15 January 2016

Nigeria's Top Broadcast Regulator Arrested Over 4G Spectrum Sale to MTN - Three Questions Needing Answers

London — The sale of 700 MHz spectrum to MTN Nigeria by the broadcast regulator, Emeka Mba was already mired in controversy. But this week he found himself arrested by Nigeria's anti-corruption body the Economic and Financial Crimes Commission and taken in for questioning. Russell Southwood picks his way gingerly through the smoke to ask three questions.

The arrest of regulators is not entirely unknown in Africa. I have found myself shaking hands with someone one week who was then arrested the next week. The most notable cases have been two Senegalese Director-Generals and a senior Liberian regulator. Also those with long memories will remember the arrest of Mike Adenuga, CEO, Globacom by the EFCC under President Obasanjo in 2006.

It is well beyond me whether there has been dishonesty in any of these cases as they seem to be deeply political: as in the case of Mike Adenuga. So the arrest of someone does not imply that they are guilty as charged without court proceedings.

The whole spectrum saga started in September 2015 when NBC sold MTN Nigeria 700 MHz spectrum for N34 billion. Now you might imagine that the telecoms regulator NCC would be responsible for managing the sale of the "digital dividend" spectrum.

But according to This Day, the Director General of NBC, Emeka Mba, said that the spectrum was sold at a time when it was still under the control of NBC, and that NBC sought and received approval to raise money to pursue its Digital Switch Over (DSO) mandate by licensing commercially a portion of the spectrum for converged services use from the previous Government. Mba said the licensing was handled transparently and was done as part of its convergence service.

But Emeka Mba's arrest has been for contravening a Presidential directive called the Treasury Single Account in which public bodies have to transfer receipts to a Treasury controlled account. It is alleged in a report in Premium Times that Mba concealed N15 billion of the N34 billion realized from the spectrum sale.

Last week, detectives went to the headquarters of the NBC and took away computers and files in the Finance and Account unit. During the operation, some key accounts staff where taken away. Sources quoted in Premium Times said the arrested officials made confessional statements to the EFCC implicating Mba and some top officials of the NBC. Mba was arrested on Monday morning in Abuja and taken to the EFCC's headquarters where was being interrogated.

A top official of the anti-graft agency, EFCC is quoted as saying : "Yes, he (Mba) is with us. We are investigating massive diversion of public funds and we're making progress. Mba definitely has questions to answer."

According to an NBC source quoted in Naij.com: "The funds were meant to guarantee the manufacturer of set-up boxes, and had been deposited in the commercial bank before the TSA policy."

"I cannot confirm to you if it has been disbursed from the bank but I can confirm that the remaining part of the money has been transferred to the TSA. As I speak to you, NBC is strapped for funds and some of our activities have been hindered."

The source at NBC claimed that that the money was fully committed to awarded contracts way before the Presidential TSA directive and provided as a guarantee to a Commercial Bank with the aim of supporting manufacturers of set-up boxes to aid the digitization process. The source claimed this made it impossible to transfer the money.

In an even stranger turn, a management source at NBC, in a phone conversation with This Day, explained that the special committee of the EFCC investigating the $2.1 billion arms deal scandal rocking the Office of the National Security Adviser, traced some payments to the account of NBC, and the operatives had visited the commission for further investigation on the matter.

So why might any of this matter to individuals or companies in the telecoms and Internet sectors in Africa? There are many questions that might be asked about the transfer of spectrum for 4G in Nigeria but there are three for which there appear to be no clear answers:

1. What is Nigeria's policy approach to the roll-out of 4G that would set the framework for any sale of spectrum?

2. Why is there no clarity about which organization is responsible for allocating spectrum in Nigeria?

There has been talk about merging NBA and NCC but there is currently no converged approach.

3. Why was a clear and transparent public tendering process not put in place to sell 4G spectrum to those who might wish to invest in the provision of these services?

If it came to pass that MTN alone among mobile operators was the first and/or the only mobile operator to roll out 4G, it would clearly have an unfair competitive advantage.

Whatever the rights and wrongs of the MTN Nigeria fine, the Government has already sown uncertainty about Nigeria as a telecoms investment destination. Unless it sorts out answers to the questions above quickly, it will only have compounded the problem.

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