MTN has engaged Eric Holder, the former US attorney-general, to help challenge a $3.9bn fine imposed by Nigerian regulators for the company’s failure to disconnect unregistered mobile phone subscribers.
Mr Holder, who returned to Washington-based corporate law firm Covington and Burling after standing down as attorney-general in April, made an initial visit to Abuja last month to plead with senior Nigerian officials on behalf of the South African telecoms group, according to people familiar with the situation
“His experience as attorney-general in dealing with corporates with a lot of problems was interesting to MTN,” said one person close to the negotiations.
The person said the company hoped Mr Holder’s “experience and stature could inject some balance into the equation”.
As US attorney-general between 2009 and 2015, Eric Holder presided over the biggest corporate settlements in US history. These included the $13bn that JPMorgan Chase paid over the sale of mortgage-backed securities before the financial crisis, and BP’s $18bn fine for the Horizon oil spill.
Proportionately, the penalty facing MTN is much greater at nearly 95 per cent of its earnings in Nigeria — its largest market with 62m subscribers — and 42 per cent for the group. But so far Nigerian authorities have been largely unmoved by company pleading, arguing the figure was computed strictly according to laws set out in 2011.
“Why would Eric Holder change anything? It looks a little desperate, like they couldn’t find anyone with proximity who is able to influence the president,” one senior Nigerian government official said.
Another official said the telecoms group had failed to respond to warnings about how unregistered SIM cards were used by criminals and Boko Haram terrorists to evade surveillance. Security chiefs were particularly incensed, he said, when a terrorist commander was captured with dozens of MTN SIM cards after the deadline set last August for all telecoms groups to disconnect unregistered subscribers.
“At first there were lots of people who said this was a bad signal for foreign investors but when they looked into it they realised that MTN had really messed up,” the official said.
MTN declined to comment on the allegations regarding SIM cards on Mr Holder’s subsequent engagement.
The fine was originally set in November at $5.2bn, roughly $1,000 for each unregistered subscriber. It was then reduced with a deadline of December 31 for payment, but MTN appealed arguing that the regulator had overstepped its authority.
A person close to the talks said MTN still expected to face a large penalty, but was encouraged by a court ruling last week in Lagos giving it until March 18 to reach a settlement. “What they are trying to do is not only come up with a more realistic number that can be paid but also reset the relationship [with government] on a new footing and restore a sense of trust,” the person said.
Umar Danbatta, executive vice-chairman of the Nigerian Communications Commission, said there was no intention to “kill” the company and that the commission would be working towards an “amicable settlement”.
However, the final decision rests with President Muhammadu Buhari. (FT)
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