Full details why CBN imposed N5.87bn fine on Stambic IBTC, Diamond bank, others

Fresh facts have emerged on why the Central Bank of Nigeria (CBN imposed heavy sanctions totaling N5.87 billion on Standard Chartered Bank, Stanbic-IBTC, Citibank, and Diamond Bank for helping MTN to repatriate $8,134,312,397.63 illegally.

Standard Chartered was fined N2.4 billion, Stanbic IBTC Bank, N1.8 billion; Citibank, N1.2 billion, and Diamond Bank, N250 million.

The CBN also asked the banks and MTN to refund $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”.

Announcing the decision in Abuja, CBN’s Director, Corporate Communications, Isaac Okorafor, said in a statement that the actions of the apex bank became necessary following allegations of remittance of foreign exchange with irregular Certificates of Capital Importation (CCIs) 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.

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

He 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.

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.

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.

In a letter by the CBN to MTN, the apex bank said its investigations revealed among others that the shareholders of MTN invested the sum of $402,590,261.03 in the company from 2001 to 2006 and that 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, Citibank and Diamond Bank.

The bank added that “the CCIs issued at the time of the investment by the above banks to your organisation 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.

“However, a review of your organisation’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.”