Nigeria central bank files counterclaim in escalating MTN dispute

05 October 2018 - 16:21 By Chijioke Ohuocha
A man passes an MTN board in Lagos, Nigeria.
A man passes an MTN board in Lagos, Nigeria.

The Nigerian central bank has filed a counterclaim to a court request by MTN which sought to stop the bank from forcing it to repatriate $8.1-billion (R119-billion), the South African telecoms company's lawyer said on Friday.

The move escalates a dispute between MTN and the monetary authority in its biggest market, which accounts for a third of its annual core profit.

The dispute started an Aug. 29 after the Central Bank of Nigeria (CBN) ordered MTN and its lenders to bring back to the country the funds which it alleged the company had sent abroad in breach of foreign exchange regulations.

"MTN had gone to court, sued the central bank and the attorney general. The central bank has filed a response and a counter claim, meaning that nobody can resort to self-help in the matter any longer," MTN's lawyer, Wole Olanipekun, told Reuters.

"With this development everybody has now surrendered... the grievances to the court. Everybody has to wait for the decision of the court."

MTN will file a reply to the bank's claim, he added.

The central bank has also asked a Lagos court to make MTN pay 15% annual interest on the $8.1-billion (R119-billion), according to court documents seen by Reuters.

It also asked the court to dismiss MTN's case seeking to stop the bank's order for the telecoms firm to repatriate the funds back to Nigeria, the documents showed.

CBN spokesman Isaac Okorafor said the central bank "is aggressively engaging MTN and the banks and I'm hopeful that an amicable resolution will soon be achieved".

Shares in MTN were trading 4% down by 12.50 GMT, having earlier fallen as much as 8.5% to R79.85, their lowest level since Sept. 21. They were still the worst performer in the Johannesburg stock exchange's top 40 index.

"The market is seeing that (the CBN move) as going back to that aggressive stance they had right at the beginning," said Greg Davies, equities trader at Cratos Capital.

The telecoms firm is also facing a $2-billion (R29.4-billion) tax bill from Nigeria's attorney general, the demand for which MTN has also asked the court to halt to protect its assets in the country. Olanipekun said MTN has received no response from the attorney general.

Central Bank Governor Godwin Emefiele has said MTN is "systemically important" to Nigeria, adding that the company and its lenders have written to the bank and provided documents on the matter.

MTN's latest troubles come about two years after it agreed to pay more than $1-billion (R14.7-billion) to settle a dispute over SIM cards in Nigeria, whose finances have been hit by a weak economy and volatile global oil prices.

The crux of the latest alleged infraction, related to the fund transfer, was that the telecoms firm did not obtain final approval before moving the naira equivalent of $8.1 billion (R119-billion) from its profits out of Nigeria, the central bank has said, adding that MTN would be refunded in naira.

MTN's lenders; Standard Chartered, Stanbic IBTC Bank, Citibank and Diamond Bank were also fined in connection to the money transfer. 

- Reuters