihi, has been appointed as the Commandant of the EFCC Academy, the EFCC has said.

Olowonihi, who was on Grade Level 17 was suspended by the then acting Chairman of the EFCC, Ibrahim Magu, in 2015 and then demoted to Grade 16 by Magu in 2017.

The aggrieved director subsequently instituted a case against the EFCC before the National Industrial Court.

According to court documents, Olowonihi said Magu had on November 19, 2015, summoned him to his office accusing him of being behind some damning online publications on the activities of the commission and against the person of the chairman.

He said on Magu’s directive, he was interrogated, his official computer taken away, while the two phones (MTN and GLO) were seized, adding that his office, after being thoroughly searched by a team of detectives and policemen, was sealed.

The plaintiff further stated that while interrogation was still on, Magu demoted him as commandant and redeployed him.

Olowonihi said while the letter was purported to have been issued by the management of the commission, he was not aware of any management meeting where such a decision was taken being a management staff.

The EFCC director won his case in court on February 26, 2019, but the EFCC under the leadership of Magu filed an appeal.

The Court of Appeal in August 2020 affirmed the ruling of the lower court but by then, Magu had been suspended indefinitely by the President, Major General Muhammadu Buhari (retd.)

On Monday, the EFCC said in a statement by its Spokesman, Mr. Wilson Uwujaren, that Olowonihi had been appointed as the head of the EFCC Academy.

A statement titled, ‘Olowonihi Takes Over at EFCC Academy’, read in part, “The acting Chairman of the EFCC, Mohammed Abba, has appointed Detective-Commander Ayo Olowonihi as Commandant, EFCC Academy, Karu, Abuja.

“Olowonihi takes over from Itam Obono, a Deputy Commissioner of Police
“The appointment which is with immediate effect was consummated with a hand-over ceremony today, Monday, January 18, 2021, attended by both Olowonihi and Obono with heads of departments and units of the Academy in attendance.”

Obono charged Staff to give Olowonihi the best cooperation, stating, “I’ll ask that, Ayo who is coming is not new, he has been here before and the work will take speed. Give him the best cooperation. The little hurdles that are there, you may be able to surmount faster than we have done.”

In his response, Olowonihi appreciated Obono and wished him well at his new assignment. He pledged to take the Academy, which is the brain of the organization, to where it should be.

Meanwhile, It was learnt that the new EFCC leadership had reversed several of Magu’s appointments while those close to the sacked EFCC boss have remained on suspension for the last six months pending the decision of the President to act on the report of the Justice Ayo Salami-led panel.

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BIG STORY

Uganda Restores Internet Two Days After Museveni’s Re-Election

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The Uganda authorities have switched on the country’s internet, six days after it was shut down.

According to NAN, Ofwono Opondo, government spokesperson, confirmed the development saying the internet was switched on after data collected indicated that there would be no violence.

The country shut down the internet about 48 hours to its presidential election which held on January 14.

The Ugandan authorities had ordered telecommunications companies to “immediately suspend any access and use” of social media and online messaging platforms.

Opondo said the internet was shut down in the best interest of the country.

He said the government took such steps because people wanted to spread messages of violence and discredit the polls.

“Internet was switched off because people wanted to spread messages of hate and violence, as well as discredit the integrity of our elections,” he said.

“We think now people have come to terms with the results. However, we remain on alert.

“Whatever was done was done for the good of the country. The opposition was affected and the ruling party was also affected. Even the general public was affected.”

Although the internet is now on, social media access remains blocked.

This development is coming two days after Uganda President Yoweri Museveni was re-elected to the country’s highest office for the sixth consecutive time.

Museveni has so far spent 35 years as president of the East African country. He was first elected in 1986.

Museveni polled 5.85 million votes to defeat Bobi Wine, the main opposition candidate, who secured 3.48 million.

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Drug Abuse Is Unacceptable Nonsense, Peddlers Will Be Dealt With Henceforth —- New NDLEA Boss Buba Marwa Spits Fire

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Mohammed Buba Marwa, a former military governor of Lagos state, has assumed office as the new chairman of the National Drug Law Enforcement Agency (NDLEA).

Speaking at an inaugural meeting with the management and staff of the agency on Monday in Abuja, Marwa said the NDLEA will be “resuscitated” to deal with drug peddlers.

The chairman noted that drug abuse has eaten “very deep” into Nigerian society, adding that every community in the country is affected.

While describing drug abuse as “unacceptable nonsense”, the retired brigadier-general said a roadmap that would guide the agency will soon be released.

“It is the task of NDLEA to stop all these unacceptable nonsense of drug abuse in Nigeria,” he said.

“As the lead agency in the drug war in Nigeria, you are all too familiar with the extent of devastation that drug use has caused our nation. Drug use has eaten very deep into our social fabric. Every community in Nigeria is affected.

“It needs repeating that the number of drug users in Nigeria now, of all ages must be well over 15 million.

“If we extrapolate the figures of the recent UNODC survey of 2018 where 14.3 million Nigerians between the ages of 15 to 64 years were found to be drug users, at that time, nearly three times the global prevalence.

“We will resuscitate NDLEA to be fully active, to be effective, respected, and be feared by all concerned criminals. Nigeria is the only country we have; we cannot fold our arms. We can, will, and must eliminate the drug scourge.”

Marwa also warned peddlers to desist from dealing in illicit drugs.

“I would like to warn those who engage in the dastardly trade of importation, export, cultivation, processing, manufacture, trafficking, sale, and consumption of illicit substances to stop forthwith or be prepared to contend with NDLEA,” he said.

“NDLEA will safeguard the nation and our youths from the drug menace.”

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