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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.

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Meet TV Producer And Content Guru Prince Adewole Liepede [PHOTO]

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Adewole Lipede, is an entrepreneur and sole proprietor of Back home Productions and is best known for his work in Marketing Strategies, Event Planning, Branding and as a Producer. For the past 10 years, he has hosted over 100 events in Los Angeles, CA and other metropolitan cities in the US.

He is also the talent liaison for BET International during the Annual BET Awards show every year. He has produced and consulted for TV projects with the intent of increasing exposure to African entertainment and culture.

His previous project was a comedy show in Hollywood and a line of children’s books called Back home Kids, which was inspired by his son to expand reading to kids.

His newest venture named “My Tribe” is geared towards the values of all people in the development to instill long-standing regard for the customs that originated back home. Adewole is an alumnus of Morgan State University with a BA in Theatre Arts. He enjoys spending time at home with his family.

Mr. Adewole Lipede is the grandson of the late King Oba Oyebade Lipede the late Alake of Agba land; Adewole is also working on a project with the presidency. Details are not entirely known to the public but it’s sure about African content and building African in Africa and also in the diaspora.

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Federal Government Plans Petrol Alternative, To Crash Fuel Price To N97

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The Federal Government on Thursday said it would crash the price of petrol by providing Compressed Natural Gas as an alternative source of fuel for vehicles nationwide.

The CNG is a fuel that can be used in the place of Premium Motor Spirit, popularly known as petrol. It can also be used in the place of diesel and Liquefied Petroleum Gas.

Speaking on what the Federal Ministry of Petroleum Resources would work on this year during a press conference in Abuja, the Minister of State for Petroleum Resources, Timipre Sylva, stated that the Federal Government was working for the passage of the Petroleum Industry Bill before May.

He further stated that moves by the Federal Government to recover $62bn from international oil companies were seemingly impossible, as no such money was sitting anywhere to be harvested by the country.

Sylva further declared that the Nigerian oil and gas sector was retrogressing, particularly when compared to the oil sector of other nations.

He stated that the use of petrol had caused a serious drain on the finances of the Federal Government as a result of the continued subsidy on the commodity.

Explaining how the government intends to crash petrol prices, Sylva said, “When you say we are thinking about reducing the pump price of petrol, I could easily say yes. Why I could say yes is because we are looking at giving the masses an alternative.

“Today, we are using the PMS but what we want to do, going forward is to see that we are able to move the masses to the CNG. If we take all transport vehicles to the use of the CNG, you would have impacted the poor positively.”

Sylva said findings by the government showed that the CNG cost less than the subsidized PMS and that once the CNG was fully deployed, the price of fuel would crash.

“The subsidized rate of the PMS per litre is N145 but the CNG cost between N95 to N97 per litre and that is why I said that we want to reduce the cost of fuel,” he stated.

He said Nigeria had abundant gas and that deploying the CNG would not be tough for the country.

“Nigeria’s gas reserve is significant. Nigeria currently has estimated 202TCF (trillion standard cubic feet) of gas, with a projection of 600TCF,” Sylva said.

On the PIB, the minister said, “We are optimistic that both the Petroleum Industry Governance Administration and Host Communities Bill, on the one hand, and the Petroleum Industry Fiscal Bill, on the other hand, will be passed within the first anniversary of the second tenure of this administration.”

Commenting on moves by the Federal Government to recover $62bn from international oil companies based on an October 17 judgment of the Supreme Court, Sylva stated that it was practically impossible to recoup such funds from the IOCs.

He declared that no $62bn was anywhere for release by the IOCs and explained that it was best for the government to sit and discuss with the oil firms on how to go about the issue.

The Federal Government had through the Office of the Attorney-General of the Federation written to the IOCs, demanding various sums of money on the basis of the Supreme Court judgment.

The court had ordered the Federal Government to recoup all revenues lost to oil-exploring and exploiting companies due to the wrong profit-sharing formula since August 2003.

Sylva said, “Yes there was a provision in the amended Deep Offshore Act, but when we had crude oil prices above $20 per barrel, the Federal Government should have asked for some form of an increase in its take.

“Unfortunately we didn’t activate that aspect. You will not blame the Federal Government or the oil companies for not activating that aspect of the Act. You will agree that $62bn could not have been sitting somewhere for us to harvest; it is not possible.”

The minister stated that Nigeria was retrogressing in the oil sector, particularly when compared to other nations that started at similar times with Nigeria in the oil and gas business.

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Ghana Emerges 3rd Most Corrupt Country In The World

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Ghana has emerged as the third most corrupt country in the world in the most recent version of Transparency International’s Corruption Perceptions Index.

The West African country scored 67 points in the rankings released earlier this week.

Another African country, Kenya, also made the top 10, occupying the 8th position with 53 points.

Colombia is perceived to be the most corrupt country in the world, according to U.S. News’ 2020 Best Countries rankings, a characterization of 73 countries based on a survey of more than 20,000 global citizens.

In the survey, respondents answered how closely they related each of the countries to the term “corrupt”, the exact meaning of which was left to their own interpretation. The attribute is factored into the Best Countries rankings for transparency, as well as the best countries to invest in and headquarter a corporation.

Colombia, which sees an estimated $14 billion a year in corruption-related costs, experienced a wave of anti-government protests starting at the end of November. A new set of strikes could ensue after protest leaders meet with government officials later this month.

While the country is known for its decades of political scandals, voters recently elected Claudia López, a member of Colombia’s green party and a prominent activist, as the mayor of Bogota. López is the first woman and openly gay individual to become mayor of Colombia’s capital city.

Mexico, known for its deadly drug cartels, follows Colombia as the No. 2 most corrupt country in the 2020 ranking. Myanmar, Guatemala, Saudia Arabia, Brazil, and Bolivia also made the top 10.

Russia, which has been accused of election meddling and Olympic doping, joins the top 10 list this year after placing No. 12 in 2019.

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