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MTN’s Shares Drop 23% After CBN’s $8.1Bn Sanction

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MTN

The shares of the MTN Group dropped as much as 23 per cent to a nine-year low, yesterday, a day after the Central Bank of Nigeria (CBN) ordered the telecoms firm to repatriate $8.1 billion alleged to have been sent abroad illegally.

The News Agency of Nigeria (NAN) reports that at trading on the Johannesburg Stock Exchange, MTN shares were down 21.4 per cent at 84.35 rand, after touching 83 rand, a level last seen in 2009.

The CBN’s demand is the latest setback for MTN Nigeria, the South African group’s most lucrative but increasingly also its most problematic market.

It comes two years after MTN, Africa’s biggest telecoms company, agreed to pay a fine of more than $1 billion for allowing the use of millions of improperly unregistered SIM cards on its network.

But in a statement, MTN Nigeria refuted the CBN’s claim in strong terms.

Signed by its public relations manager, Funso Aina, MTN said it received a letter on August 29 from the CBN alleging that the Certificate of Capital Importation (CCI) issued in respect of the conversion of shareholders’ loans in MTN Nigeria to preference shares in 2007 had been improperly issued, and that consequently, the historic dividends repatriated by the telecommunications firm between 2007 and 2015 amounting to $8.1 billion needed to be refunded to the apex bank.

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It claimed no dividends have been declared or paid by the Nigerian arm other than pursuant to CCIs issued by its bankers with the approval of the CBN as required by law.

He explained that the issue surrounding the CCIs has already been the subject of a thorough enquiry by the Senate of Nigeria.

According to him, “in September 2016, the Senate mandated the Committee on Banking, Insurance and other Financial Institutions to carry out a holistic investigation on compliance with the foreign exchange (monitoring and miscellaneous) act by MTN Nigeria and others.

In its report issued in November 2017, the findings evidenced that MTN Nigeria did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria.”

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Aina said MTN Nigeria, as a law-abiding body, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria.

Promising to “engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available,” MTN, however, added: “The re-emergence of these issues is regrettable, as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.”

This concern was re-echoed by Greg Davies of boutique investment house, Cratos Capital, in Johannesburg, who noted: “You just can’t do business in an environment where these type of things are going to happen.”

The CBN’s director of corporate communications, Isaac Okorafor, said on Tuesday that investigations specifically revealed that $3.45 billion was allegedly repatriated by Standard Chartered Bank on the basis of illegally issued CCIs.

Similarly, “$2.63 billion, $1.76 billion and $348.9 million were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc between 2007 and 2015.”

Okorafor said the investigations by the CBN in March 2018 became necessary, following allegations of remittances of foreign exchange with irregular CCIs issued on behalf of some offshore investors of MTN Nigeria.

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Already, the CBN has ordered the managements of the four banks and MTN Nigeria to immediately refund the $8.1 billion allegedly repatriated by the company to the coffers of the apex bank.

Figures obtained from the CBN yesterday showed that the highest fine of N2.47 billion was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria got N1.88 billion. Citibank Nigeria is to pay N1.26 billion and Diamond Bank N250 million.

The CBN investigation further revealed that on account of the illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) worth $399.5million, the company illegally repatriated $8.13 billion.

Okorafor said the investigations were thorough and allowed all the parties a fair hearing. He advised banks and multinational companies in Nigeria to adhere strictly to extant regulations in their foreign exchange transactions.

Business News

Boeing Shares Continue To Slide As Countries Ground 737 MAX Planes

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Boeing Shares Continue To Slide As Countries Ground 737 MAX Planes

Boeing shares have continued to slide on Tuesday as a growing list of countries move to ground the aircraft manufacturer’s 737 MAX model jets after the crash of an Ethiopian Airlines flight on Sunday killing a hundred fifty-seven persons.

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Boeing’s stock price has fallen nearly twelve percent since the accident, erasing roughly twenty-eight billion dollars in value amid concerns the accident could have links to last October’s crash of a 737 MAX 8 operated by Indonesia’s Lion Air. A hundred eighty-nine persons died in that one.

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Although experts warn that it’s too early to know what caused the Ethiopian Airlines crash, both crashes occurred shortly after takeoff. Experts say, that suggests a possible connection.

Bloomberg reports the Boeing 737 is the best selling aircraft in history.  The MAX is its newest version, with more fuel-efficient engines.  It is also generates almost one-third of the airline maker’s operating profit.

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Business News

SA Banks Stop Supply Of US Dollars To Zimbabwe

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SA Banks Stop Supply Of US Dollar To Zimbabwe

South African banks have stopped supplying Zimbabwe with U.S Dollar notes saying they want to avoid risk. They cite Zimbabwe`s loss of a hundred correspondent banking relationships in the past few years because of the country`s high risk rating.

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South African banks have been the major sources of U.S dollars for Zimbabwe since 2009.

Zimbabwe Reserve Bank Director, William Wanimanzi says the development is a result of the country`s failure to follow proper dollarization procedures, signs of which he said are now catching up with the country`s fragile economy. He said the country is not officially dollarized because it does not have an agreement with the United States government to use its currency. He says this will make it difficult to take in cash into the economy.

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African News

Zimbabwe Central Bank Abandons Quasi Dollar

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Zimbabwe Central Bank Abandons Quasi Dollar

Zimbabwe Central Bank has abandoned the quasi dollar it introduced in 2016.  The peg of one Zimbabwe dollar to one US dollar has not worked as the black market rate has been in the range of three and a half to four Zimbabwe dollars to one U.S. dollar.

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Economists say this move could lead to jitters in countries that hold the peg, including Saudi Arabia and Hong Kong.

Zimbabwe has long been dealing with currency instability that in 2009, it introduced the US dollar, euro, and the South African rand as legal tenders it thought would stem the wild round of hyper-inflation.

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