Nigerian central bank in $8 billion court battle with telecoms company

Nigeria’s central bank is being sued by South African telecoms company MTN in a dispute over the alleged illegal repatriation of profits.

The Central Bank of Nigeria alleged on August 29 in a statement on the social media network Twitter that MTN’s Nigerian subsidiary had breached Nigeria’s foreign exchange regulations. The CBN said MTN and four commercial banks would have to “refund” over $8.1 billion in profits, which it said had been illegally repatriated to South Africa.

The fine is by far the largest the central bank has levied on any firm. The central bank’s public statements provide very little detail of MTN’s alleged breaches of forex regulations.

The South African firm is now challenging the central bank’s fine in Nigeria’s courts, according to a report in a local newspaper republished by the website AllAfrica.com.

A judge in the Federal High Court in Lagos set December 4 as the date for an initial hearing in the case, local newspaper Leadership reported. MTN has named both the central bank and the Nigerian federal government’s attorney general, Abubakar Malami, as defendants in the suit.

The South African company’s lawsuit claims that the central bank acted outside its legal powers, in an “illegal, oppressive, abusive, unauthorised and unconstitutional” manner, the newspaper said.

The same central bank tweet in August also announced it was fining four commercial banks for breaches of regulations. It levied a fine of 2.4 billion naira ($6.6 million) on the Nigerian operation of Standard Chartered, 1.8 billion naira local bank Stanbic, 1.2 billion naira on Citibank and 250 million naira on another local firm, Diamond bank.

In a public statement on September 21, the CBN confirmed it was fining the four banks “due to irregularities with respect to repatriations made on behalf of MTN Nigeria Limited”.  The central bank statement added: “In response to the recent regulatory actions, the banks and MTN are engaging the CBN and have provided additional information, which is currently being reviewed with a view to arriving at an equitable resolution.”

In its September statement, the central bank said it wanted to assure investors that the integrity of its foreign exchange regime “remains sacrosanct”. It said there would be “no retroactive application of foreign exchange rules and regulations”.