The Senate Committee on Banking and National Security has been mandated to investigate why and how Etisalat defaulted in its $1.2 billion loan it took from 13 Nigerian banks.
Nigeria’s Senate voted in favour on Tuesday of launching an investigation into the default on a $1.2 billion loan earlier this year by Etisalat Nigeria and into how the funds were used.
Etisalat Nigeria, now called 9mobile, took out a syndicated loan from 13 Nigerian banks but failed to make repayments earlier this year.
“The Senate is aware of allegations that the loans had been diverted to other uses not related to the business, as there was no evidence of what the company did with the loans,” the upper house said in an order paper published on Twitter.
The vote mandates the Senate Committee on Banking and National Security to launch an investigation, which, if required, will pass its findings on to regulators including the financial crimes agency.
In its order paper the Senate also raised questions over the Abu-Dhabi listed parent company Etisalat, which subsequently terminated its management agreement with its Nigerian business and gave up its 45 percent stake.
“The decision of the core investors to pull out of Nigeria raises issues of suspicion, on the intent of a company in obtaining a loan facility, defaulting and then pulling out of the country, hoping that their shares would be used to write off the debts,” the document said, without naming Etisalat.
Etisalat declined to comment.
The motion said that, as of 2016, Etisalat Nigeria had started defaulting on its $1.2 billion loan obligations leading to a few bailouts from its parent company in Abu Dhabi.
The document also said it was understood that 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 serve since 2016”.
Bukola Saraki, the Senate president, said after the vote that it was important to launch an investigation.
“We must protect jobs, corporate governance, investment climate in the country. I implore the committee to do a thorough job in the interest of the economy and the country,” he said.
Nigerian lenders have picked Barclays to try to find new investors for 9mobile, two banking sources told Reuters last week.