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Adebayo Okeowo: Nigeria & Big Business – Putting MTN’s Penalty in Perspective

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When in July 2015, it was reported that BP had been fined a staggering amount of $18.7 Billion for the 2010 fatal oil spill in the Gulf of Mexico, environmentalists objected that the court was too lenient in its fine.

But when telecoms giant – MTN was recently fined by the Nigerian Communications Commission (NCC) to the tune of $5.2 Billion for failing to deactivate a whooping 5.2 million unregistered SIM users, economic analysts described it as an excessive penalty. Some even suggested that it was Nigeria’s way of generating money following the global oil decline.

Why can’t this be seen for exactly what it is: a government taking the responsible step to regulate activities of corporations within its space? Nigeria has been severely accused for having weak regulations which allow corporations take advantage of the loop-holes to act irresponsibly. But now that the ropes are being tightened, some people are crying foul. Why should it be ok for the NCC to lax in its penalty just to play nice?

The NCC has stated that MTN was fined so high because unregistered SIM cards pose a threat to national security particularly in light of the Boko Haram insurgency. Why then is the NCC being chided for taking the initiative to curb unacceptable corporate behaviour whereas MTN is getting sympathy for failing to abide by the rule books? Ask the average Nigerian, and they will likely tell you they wish MTN could also be fined for poor service delivery.

Some have actually claimed the fine to be unfair because it makes up 1/4 of MTN’s total asset and may as a result push them out of business. But my question is: should the fairness of the fine meted out be based on MTN’s profit margins and its ability to pay or the magnitude of the problem being addressed – which in this case is: ending terrorism and other criminal acts. I believe the latter should be the litmus test for fairness. It is the reason the Gulf of Mexico settlement was deemed insufficient because the oil spill claimed 11 lives and 4.2 million barrels of oil were spilled over a period of 87 days!

If you are familiar with corporate behaviour in Africa as compared to the rest of the world, you will know that corporations have constantly exploited weak regulatory bodies to get away with a lot that they wouldn’t dare attempt in the Global West. It is due to this disparity that a global treaty is now being crafted to regulate businesses and multi-national corporations, so that a minimum standard is maintained whether you are operating in the New Zealand or in Angola.

MTN is already engaging with the NCC to request a lesser fine or be given the allowance to stagger the payment. This, I believe is the way to go.

As for the speculations that NCC’s fine will discourage foreign investment; investors don’t avoid territories because they may be slammed with a fine. They avoid them because they are unstable and unprofitable. So the quest should be to make Nigeria more stable and safe and the investments will come.

Photo Credit: Dreamstime | Ammentorp

Adebayo Okeowo is a human rights lawyer whose experience traverses both government and private organizations. He is currently engaged with the Commonwealth Human Rights Initiative and is the founder of the White Code Centre (www.whitecodecentre.org).Twitter: @AdebayOkeowo

34 Comments

  1. OddB

    November 4, 2015 at 8:47 am

    To be frank, this is quite an irresponsible article that does little to objectively analyse both sides, current events and the message that can be inferred from a fine like this.

    While our president is busy going about begging foreign investors to come and “help” us, we are here imposing ridiculous fines on foreign companies (MTN and STANBIC). By the way, let us not even get started on

  2. OddB

    November 4, 2015 at 8:55 am

    To be frank, this is quite an irresponsible article that does little to objectively analyse both sides, current events and the message that can be inferred from a fine like this.

    While our president is busy going about begging foreign investors to come and “help” us, we are here imposing ridiculous fines on foreign companies (MTN and STANBIC). By the way, let us not even get started on the FRC and what they are up to.

    In this state of dire need for foreign investment, what a way to boost investor confidence.

    And yeah to even to compare it to the BP Macondo spillage shows a lack of understanding on the part of the writer. Even IOCs operating in Nigeria have been fined heavily for such environmental degradation that have tendencies to have effects on our habitat for generations via bio accumulation and other means.

    Finally, I think we should call it what it is; we are broke and are using any means necessary to raise funds while putting on the hat of decency, but we must learn to strike a balance so as not to drive those that we are begging to “help” us.

    Safe y’all.

    • Ephi

      November 4, 2015 at 9:59 am

      OddB, I suspect you are a staff of MTN.
      Well, it is a simple issue, a company either shapes up or ships itself out. It is not by force to do business in any country, Nigeria inclusive.

