CBN Debits N5.87bn From Four Banks as Fines

Following a fine of N5.87 billion the Central Bank of Nigeria (CBN) recently imposed on Stanbic IBTC, Standard Chartered Bank Nigeria, Citibank and Diamond Bank, the banking sector regulator has finally debited the accounts of the respective banks.

While Stanbic IBTC on Thursday disclosed in a statement to the Nigerian Stock Exchange (NSE) that CBN has debited its account, a CBN source told the media that the amount has been deducted from the affected banks’ respective accounts at the CBN.

The CBN last week slammed a fine of N5.87 billion on four banks over the violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995, and the Foreign Exchange Manual 2006.

Also affected was MTN Nigeria, which the CBN directed to immediately refund $8,134,312,397.63, which was illegally repatriated by the telecoms company, to the coffers of the bank.

For the banks, the highest fine of N2,470,604,767.13 was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria was fined N1,885,852,847.45.

Citibank also got fine of N1,265,541,562.31, just as Diamond Bank was directed to pay N250 million penalty.

 But Stanbic IBTC in a statement explained: “Following our earlier announcement to the NSE on 30 August 2018, in respect of the penalty of N1.886 billion imposed by the CBN on our banking subsidiary – Stanbic IBTC Bank Plc in relation to the remittance of foreign exchange on the basis of certain capital importation certificates issued to MTN Nigeria Communications Limited, we write to update the NSE that the CBN has debited the account of our banking subsidiary with the CBN for the full amount of the above stated fine advised to the bank.

“Stanbic IBTC Holdings Plc as well as our banking subsidiary maintains our position on this matter, which is the fact that the bank has done nothing illegal and accordingly the bank will continue to provide CBN with documents and details in support of our contention that our actions in relation to these transactions were not illegal.

“Please note that this debit does not impact on the capacity of our banking subsidiary to handle clients’ requests or clients’ ability to continue to carry out viable business transactions with either the bank or any member of the Stanbic IBTC Group, whether in relation to the importation of capital or otherwise.

“Our business transactions will continue to be handled professionally and in a manner that is aligned with Nigeria’s laws and regulatory guidelines.”

Nonetheless, the CBN source who pleaded to remain anonymous, confirmed that the respective accounts of Standard Chartered Bank, Citibank and Diamond Bank at the CBN were all debited as well.

Responding to a question on when MTN Nigeria would refund a total of $8.134 billion as directed by the CBN, the source said talks were still ongoing on when and how the fund would be returned to the country.

CBN Governor, Mr. Godwin Emefiele had explained that the hammer on MTN Nigeria was because the telecom company took liberty for licence in flouting Nigeria’s foreign exchange laws in the manner of the funding of their equity investment into MTN and subsequent capital repatriation that resulted thereafter.

“They brought in $402 million and said about $350 million of that was equity and the balance was loan, and they were issued Certificates of Capital Importation (CCIs) for the equity.

“They later reversed that position when they realised that the loans will not attract the kind of taxation equity investment will attract.

“And they altered the structure of their funding in a clear violation of the spirit and intent of Nigeria’s foreign exchange regulations,” the CBN Governor had explained.

Emefiele had stressed MTN Nigeria manipulated the regulations for maximum profit and tax avoidance, without regards to the laws when they embarked on unauthorised conversion of loans to equity so as to game the system and exploit loopholes.

Meanwhile, both the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) indicated that they do not want to be dragged into the current allegation of $2 billion tax indebtedness by MTN Nigeria to the federal government. 

The Attorney General of the Federation (AGF), Mr. Abubakar Malami, had asked the telecoms company to remit the amount to the federal government having failed in its tax obligation within the past 10 years.

But, MTN had, however, insisted that all pending taxes had been settled.

When it was sought to know the step being taken by FIRS to ensure the taxes are recovered, officials kept mum about the matter.

Although there was no formal statement from the FIRS, a top official of the agency said the matter had to do with import duties and should be handled by the Customs.

The FIRS source said it had limited information on the taxes in questions.

Also, Customs' spokesman, Deputy Comptroller Joseph Attah, told the media on the telephone that other than, "pay your duty and get cleared," the service had nothing to do with the current issue with MTN.