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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.

BIG STORY

WAEC Releases 2020 WASSCE Timetable, Exams To Start August 17

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The West African Examinations Council has released the timetable for the 2020 West African Senior School Certificate Examination, The PUNCH is reporting.

The Federal Government had announced the resumption of graduating pupils beginning August 4, noting that WASSCE would begin effective August 17, 2020, through September 12, 2020.

WAEC Nigeria in a statement on Tuesday signed by its Head of Public Affairs, Demianus Ojijeogu, advised candidates to disregard other versions of the examination timetable in circulation.

The statement was titled, ‘WAEC Releases Timetable For The Conduct Of West African Senior School Certificate Examination For School Candidates, 2020’.

The statement read, “The West African Examinations Council, Nigeria wishes to inform its stakeholders-schools, parents and candidate-that the Final International Timetable for the conduct of WASSCE for School Candidates, 2020 has been released.

“The Council notes that several versions of the examination timetable have been in circulation and enjoins the general public to disregard them as they did not emanate from it.

“The examination which has been slated to begin on Monday, August 17, 2020, will end on Saturday, September 12, 2020.

“The Council hereby urges the candidates to abide by the rules and regulations guiding the conduct of the examination by shunning all acts of malpractice and obeying all Covid-19 protocols that have been put in place at the examination centers.

“This is wishing the candidate’s success in the examination.”

Ojijeogu in a chat with our correspondent said details of the timetable would follow.

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BIG STORY

Financial Recklessness: Pondei, Other NDDC Staff Spent N5bn As Medical Allowances During Lockdown —- Senate Report [Full Breakdown]

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The Senate report on the alleged financial recklessness in the Niger Delta Development Commission has revealed how the top management of the agency shared N4.9bn among themselves in the guise of medical checkup.

The document also showed that the management paid N114.9m as a supplementary medical allowance to 26 staff members during the same period.

It stated that both disbursements were made when the nation was under lockdown to check COVID-19 spread.

The report was adopted and approved by the Senate shortly before it proceeded on its annual recess penultimate week.

A copy of the document obtained by our correspondent in Abuja on Monday indicated that the monies were paid to the individual accounts in March and April this year.

The document indicated that the acting Managing Director, Daniel Pondei, and the two executive directors got N14.2m each.

The report noted that no such payment took place during the first Interim Management Committee led by Joi Nunieh.

It nonetheless, stated that available data showed that the allowance had been in existence even though it appeared to have no specific policy underpinning it.

The report stated, “The three members of the Interim Management Committee received the highest amount of N142m each.

“Two other people, namely Evan Caroline Nagbo and Ms Cecilia Akintomide, took N12,387,500 each, while Peter Uwa Edieya was paid N10,340,000.

The report further added that four other members of staff collected about N8m each while 140 others collected an average of N7m each.

The NDDC management also paid 75 others N6m each while 153 staff members were paid N5.5m.

Four other categories of staff were paid between N4.1m and N4.8m while seven others got about N3m each.

The document further indicated that 804 staff members collected between N2.4m and N2.9m each.

Apart from these, the document showed that the management paid N114.9m as a supplementary medical allowance to 26 staff members.

No fewer than 15 of them got N7m while one of them collected N5.2m.

The rest however collected between N375, 000 and N550, 000 each.

The report indicated that “payment to all the 1,401 staff who received the allowance was made on 16 March 2020.”

It added that the distribution of the payment category and the number of staff did not suggest a regular hierarchical pattern and an absence of clear policy, which raised suspicion of arbitrariness.

The report also stated that the NDDC management used staff members for the distribution of Lassa Fever kits.

It explained that Personal Protective Kits were given to the 185 LGAs of the Niger Delta states through the NDDC staff.

The staff members, according to the document, were paid various amounts, ranging from N300,000 to N6,845,000, on April 15, 2020, for the distribution of the kits.

The report stated, “The total amount used for the distribution is N55,090,000.

