20 November 2017

Nigeria: Alleged Tax Evasion - Lawmakers Threaten Arrest Warrant Against Telecoms CEOs

Abuja — The Chairman, House of Representatives Ad-hoc Committee investigating the activities of telcoms operators and vendors, Hon. Ahmed Abu (APC, Niger) has threatened to serve bench warrants against chief executives of major telecommunications companies over their failure to appear before it and defend allegations of tax evasion amounting to about N143 billion.

At the resumed hearing over the weekend, Chief Executives of MTN Nigeria, Globacom, Airtel Nigeria, 9mobile Nigeria, former chairman of the defunct Etisalat, Mr. Hakeem Bello Osagie as well as Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, for the umpteenth time did not appear before the committee.

Irked by the development, the committee members forced its chairman to issue a warning that failure to appear on a yet to be communicated date, will leave the lawmakers with no other option than to issue arrest warrants against them.

Specially, the committee is probing alleged tax evasion by the big telecoms companies including value added tax deductions on recharge cards as well as ongoing dispute between telcos and value added services (VAS) providers in the industry over questionable revenue sharing formula, particularly in the lottery services operated by mobile technology.

Abu specifically noted that the committee had invited Bello-Osagie and the Airtel CEO on several occasions to answer questions on alleged tax evasion by the then Etisalat and Airtel but they failed to show up.

He said the attitude of the duo was unacceptable, warning that should they fail to appear again, an arrest warrant would be issued against them.

He berated officials of 9Mobile for the absence of its CEO, stressing that it would invoke relevant constitutional provisions in dealing with the organisation involved.

He said the committee decided to revisit the recent exit of Etisalat Group from the country, adding that the circumstances leading to winding up of its operations would not be swept under the carpet.

However, the ad-hoc committee similarly quizzed the Nigeria Lottery Regulatory Commission (NLRC) over what it described as unclear revenue sharing formula between Mobile Network Operators and VAS/Digital content and Mobile- based lottery.

Director General, NLRC, Mr. Lanre Gbajabiamila disclosed that while about 295 licensed VAS providers had generated about N80 billion revenues across the four major mobile telecommunications operators, within the past four years , MTN alone had grossed about 50 per cent of the entire revenue.

Abu had earlier in the year ordered the Nigerian Communications Commission (NCC) and the NLRC to end all existing lottery contracts between GSM companies and lottery operators insisting that the existing lottery contracts which had now gone awry were carried out in breach of the National Lottery Act and constituted illegality.

It was gathered that the telcos charged 70 percent of the total share, leaving lottery operators as well as the commission with 30 percent to share, whereas, the initial agreement stipulated that 50 percent should go to the winner at any particular point in time while 30 percent should go to the operator as well as 20 percent to the regulatory commission.

However, Gbajabiamila, in his submission to the committee wanted the sharing formula reviewed to a ratio 60- 40 in favour of the VAS providers.

He said: "The resources and creativity that continues to be applied to VAS and digital content generation are the key components to the success of the industries.

"Over the years, collaborations between MNOs and the VAS partners have seen revenue share continue to take a fall from 60 to 30 percent on the average, to as low as 15 percent to VAS providers in some cases."

The Executive Vice-Chairman of NCC, Prof. Umar Danbatta had told the committee that although, there's an existing memorandum of understanding (MoU) between the NLRC and the NCC, it doesn't however cover the agreement between lottery operators and the commission.

Nigeria

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