After coming out all guns blazing, Nigeria\u2019s central bank surrendered some ground in its tussle with MTN Group Ltd, pledging that a dispute over the repatriation of $8.1 billion in dividends from the country will soon be resolved.<\/p>\n
Examiners from the central bank are reviewing documents provided by Johannesburg-based MTN and four banks accused of moving money out of the continent\u2019s biggest oil producer without the regulator\u2019s final authorization, Governor Godwin Emefiele told reporters on Tuesday in the capital, Abuja.<\/p>\n
He also clarified that the regulator had initially wanted MTN to reverse the flows and that there was no liability on behalf of the lenders.<\/p>\n
\u201cWe\u2019ll resolve the matter,\u201d Emefiele said. \u201cEveryone will be happy\u201d from MTN and the lenders to the Central Bank of Nigeria and the government, he added.<\/p>\n
Nigerian authorities are changing their tone after coming under criticism that the impasse with MTN and lenders including Citigroup Inc., Standard Chartered Plc, Standard Bank Group Ltd. and Lagos-based Diamond Bank Plc threatened to spook investors. The regulator had initially demanded MTN and the banks refund the money, spurring the biggest collapse in MTN\u2019s stock in 20 years.<\/p>\n
\u2018Erratic Nature\u2019<\/strong><\/p>\n \u201cThe erratic nature of the CBN – and perhaps even the manner in which its position has been articulated in the MTN saga – will at the minimum highlight concerns regarding the business environment in Nigeria,\u201d said Ryan Cummings, a director at Signal Risk, which advises companies in Africa. \u201cAnd, at worst, illustrate that the country is a jurisdiction where state involvement could occur with detrimental consequences should there be political capital to derive from it.\u201d<\/p>\n MTN\u2019s shares rose 2.6% by the close in Johannesburg, gaining for a fifth straight day after the company last week announced it provided extra information that may lead to an \u201cequitable resolution.\u201d That pared losses to 23% since Aug. 29, the day before the central bank demanded the company return the money.<\/p>\n \u201cThe CBN now is trying to be as diplomatic as possible while at the same time they just shot themselves in the leg,\u201d said Abiodun Keripe, head of research and strategy at Elixir Investment Partners in Lagos. \u201cThey said these guys have erred and all of a sudden you are now talking about making them happy. All of these will form a precedent going forward, how they manage it is critical.<\/p>\n It would be good if there is a soft landing just for the health of the economy and the capital market.\u201d<\/p>\n Positive Step<\/strong><\/p>\n Earlier on Tuesday, Johannesburg-based Standard Bank said the central bank won\u2019t take at least $2.63 billion from the accounts of its local unit and that the central bank may review an earlier penalty.<\/p>\n Standard Bank\u2019s Stanbic IBTC, Standard Chartered, Citigroup and Diamond Bank were fined about $16 million between them for repatriating the dividends. The central bank had already taken the fines by debiting the accounts of Stanbic IBTC and Diamond Bank.<\/p>\n Emefiele said the regulator had originally sought documents detailing the transactions in May and extended this by another two months before making the announcement.<\/p>\n Representatives in Lagos for MTN and Citigroup declined to comment, while a spokeswoman for Diamond Bank said she was unable to provide a response. A spokesman for Standard Chartered didn\u2019t answer a phone call or immediately respond to a text message. The accusations against MTN – including allegations by the attorney general\u2019s office that it owes $2 billion of back taxes – come as President Muhammadu Buhari\u2019s administration faces criticism of its economic management in the run-up to the elections.<\/p>\n Two years ago, MTN negotiated a $5.2 billion fine down to about $1 billion plus a commitment to list its local business in Lagos. That penalty was related to subscribers that weren\u2019t properly registered in the country.<\/p>\n \u201cIt\u2019s a shoot-first-and-think-later scenario,\u201d Kayode Omosebi, an analyst at Lagos-based Asset & Resource Management Co, said on the central bank\u2019s handling of the MTN matter. The CBN should \u201ctake their time and do some analysis before coming out to the market,\u201d but at least investors now \u201cknow that things may not be as bad as the CBN put it initially.\u201d<\/p>\n
\nBack Taxes<\/p>\n
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