By Charles Ike-Okoh
THUR, SEPT 06 2018-theG&BJournal-Three years after a hefty $5.2bn fine was clamped on MTN, the Central Bank of Nigeria is wielding the axe again, this time over the mobile giant’s ‘illegal’ transfer of over $8.134bn out of the country, a charge that is now laced with political undertone and viewed as corporate fraud as well.
MTN is already providing the usual accounting defence of tax remittances from the apex bank claims-and once again observers are discussing the country’s relationship with prospecting foreign investors and those already in the country who contribute to growth. In both situations there is a true structural story concerning investors and there is even more pain in the horizon for MTN, particularly on its bottom line.
Up to a point. The latest charges against MTN questions the clarity or otherwise of its corporate financial disclosure process- which in most countries is a tool so much more powerful. Yet this may prove to be the high point; companies (local or foreign) which potentially have had opaque disclosure procedures will now be thinking hard about the consequences and the unknown cost associated with that.
Again, it should be a clear sign that MTN needs to review or begin a fresh assessment of its level of sanctions risk. A longer term assessment should however start with its shareholders involvement in its financial dealings. There is no dream anymore and they are in some ways the biggest problem of all for MTN.
In all the charges CBN threw at MTN the shareholders had a major mention; it was either about illegal conversion of the shareholders loan to preference shares (interest free loan) or the illegal repatriation of funds through banks to off-shore shareholders accounts, all on behalf of MTN.
MTN’s shareholders, it seems, are in thrall to a conception of themselves as the over-all short-term managers of the company rather than as strategists who should not typically be involved in the day-day operations of the company for the long-term. That is hurting them gravely to a level of crisis mode. It equally has placed them in very difficult position to step back to think about the company’s long-term evolution.
Yet never has it been more needed. If for the past 17 years, for the sake of the argument on continued foreign investments into Nigeria, MTN is a slogan, a company with great institutional focus and norm; the truth is that today it is a company in search of principles, particularly corporate governance principles.
To some degree, the CBN sanctions flows from their frustration of the MTN’s shareholders’ behaviour which seems to follow the extent that all MTN’s shareholders investment was left outside their financial reports to the apex bank over the years and, to the extent that these transactions are shipped off in the name of the shareholders raises dangerous red flags.
While the CBN sanction has its critics, its action is about fixing MTN. Not only would it be extremely important to the overall perception of regulations and regulators in the country, it also cautions the doubters that the Central Bank is ready to stretch their trust that similar misdemeanor in the future will have an even firmer response and consequences for the shareholders and the company.
However, the CBN needs to make sure that this action is calibrated to offer incentive for MTN to continue on its path to going public as intended.
