Thread by @yinkanubi

Thanks to all who read and shared this thread. Based on the feedbacks I got, I felt the need to answer some of the questions raised and to elaborate on some points. The Ultimate goal is to ensure that people are better informed about this topic #MTNRefund

https://twitter.com/yinkanubi/status/1035555089904226304

1. What is CCI and why is it important?

CCI means – Certificate for Capital Importation. It is issued on evidence of importation of foreign exchange into Nigeria for the purpose of investment in a local company. This investment can be in form of cash or equipment. #MTNRefund

The rule is that once you import FX to invest in a company in Nigeria you must sell the FX to the bank within 24 hours of inflow and the bank will issue a certificate for capital importation (CCI) IFO the investor. The CCI must indicate whether it's for Equity or loan. #MTNRefund

Why is the CCI important?
a. Because govt uses the data to determine the volume of FDI inflow into Nigeria.
b. Because you will require the document in the event of repatriation of dividend or repayment of loan + interest. This brings me to my second question. #MTNRefund

2. What is the connection between $402m and $8bn?

The $402m was the total amount in cash and equipment that MTN shareholders invested into MTN Nigeria between 2001 – 2006. CCI was issued for this amount at the initial. ($59m as loan and $343m as Equity). #MTNRefund

With this investment, MTN made enough to pay dividend of $8.1bn between 2007 – 2015. In other to be able to pay the dividend to its shareholders, MTN needed the CCI to bid for FX. This is to show that it invested equity to which it is entitled to collect the dividend. #MTNRefund

3. Why did SCB need to apply again for CCI to convert MTN shareholders loan to Preference shares?

Because if it remained a loan, they would only have been able to pay back the $399m it claimed to be shareholders loan + interest. #MTNRefund

But with the conversion to preference shares (equity), they can pay dividend (which can be considerably higher or lower than loan amount depending on performance) to the preference shareholders. Hence the $8 Billion repatriated. #MTNRefund

4. Why did the CBN allow MTN to repatriate $8.1bn when it had not given final approval?

When SCB applied for CCI for the conversion of MTN’s loan to preferred shares, the CBN gave an AIP (Approval-In-Principle) with a caveat that they fulfill 2 conditions before final approval.

According to CBN, those conditions were not met. The bank issued the CCI and with it, they got FX to remit as dividend. What this shows is a clear lack of coordination between units in the CBN & banks. There was no tracking done to flag FX deals connection to this CCI. #MTNRefund

I must add that this was the period when CCI was issued manually. Currently, the process is electronic (eCCI) and more efficient. Apart from easier CBN monitoring, a eCCI benefit is that requests requiring CBN’s approval are now sent online and status easily tracked. #MTNRefund

6. What rule did MTN violate and what are the sanctions?

According to the CBN, MTN violated the FX Act and Foreign Exchange Manual. They didn’t state the exact section. But we can assume they are talking about Section 15 of the Act and Memorandum 22 of the manual. #MTNRefund

However, those sections in the Foreign Exchange Act and the Foreign Exchange Manual had nothing to say about “irregular or illegal CCI” which is the text used in the CBN accusation and communication to the bank and MTN. It is very important to establish "the offence". #MTNRefund

What are the sanctions prescribed?

I really do not know. Maybe experts on this subject can educate us whether there is truly a “Refund” sanction anywhere in the CBN rules book and guidelines. Because I do not think there is any precedence for this. #MTNRefund

7. Could the annoucement have been better handled by CBN?

I think so. They cld have coordinated with other agencies like SEC which is presently processing approval for MTN’s IPO or at least give them a heads up because it looked like they were blindsided by the news. #MTNRefund

8. Why is it wise for you to just take a ring side seat and just watch?

Because there are too many variables that you do not know.

a. You don’t know what was in the initial CCI obtained when Capital was imported.
b. You don’t know what is in the MTN Financials. #MTNRefund

c. You don’t know the decision in 5B of the MTN Board Resolution that CBN insisted must be implemented before giving their final approval.
d. You don’t know the shareholders and/or final beneficiaries of the MTN preference shares. #MTNRefund

e. You don’t know if the banks have admitted full or partial culpability to the CBN.
f. You don’t know what the CBN knows about the investment and operational practices of this investor called MTN.
g. You don't know what is in the MTN SHA (Shareholders Agreement). #MTNRefund

When you have these much information that you do not know save for what the parties involved have chosen to share to the public, you are better off quietly observing until better information is available in the public domain. #MTNRefund