      The writer is spot on with this article and it is completely appropriate to compare it to the BP spill – both companies were fined for negligence, eod.

    • babygirl

      November 4, 2015 at 11:49 am

      God bless you for this beautiful response.

    • micheal

      November 4, 2015 at 6:26 pm

      when you are applying it must be measurable and acceptable. how can you say $5 billion dollars is an acceptable fine when the system has accepted that behavior for a long time. this is not an investment friendly decision.

    • Ses

      November 4, 2015 at 2:11 pm

      I totally disagree with you. If you violate the laws of an entity you must pay the fine within the ambit of the law. Ab Initio they should have ensured that those lines were disabled in line with the declaration by the regulators, period. Investment banks are fined all over the world for not adhering to best practice, it is a global phenomenon and not alien to Nigeria in the least.

    • Mz Socially Awkward...

      November 4, 2015 at 4:32 pm

      I’m curious to know about the publicised fines the Federal Govt have inflicted on IOCs doing business in Nigeria. Court action by communities is one thing (and I know of large judgement sums obtained for certain communities by environmental lawyers/activists) but fines especially imposed by the government are another and keeping in mind that the shocking negligence of those Naija-based multinationals was exposed during Abacha’s regime (i.e. an era when the Federal Govt was very culpable in the destruction of the Niger Delta)… well, I’m just very curious to know when those fines were applied and exactly how much they were.

      And I don’t mean “fine” in the sense that someone from FEPA walked into SPDC’s office and walked out with brown envelop, I mean an actual fine that was publicly announced as punishment for their wrongs. Given that ordinary Chocolate Royale can just pop right back up into business-mode after the indicting claims of using expired products to feed (scratch that – sell goods to) customers and Dana Airlines are still operating after an entire committee was set up to reach a recommendation made to the Government of banning further flights by that airline …. well, history in this regard may explain my sincere scepticism on the subject. If NCC’s bite proves as powerful as its bark in this matter of MTN’s fines, then I may become a convert.

  3. Ada Ada

    November 4, 2015 at 8:56 am

    Oh yes! They should be fined for poor service delivery too. In spite of my 14 year abusive relationship with MTN, I just haven’t been able to switch to another network……..lol

  4. omosi

    November 4, 2015 at 9:02 am

    I agree with NCC, it sends a signal that you cant just ignore the laws of the corporation, if they were operating in Europe or America, there will definitely have done the right thing, so please collect the fine, all of it.

    Plus MTN’s data is a terrible one

    • micheal

      November 4, 2015 at 6:32 pm

      Don’t take for granted the investment portfolio you are enjoying current. certain policies by government can deter other investors from coming to your country.
      its also important to note, there are other Nigeria firms in other African nations. as you are enforcing with huge penalties; do not say Nigeria businesses are being frustrated. we need each other as Africans. Bullish action will not affect you in Nigeria but other Nigeria companies abroad. recently in Ghana, Dangote Cement had polluted a village with dangerous chemicals that is affecting the breath of the community.

  5. Goodluckichigo

    November 4, 2015 at 9:13 am

    Thank you for your write-up, educating and enlightening.!!

  6. Chi

    November 4, 2015 at 9:32 am

    MTN has to pay that money! It will teach corporations and investors to obey regulatory bodies and to serve us well. Also, I have been waiting such a time as this, MTN has looted Nigerians for a long while, it’s about time they pay back, besides South Africa has been cruel and unjust to Nigerian business owners, I believe it’s time they taste their poison. That sounds hateful, right.

    • micheal

      November 4, 2015 at 6:33 pm

      Africa is a small village.

    • Ready

      November 5, 2015 at 2:57 pm

      Michael, go away. Don’t come and use your capitalism and African underdevelopment 101 class to be dropping comments everywhere. Do we need investment? Yes. Was MTN irresponsible? Yes. The need for investors should not be a reason to coddle a badly behaved company, They’re quick to mention Nigeria’s faults; now that it’s obvious that they’re irresponsible in addition to allegations that they cart what should be our revenue in form of taxes out of the country, should we let them go? No.

  7. Nuna

    November 4, 2015 at 10:26 am

    I’m not so sure, but I think you meant to write BP, not Shell BP. They are different

  8. Nuna

    November 4, 2015 at 10:28 am

    And BTW your article is spot on. They are both acts of negligence and just because we are looking to boost investor confidence does not mean we should condone defaulters. They should pay up.

