Former expatriate staff of the MTN Group, Mr. Paul Odunewu has filed a further-reply-affidavit and written address dated 28th December 2023, at the Court of Appeal, Lagos Division, in support of his application praying the Court for an Order to compel the telecommunications giant to deposit with the Court the judgement debt and accrued interest as ordered by the National Industrial Court Nigeria (NICN), Akure Division.
In a judgement by Justice Oyejoju Oyewunmi on 17th September 2017, the court had found that the termination of the employment of the former Network Group Operations Manager on 28th February 2006, was wrongful and malicious; and had ordered the company to pay Odunewu’s entitlements including share options valued at $13,144,512.00.
MTN had faulted the judgement of NICN and appealed on 29th September 2017, through its external counsel, Prof. G Elias & Co., vide a notice of appeal containing two grounds alleging that the court breached their fundamental right to fair hearing. MTN also filed a motion for stay of execution of the judgement, but Odunewu’s counsel, Prof A. B. Kasunmu’s Chambers, opposed the stay of execution motion on the ground that the initiating notice of appeal is not competent.
MTN Group Limited, South Africa (MTNG); MTN Nigeria (MTNN) and MTN International, Mauritius (MTNI) is the first, second, and third Appellant respectively, in this six-year-old appeal which had lasted more than 10 years from the Lagos State High Court to the NICN before judgement was delivered in September 2017.
In his application filed on 8th January 2020, with appeal number CA/1346/2017, Odunewu’s grounds of the motion include assertions that the Notice of Appeal filed by MTN on 29th September 2017, is highly incompetent and does not raise any substantial or recondite issues of law. Also, MTN have been facing huge fines from various Authorities in Nigeria for regulatory and tax infringements and the cumulative impact of these fines raises existential issues for MTN Nigeria and their ability to pay the judgement sum as due at the determination of the case. Furthermore, the appellants (MTN) have not been prosecuting this appeal diligently and expeditiously.
Odunewu supported the motion with financial statements and press releases by MTN (among others). MTN completed in 2019 payment of ₦330 billion Nigerian Communication Commission (NCC) fine, and MTN Group had paid $100 million to lawyers within six months to negotiate the NCC fine. MTN Nigeria reported preferential shares redemption as of 30th December 2019, at a total amount of ₦148.19 billion (or US$399.59 million) in favour of MTN Group. This, consequently, reduced share capital of MTN Nigeria to ₦17.623 billion in 2019 compared to ₦65.145 billion in 2018.
On the 24th of December 2018, MTN announced payment of $52.6 Million as a “notional reversal” of $1.0 billion private placement in 2008 based on certificate that did not have final approval and thereby resolved the $8.1 billion dividend repatriation issue with Central Bank of Nigeria (CBN). A Nigeria Senate Committee had investigated MTN for capital flight and had reported that a total capital inflow of $1.24 Billion was injected for MTN operations in Nigeria for the period 2001 – 2016 whereas MTN Nigeria repatriated $13.92 billion from 2006 to 2016 in the guise of dividends/profit, repayment of loans and licenses/management fee. This meant that MTN, as of 2016, were repatriating US$11.00 for every US$1.00 that they injected into their business in Nigeria.
In a Reply-Affidavit dated 4th February 2022, Temitayo Adeniyi, a lawyer at Kasunmu’s chambers, deposed that MTN “substituted payment of the fines and associated costs with huge debt and are, therefore, running their operations in Nigeria with riskier financial structure than 2014 (before the 2015 NCC fine). In the current Nigerian climate of stronger regulatory oversight, MTN Group redeemed its preference shares and thereby reduced their exposure in Nigeria but created significant financial and economic risk to boost shareholder returns with much higher leverage in 2019 than 2018”. Furthermore, MTN “have not prosecuted this appeal expeditiously but instead they have been prevaricating to regularize the initiating Notice of Appeal dated 29th September 2017 thereby causing enormous delay to the determination of this appeal. The Appellants have failed or are unable to take advantage of this honourable Court’s ruling on the 17th of October 2018, that the Motion for Stay of Execution shall abide the determination of the appeal, which is adjourned to 27th February 2019″. He further deposed: “the entire appeal is a masterful delay tactic, cleverly designed by the Appellants to deny the Respondent from enjoying the fruit of the judgement”.