“Twenty-nine employees were engaged in ‘Monitoring of the Emergency Response Programme on Lassa Fever Outbreak at a cost of N5,972,500’.

“NDDC did not provide any returns on the end-user beneficiaries which would have helped in evaluating the accountability and transparency of the programme. There was also no mention of the original target beneficiaries.

“NDDC management did not provide details of allocation of the Lassa fever Protective Kits per each state and LGA and how the distributors were assigned as well as the collated report on the distribution exercise.

“They should have justified the huge amount of money allocated for the exercise.”

The report further added that by its own record. NDDC spent N808.9m as imprest between October 29 2019 and May 23. 2020.

It stated that “this covers a period of seven months during most of which the nation was on lockdown.

“Given that significant amount was also expended on travels, duty tour allowance during this period, payment of bills, it is difficult to justify this huge amount as imprest necessary for the services of the commission.”

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BIG STORY

mediaReach OMD Employs Data On Media Consumption To Aid Businesses In Navigating The New Normal

Peter Okunoren

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mediaReach OMD, a frontline marketing and media agency, had during this period of the coronavirus (COVID-19) pandemic, guided media planners, buyers, and businesses in their investment bid with data-driven newsletters on media consumption habit to maximize profits and increase productivity and to navigate the new normal.

Published in ThisDay Newspapers and titled “COVID-19 and Media Consumption Habit, What has Changed?,” the newsletters are a culmination of the sequence of information aimed at examining the potential impact of the pandemic on audience behaviour and media consumption in Nigeria.

It also contains thought starters and needed actions regarding adaptation of the definition of the new normal posed by the pandemic.

Against this backdrop, the Managing Director of the Agency, Nitinchandra Nandekar, said the firm has been monitoring changes in media consumption and adapting to innovative ways of connecting with the target audience, through data-led approaches to guide clients’ investments during the COVID-19 lockdown/post lockdown.

Nandekar avowed that while businesses, especially the marketing and media ecosystem waits for an end to this deadly disease which has dealt a hard blow on world economies, the journey to success will continue to be guided with key principles, including being ready for the day after.

The foremost media agency with presence in Nigeria, West, and Central Africa, posits that media consumption which is in favour of the TV continues to be stable with much attention on genres like news and entertainment, while businesses are now adopting a more creative and innovative form of operations with adaptation to the new normal.

Commending the media agency for these initiatives, the Chairman and Managing Director of Expand Global Industries Limited, Rajat Kapur, said as a global partner of Henkel for Media Investment Solutions, MediaReach OMD helps not only in the normal ways but regularly releases data-driven media intelligence information newsletters which ensure that Henkel is prepared to deal with the new normal characterised by the pandemic.

This, he said, contains the changing consumer habits, the higher need for hygiene-based products and the changing media landscape, all highlighted for a better clearer and stronger media investment leading to best in class equity development of Henkel’s brands.

In his remark, the President of the National Institute of Marketing of Nigeria (NIMN), Tony Agenmonmen, said the breakout of the pandemic has been a defining moment for the world.

He affirmed that the deadly disease came with uncertainty and fear because no one knows exactly what was going on, not even the experts, including the World Health Organization (WHO) which has been struggling a bit.

“A bewildered world therefore became anxious and hungry for news. And with the lockdowns in almost all parts of the world, consumers were hungry for information. They tried to stay connected to all the news about the pandemic and social media was the greatest beneficiary,” he said.

Agenmonmen continued “It helped that some brands understood this and were able to help in providing the information in ways that were not seen as exploiting the fears and worries of consumers. Six months down the line, it appears that the world has come to accept that we will have to live with it for an indeterminate while. The fears remain.”

On the importance of data to investment, the NIMN President remarked that without it, organisations cannot plan their daily activities properly. “Data is life, it is very critical in running your day-to-day investment. If you have the right data, then you are on the right path to success,” he avowed.

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