  9. BongzZulu_RSA

    November 4, 2015 at 10:39 am

    Trust an empty head to swiftly turn this into a SA VS Nigeria. MTN are in the wrong here for not following that country’s rules therefore deserve to be fined. Compromising any country’s security is a serious offence. However I personally feel that the nigerian communications body and country went a bit overboard on this one. This seems just like any other money-making scheme. Apart from the exorbitant amount they will be cashing in from MTN, are the any other remedial actions to be undertaken? so MTN pays Nigerian government money and the unregistered sim cards continue to be in operation, another normal day in Africa.

    • Ephi

      November 4, 2015 at 12:25 pm

      To answer your question — “so MTN pays Nigerian government money and the unregistered sim cards continue to be in operation, ”

      They will simply be fined a second time for keeping the unregistered sims in operation. If they do not learn from the first fine, a second fine will help to jolt them to action.

    • Yep

      November 4, 2015 at 12:27 pm

      The writer is far from being an empty head. I am not sure what people try to achieve by insulting others when trying to pass a message across. Communication is not that hard na, jeez.

    • Hellen

      November 4, 2015 at 2:45 pm

      The issue is that MTN and other communication companies agreed with NCC to pose a fine of N200,000 for any unregistered sim card within a stipulated time. And MTN refused to deactivate about 5.1 million unregistered sim cards in their network, thereby incurring the wrath of NCC. So, NCC should not be blamed for any wrong doing. Let MTN pay the fine as agreed with other network providers.

    • dayo

      November 4, 2015 at 4:53 pm

      I am sorry to say it is not that simple…you see, once the fine has been paid then MTN must either Drop unregistered users, and or register future would be users, otherwise more fines will follow. Just like big oil companies pay their fines for polluting the oceans, they also have to pay and facilitate the cleaning up of the mess they made. So my brethren, it is not “just another day in Africa”, like you so patriotically put it, but rather another “glorious day” for a new Africa…enjoy the sunshine while you can!!!

  10. BongzZulu_RSA

    November 4, 2015 at 10:42 am

    SMH, as for the “MTN service is crap” brigade, silly me I am outchea thinking you guys got other equally capable companies that are MTN competitors. Is MTN in monopoly over there?

  11. Niola

    November 4, 2015 at 1:24 pm

    Adebayo, this article is very apt. International companies flout the laws of countries where there is simply no enforcement. They take advantage of a countries with poor regulatory implementation . I witness it everyday especially with respect to non-existing labour laws in Nigeria. Many of our laws are extant and our parliamentarians need to step up and oh how can I be a part of this initiative, appears worthwhile.

  12. BongzZulu_RSA

    November 4, 2015 at 1:24 pm

    @Yep or whatever exotic name you call yourself, that “empty head line” was directed at the blogger (NOT the author) who said South Africa has always been cruel to Nigerian businesses so this is payback time . Try to read and comprehend the comment and/or interactions, that will spare you from looking like a fool in public.

    • Yep

      November 4, 2015 at 3:50 pm

      It’s obvious you’ve got no manners. Not surprising. Pele

  13. Amina

    November 4, 2015 at 1:27 pm

    The fine is commensurate to the severity of the breach, in my opinion. Unregistered sims, could easily be used as triggers for bombs and other terrorist activities. MTN please pay up and desist from breaking stipulated rules.

  14. dayo

    November 4, 2015 at 4:41 pm

    …so MTN has been making loads of money from unregistered SIM card users while at the same time attracting more unregistered SIM card users, which in turn continues to open all sorts of doors for TERRORISM, ARMED ROBBERY, KIDNAPPERS, and only God knows what else. And yet they(the fat cats @MTN) are complaining about paying a LEGAL AND LEGITIMATELY IMPOSED FINE…?! This is unbelievable. They should SHUT UP! PAY UP! AND IMPROVE THEIR(MTN) MEDIOCRE SERVICES with some of the profit they made from breaking the LAW!!!

  15. Long One

    November 4, 2015 at 8:41 pm

    Whilst I agree that there is no excuse for bad behaviour, we need to be objective about this situation. The fine is clearly excessive and I think there is more to it than meets the eye.

    The govt/ncc alleging that unregistered sims will encourage terrorism.: I see this as an excuse for government to push its responsibility in maintaining a national database to MTN and the other operators.

    Please recall that the GEJ government voted about 60bn to SIM registration by the NCC. Pray tell where is the NCC database.? If there are errors in the operators’ database it should be verified against the NCC’s. There have been so many attempts at registration of citizens (national I’d, voters card, bvn, sim reg) all to no avail.

