• Tuesday, April 16, 2024
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As ActionAid calls out MTN and corporate Nigeria

As ActionAid calls out MTN and corporate Nigeria.

THE PUBLIC SPHERE with Chido Nwakanma

Nigerian silence has followed the bold statement of ActionAid Nigeria calling out MTN and its board members for an alleged breach of corporate governance. “Nigerian silence” ignores uncomfortable situations, hoping they will go away. It has been our style to make our dogs sleep.

Although MTN Nigeria is a quoted stock, the NGX witnessed no ripple. It is as if nothing happened.

ActionAid versus MTN Nigeria deserves more than the traditional silence in prickly situations. We ought to address it directly. It has broad and significant implications and ramifications beyond the parties involved. In calling out one of the poster boys of corporate Nigeria, Action Aid throws a challenge at the pack.

ActionAid Nigeria’s Country Director, Andrew Mamedu, urged the ICPC and the FG to investigate MTN Nigeria’s board appointments in a press statement on March 12.

Mamedu stated: “The appointments of former government officials, including Ernest Ndukwe, former Chief Executive Officer of the Nigerian Communications Commission (NCC), Ifueko M. Omoigui Okauru, former Executive Chairman of the Federal Inland Revenue Service (FIRS), Omobola Johnson, Nigeria’s former Minister of Communication Technology, and Mr. MK. Ahmad, the pioneering Director-General and Chief Executive Officer of the National Pension Commission, raised serious concerns.

“It is unacceptable that MTN Nigeria, a company entrusted with providing essential telecommunications services to millions of Nigerians, would stack its board with individuals with a history of regulatory oversight, pensions, and taxation authorities. This move raises serious concerns about the potential for backdoor negotiations, conflicts of interest, and the impact on the Nigerian community. By allowing former government officials who were supposed to regulate MTN Nigeria to occupy top positions on its board, there is a risk of regulatory capture and undue influence over regulatory decisions. This undermines our institutions’ integrity and jeopardises the interests of consumers, investors, and shareholders.

“ActionAid Nigeria demands that MTN Nigeria immediately reconsider its board appointments. Furthermore, we urge the Nigerian Communications Commission and the Securities and Exchange Commission to investigate these appointments and take appropriate action to hold MTN Nigeria accountable for any breaches of regulatory standards or corporate governance norms.”

The ActionAid statement deserves closer examination by Nigerians. I do so mainly as an intellectual exercise, without any position for or against it. My interest lies in the various areas the issue covers in corporate governance, ethics, and defamation.

Let us examine the matter starting from corporate governance, the plank on which Action Aid rests its petition.

Various online sources state that corporate governance is the umbrella for a company’s management. As Investopedia sums it up, “Corporate governance is the structure of rules, practices, and processes used to direct and manage a company. A company’s board of directors is the primary force influencing corporate governance. Bad corporate governance can destroy a company’s operations and ultimate profitability. The basic corporate governance principles are accountability, transparency, fairness, responsibility, and risk management.”

Nigerian firms primarily practise the Anglo-American model of corporate governance. Shareholders determine the structure of the board, its composition, and its practices.

So, what is a conflict of interest? A conflict of interest “occurs when an individual’s personal interests—family, friendships, financial, or social factors—could compromise their judgement, decisions, or actions in the workplace. Government agencies take conflicts of interest so seriously that they are regulated.”

Bad corporate governance led to “Dieselgate” at Volkswagen AG of Germany. The directors did not notice for several years that the firm deliberately and systematically rigged engine emission equipment in its cars to manipulate pollution test results in the US and Europe. Volkswagen’s stock shed about half of its value, and sales fell 4.5 percent in the month following the disclosure.

There is the notorious Enron case, in which the board waived many rules related to conflicts of interest. It allowed the chief financial officer, Andrew Fastow, to create independent private partnerships to do business with Enron, among other offences. Enron used these private partnerships to hide its debts and liabilities. A full accounting firm would have reduced its declared profits significantly until they became known and Enron collapsed.

The Enron saga led to the 2002 Sarbanes-Oxley Act, which imposed stricter recordkeeping requirements on companies and strict criminal penalties for violations.

The Action Aid call is a loaded gun. What does it know, and what is it hiding? Otherwise, it could face charges of blackmail and defamation. Webster’s dictionary defines defamation as “the act of communicating false statements about a person that injures that person’s reputation: the act of defaming another.”.

The statement is defamatory on the surface. It impugns the character and integrity of the four directors and accuses them of a crime ActionAid suspects “they could commit.” It is an anticipatory criminal or unethical action—very strange. Rather than a straight accusation, Action Aid uses innuendo to imply that these directors are unworthy or guilty of character defects.

It also, by implication, casts serious doubts about regulators over MTN. It insinuates that they are not strong enough to resist regulatory capture while “the potential for backdoor negotiations, conflicts of interest, and the impact on the Nigerian community” exists. Note that everything it alleges is in the realm of probability. Unless it has facts that it will produce later,.

The accusation feeds into the revolving door concept, where former regulators allegedly benefit from later appointments in companies they regulated. Arguments against the revolving door include conflicts of interest, regulatory capture, a lack of transparency, the difficulty of tracking potential conflicts, and erosion of public interest.

Arguments for the revolving door include bringing expertise (industry or government) to improve decision-making with practical insights, better efficiency, and knowledgeable heads on the table. Countries have yet to pass a law against it, even though it is widespread.

Finally, as the lawyers would ask, who is ActionAid Nigeria, and what is its locus? Do they have shares in MTN Nigeria?

Action Aid says it is part of an international group. Its mission is “to achieve social justice, gender equality, and poverty eradication by working with people living in poverty and exclusion from their communities, people’s organisations, activists, social movements, and supporters.” Mission 1 of its mission statement could explain this action: “To enhance people’s power in democratic and inclusive governance.”