In a Further-Counter-Affidavit by MTN dated 18th February 2022, one Athanasius Akor, a Lawyer at G. Elias & Co, deposed: “the fact that there is an appeal against the judgement and a pending application for stay of execution are an exercise of the constitutional rights of the appellants”. He deposed that MTN “is not dissipating and is not repatriating its assets out of Nigeria”; and that MTN “conducted an offer for sale of its share on the Nigerian Stock Exchange (NGX) which is a testament of its long term believe and its intention to remain as an active participant in the Nigerian economy.” He further deposed that the 2015 fine has been fully paid since May 2019 and that MTN Nigeria has been making profit and declaring dividends. Mr. Akor deposed that share price of MTN Nigeria jumped to ₦199.8 per share on 17th February 2022. He further deposed that Mr. Odunewu based his analyses on the MTN Nigeria 2018 Audited Account and not the latest 2021 Audited Financial Statement in which MTN Nigeria declared a revenue of circa ₦1.7 Trillion and a profit of circa ₦286 billion. Also MTN“has no financial issues that will prevent them from meeting their financial obligations or paying the judgement debt and accrued interest in the event that the appeal is determined in favour of the Applicant and against the Respondents”.
In a further-Reply-Affidavit sworn to on 28th December 2023, Ejike Mitchel Maduagwu, a lawyer at Kasunmu’s chambers, deposed that MTN Nigeria “is still being investigated for other tax and revenue leakage matters. Meanwhile the Respondents have repatriated out of Nigeria their huge profit and replaced it with huge debt. The huge revenue, profit, and share price in 2021, as reported in the 2021 Audited Account, are unreliable indicators to determine the respondents’ ability or willingness to pay the judgement debt or withstand future shock to their business, be it regulatory, economic, or political”. MTN Nigeria reported in their 2021 Audited Account that the demand notice for ₦242 billion and US$1.3 billion alleged revenue indebtedness is still undergoing review and reconciliation with both Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS). House of Representatives’ (HOR) tax compliance check and alleged US$30 Billion revenue leakage against MTN Nigeria is still undergoing review.
Maduagwu further deposed: “from 2001 till 2021, MTN reported a cumulative total revenue of about ₦13.66 trillion from Nigeria at an EBITDA (operating profit) margin of, at least, 50 per cent or EBITDA of ₦6.84 Trillion minimum. In 2021, MTN Nigeria (sic) reported that they are running their business with a Liability of circa ₦2 trillion”. “The Judgement Debtors are still running their operations in Nigeria with riskier financial structure (characterized by higher Leverage, worse Liquidity, and worse Solvency) in 2021 than in 2014 (before the 2015 NCC Fine). MTN Nigeria liquidity deteriorated by ₦356.99 billion from ₦47.66 billion surplus at the end of 2014 (before the 2015 NCC fine) down to ₦309.333 billion deficit at the end of 2021”.
He deposed that the reported share price of circa ₦200 in February 2022, for each 2 kobo share, “results to ₦10,000.00 for every ₦1 that MTN invested in 2001. The annual yield/interest rate (r) of the Respondents’ investment in Nigeria from 2001 till 2021 is 58%; MTN Group received US$399.59 million in December 2019 as redemption of its preference shares investment of US$2,012,951.31 in November 2007. For every US$1.00 investment MTN Group redeemed US$198.51 as well as annual dividends during the period of twelve years. This gives an annual yield / interest rate (r) of 55 per cent. In addition to substantial annual dividends, the respondents are enjoying investment yield of at least 55 per cent annually which is a much higher rate than the judgement debt default interest rate of 21 per cent annually”.
Odunewu further said that it is in the interest of justice to grant his application and “direct the Respondents to deposit with this honourable Court the judgement debt and interest accrued till a day of fund transfer; or in the alternative, we pray the Court to direct the respondents to provide a bank Guarantee to secure the judgment debt pending the determination of this appeal”.
The trial court had found that MTN Group is the parent company and the life wire of both MTNN and MTNI that controls them and thus integral part of the both companies. Also, MTN Nigeria has no power of its own to act under its contractual agreement with Odunewu except as approved by its Parent Company, MTN Group. The trial Court had ordered that the judgement sums of $13.47 million, ₦2.54 million, and £10 thousand be paid by the second and third defendants (MTNN & MTNI), “except the issue of costs which is to be paid by all the defendants (MTN sic)”. The trial judge had ordered MTN to make the payments within 30 days, failing which the sums would appreciate at 21 percent interest per annum.