    More importantly, even if the operators obtain information from the subscribers, there is no guarantee that it is the correct information.e.g I may go to register a sim as musa danladi and obtain a fake driver’s license to buttress that. There is no obligation on the operators and it cannot be their duty to confirm that the Musa danladi is who he is and lives at the given address.

    The information obtained by the operators will only be helpful if there is a solid database to verify the subscriber information against. The current bvn exercise may prove more reliable as accounts belonging to a certain individual will be linked.

    In more developed countries, do subscribers have to give their biometric information to get buy a line? No. In the U.S. For instance, you provide your social security number and all your details will be linked to the line.

    Also, whilst contact details may not be available, I believe the operators have capabilities to provide location information of lines to the exact mast from where the line is making or receiving calls. So if the government actually wanted to track criminals, they would be able to.

    I understand the sentiments about exploitation by MTN but we also need to see it in a larger context of how they have contributed directly and indirectly to the growth of the economy. Through their direct employment of staff, contractors/suppliers that do business with them down to street vendors… They have the largest coverage (though not perfect), it facilitates commerce across the nation. A blow to the company will affect not just the company but a huge number of people and the economy as well. There is the argument that another provider may take over but not without some impact/set back. Can the current operators deal with about 60m subscribers dumped on them?

    Our government needs to get serious about its obligations and also maintain a balance in its regulatory and enforcement duties in order to attract and retain foreign investments. We need fdi-It’s a hard fact but true.

    • Gina

      November 6, 2015 at 3:34 pm

      We can choose to look at this from whatever view point that we want.While most of your points are valid, MTN and other telecoms operators sat with NCC and decided on the fines to be imposed for non-compliance with the sim registration deadlines (per sim). Also MTN had a grace period after the deadline to comply, so they were well aware of the (financial) consequences of their actions before they took the risk.

  16. Krasavitsa

    November 4, 2015 at 9:16 pm

    @ BongzZulu_RSA, No there are other service providers but mtn just really sucks! And I think it’s because they know that people (e.g me) find it really difficult to switch lines plus nigerians are generally a complacent bunch hence the really terrible state of everything in the country.

  17. Karie

    November 5, 2015 at 6:14 am

    BP not Shell BP.

  18. Eddy

    November 7, 2015 at 12:59 am

    Let’s not forget that all telcos knew before hand the implications of not adhering to the SIM reg exercise. (N200k per SIM i believe). A set date was given to complete SIM registration (which is long overdue anyway) and a fine was attached to check defaulters. It’s really as simple as that. All As much as i feel it’s a very heavy fine, i don’t think anyone can have any complaints about it. MTN is very free to appeal the fine

  19. FreeRoamer

    November 10, 2015 at 5:17 pm

    The blame can;t be solely placed on MTN, I think the fine is outrageous. To butress my point I came across an article by Azu Ishiekwene.

    See excerpts of the article

    The NCC needs to review the penalty, not only because it’s the logical thing to do, but also because it has a poor record of complying with its own rules – whether in the sale of spectrum or even the registration of subscribers, the very basis for the MTN fine.

    Whereas part II, section II (2) of the NCC (Registration of Telephone Subscribers) regulation of 2011 excludes the regulator from incurring costs on subscriber registration, the government of former president Goodluck Jonathan approved 6.1 billion naira (R427 million at the current exchange rate) for the NCC in 2011 for SIM registration.

    Its former executive vice-chairperson, Eugene Juwah, claimed at the time that the money was “to register 80 million subscribers”. Well, that did not happen.

    The commission returned for more money in 2012, forcing Abike Dabiri-Erewa, then a member of the House of Representatives, to insist that “the commission must explain to Nigerians how the money was spent”. Well, again, that did not happen.

    If, after breaking its own law three years ago, spending 6.1 billion naira and then leaning on the four other telecoms companies to spend about 45 billion naira more, the NCC still managed to get the registration done, the entire subscription base would have been covered by now.

  20. Spykido

    November 18, 2015 at 2:07 pm

    MTN really is in a tight spot. Then again, MTN has confessed to its crime, our concern should be to see both the regulator and the organization are out of the mud. Believe me, everyone has had their part to play. Now its time to return yo the drawing board. As for the fine, the regulators should temper mercy, surely they don’t want to sink MTN.

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