Senate Reveals MTN’s N300bn Proposal as Settlement for Fine

MTN’S PROPOSED N300BN PAYMENT PLAN
• N50bn already paid in “good faith”
• N100bn via electronic transfer between Dec 31, 2016 and Dec 31, 2020
• N80bn investment in Nigerian sovereign debt instruments in 2016-2017
• N70bn through the provision of broadband access to the FG (subject to excess capacity on MTN’s fibre network) for its e-initiatives

The Senate Committee on Communications yesterday revealed that MTN Communications Nigeria Limited has proposed to pay N300 billion ($1.5 billion) in the ongoing negotiations between the company and Attorney General of the Federation and Minister of Justice, Abubakar Malami (SAN), on the N780 billion fine imposed on the network operator by the Nigerian Communications Commission (NCC).

The industry regulator imposed a N1.04 trillion fine on MTN last October for failing to disconnect 5.2 million unregistered subscribers on its network, but later reduced it to N780 billion and gave the network provider till December 31, 2015 to pay up after it had appealed for leniency.

But before the deadline, MTN sued the federal government challenging the power of the federal government and NCC to impose the fine.

Last month, it withdrew the case and paid N50 billion as a gesture of good faith towards the settlement of the fine.

The penitence exhibited by MTN paved the way for negotiations with the federal government led by Malami and the South African-owned firm led by former US Attorney General, Mr. Eric Holder.

At an investigative hearing held yesterday by the Senate committee in the National Assembly, vice chairman of the committee, Senator Adeola Olamilekan (Lagos West) brandished a proposal acknowledged by the Solicitor General of the Federation, Taiwo Abiodun, from MTN wherein the network provider insisted that it could only pay N300 billion.

A breakdown of the proposal which was forwarded to the Ministers of Communications and Finance by the solicitor general as well as NCC executive vice chairman, Prof. Umar Dambatta include the N50 billion already paid by MTN into a recovery account of the Central Bank of Nigeria (CBN) and another N100 billion to be paid via electronic transfer between December 31, 2016 and December 31, 2020.

The proposal also includes another N80 billion proposed payment by MTN as a demonstration of its commitment to and confidence in the Nigerian economy and will be subject to necessary regulatory approvals,

This would come by way of MTN Nigeria committing to purchase N80 billion of Nigerian sovereign debt issued on the international market in 2016-2017.

The last tranche of N70 billion which the network provider proposed will be through the provision of broadband access to the Federal Government of Nigeria (subject to excess capacity on the company’s fibre network) for the purpose of the government’s e-initiatives (e.g. visa processing, public service, connecting schools, registration, etc.).

If accepted, the broadband access valued at N70 billion will commence from the date of the execution of the agreement between the federal government and MTN to December 31, 2020.

Olamilekan, having brandished the document, accused the AGF of deceiving Nigerians that negotiations were still ongoing with MTN, whereas he had already executed an agreement with MTN that will allow the company pay the proposed N300 billion in four years.

However, an official from the AGF’s office dismissed the charge, describing the document as a proposal which he said was not an end in itself but a means to an end.
But Olamilekan disagreed, insisting that the government was only playing on Nigeria’s intelligence and questioned the rationale behind the acceptance of N50 billion from MTN, which was the first tranche of the payment as contained in the proposal, and yet claiming that negotiations were still ongoing.

The session was attended by Minister of Communications, Mr. Adebayo Shittu, Dambatta, another representative of the AGF, Mr. Dayo Apata, MTN’s Chief Executive Officer, Mr. Ferdinand Moolman, acting Director of Banking and Payment System Department of the CBN, and the Accountant General of the Federation, Mr. Ahmed Idris.

The meeting revealed how the AGF and presidency kept NCC and Shittu in the dark in the negotiations with MTN on the fine.

While Shittu said he was not part of the entire negotiation process, Dambatta said NCC was not responsible for the reduction of the fine from N1.04 trillion to N780 billion, saying it was only invited to a meeting of an inter-agency committee set up by President Muhammadu Buhari.

He said the committee reduced the fine by 25 per cent following the president’s approval after MTN wrote a letter of apology to the government.
Both Shittu and Dambatta said they were not aware of negotiations between Malami and MTN that led to the payment of N50 billion by the latter into the CBN recovery account on February 24.

Shittu maintained that the matter was between Malami and MTN. According to him, since the matter went to court, his ministry and the NCC had virtually been kept at arms length on the matter, adding that when MTN indicated its decision to settle the matter out-of-court, the AGF gave it two conditions for the out-of-court-settlement.

He listed the conditions to include making a down payment of six per cent of the total fine, amounting to N50 billion first, and withdrawal of the suit, both conditions which he said MTN fulfilled.

In his submission, Dambatta disclosed that the fine of N1.04 trillion imposed on MTN by NCC was predicated on a charge of N200 per line that was not registered by the company, in line with its directive at the time.

However, he said the negotiations on the N1.04 trillion fine down to N780 billion was handled by an inter-agency committee set up by the president to look into the fine, to which he said NCC was invited.

According to him, based on a letter of apology written by MTN and its remission, Buhari gave approval to the committee to reduce the fine by N25 per cent, thus bringing it down to N780 billion.

He further disclosed that NCC was not informed about the move to settle the case out of court neither, nor was it a party to the payment of N50 billion to CBN.
On its part, MTN explained that the process leading to the payment of N50 billion began when it made its intention to settle out-of-court known to the AGF.

According to MTN’s chief executive, who echoed the communications minister’s submission, the AGF had informed them that the federal government’s interest in the matter would be dependent on MTN’s preparedness to fulfill the two conditions enumerated by AGF, which he said MTN fulfilled.

But the representative of the AGF who said Malami was unavoidably absent due to a trip out of the country, said on January 22 while in court, MTN had indicated its interest in settling the matter out of court and after being told to do so in “good faith”, by meeting the two conditions, it requested for a long adjournment, which he said was granted by the court.

He said it was these actions that led to the adjournment of the case to March 18 by the court.

When asked why MTN was asked to pay the money into a CBN account and not the NCC account, Apata said he did not know.

However, the accountant general said though his office was not involved in the negotiations, he only got involved in the matter when the AGF asked him to facilitate the opening of an asset recovery account with the CBN. He said the account was credited with N50 billion on February 24.

When the committee questioned the AGF’s representative on the legality of the account, he said he was not in a position to say whether it was legal or not.

Through out the questioning the Senate committee did not conceal its displeasure with the entire process, with Olamilekan demanding to know the right of the AGF to enter into negotiations with MTN while sidetracking other major stakeholders – Ministry of Communications and NCC – in the matter.

He accused the AGF and accountant general of having ulterior motives in the matter by taking over the jobs of NCC and Ministry of Communications.

Also speaking, Senator Abiodun Olujinmi (Ekiti South), said impunity usually begins with the abuse of a process, saying having served on the board of NCC, imposition of fines on telecommunications company by NCC was a regular norm.

According to her, such fines are usually paid into the NCC account, for subsequent transfer by NCC into the Federation Account.

According to her, Malami and Idris had shaved the heads of Shittu and NCC in their presence by totally taking over their jobs.

She described the entire negotiation process as “voodoo” and faulted the opening of a recovery account for money that was not stolen, describing it as a clandestine move to circumvent due process.

She also queried the rationale behind the determination of 6 per cent of the fine, amounting to N50 billion paid by MTN.

“You asked them to pay 6 per cent of N780 billion. And you said it was in good faith. Who determined that? You asked them to withdraw the case from court and you said the case is still in court,” she said.