Senate probes utilisation of $1.2bn loan obtained by Etisalat

The senate has mandated its committees on banking, communications capital market, national security and intelligence to investigate the utilisation of $1.2 billion loan obtained by Etisalat.

The upper legislative chamber also mandated the committees to make recommendations on ways the country’s financial structure could be strengthened by legislation to prevent a similar reoccurrence.

The resolutions of the senate followed a motion entitled ‘The need for senate’s intervention in recent Etisalat Nigeria $1.2 billion debt crisis’ sponsored by Adeola Olamilekan, senator representing Lagos west.

While moving the motion on the floor of the senate on Wednesday, Olamilekan noted that loan was acquired in 2013 as medium-term with a seven-year facility to fund expansion of the network from a consortium of 13 banks.

The senator said in 2016, the company started defaulting on its $1.2 billion loan obligations to which bailouts were given to it from its parent company in Abu Dhabi.

“Only about 42 percent of the loan has been repaid, remaining an outstanding debt of $696 million representing 58 percent of its capital, which Etisalat has failed to service since 2016,” he said.

“Since this year, the banks have been moving to take over the telecommunications company in order to recover their funds.

“The Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) have intervened and raised issues of regulatory compliances in trying to prevent a takeover by the banks, but the intervention has failed to produce an agreement on the debt restructuring

“All UAE shareholders of Etisalat Nigeria, including state-owned investment fund Mubadala had exited the company coupled with the resignation of top key management officers of the company the chief executive officer Mr. Matthew Willsher, chief financial officer Mr. Wole Obasunloye, director and the third Shareholder/Partner Mr. Hakeem Belo Osagie.”

The legislator said if the situation is not handled, it would have negative on foreign investments in the country.

“Although it should ordinarily not be the duty of the senate of the federal republic of Nigeria to wade into individual debt crisis of private sector businesses but the senate is convinced that if this situation is not properly handled, it will have negative implications for the Nigerian business environment and on foreign investments in Nigeria,” Olamilekan said.

While about 4000 jobs are at stake as a result of “these suspicious dealings,” the senator said the loan of this magnitude has the capacity of setting off another banking crisis in the country.

“The decision of the core investors to pull out of Nigeria raises issues of suspicion,” he said.

“Allegations that the loans have been diverted to other uses not related to the business for which the huge loan was obtained, as there was no evidence of what the company did with the loans.”

The upper legislative chamber adopted the motion when it was put to a voice vote by Senate President Bukola Saraki.