BD Insider 204: DLM Trust temporarily halts duties as Patricia's escrow trustee

Johnstone Kpilaakaa -

In today's newsletter, we bring you news about

  • MTN's tax troubles
  • Patricia's latest effort to repay customers

We also added other noteworthy information, including opportunities for cleantech founders and tech enthusiasts in Nigeria.

📰 The Midweek Brief

#1. MTN Nigeria to pay a $72.5 million tax fine

The news: The Lagos division of the Tax Appeal Tribunal has ordered MTN Nigeria to pay a tax fine of $72.5 million to the Federal Inland Revenue Services (FIRS). This fine covers a decade of tax arrears, from 2007 to 2017.

Why it matters: The tax dispute between MTN Nigeria and the FIRS started when the Office of the Attorney General of the Federation initiated an investigation into MTN's transactions spanning from 2007 to 2017.

This investigation led to allegations of significant tax arrears. Subsequent reviews and assessments by the FIRS resulted in an initial VAT assessment of $72.5 million, with additional penalties and interest of $21 million. MTN objected to this assessment, leading to a revised assessment of $47.7 million in VAT and $87.9 million in additional penalties. This was again rejected by MTN in June last year.

After months of legal wrangling, the tribunal ultimately ruled in favour of the FIRS, ordering MTN Nigeria to settle the assessed liabilities. However, it absolved MTN from paying the $21 million which was associated with penalties and interest on the principal tax amount. 

The outcome of this case underscores the importance of clarity in tax regulations and the need for multinational corporations to engage with tax authorities to resolve disputes effectively.

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#2. DLM Trust temporarily halts duties as Patricia's escrow trustee

(Update: 20:14, Oct 25, 2023) The news: Nigerian SEC-licensed trust company, DLM Trust says it has temporarily paused its appointment with Patricia to oversee the repayment of $2 million in customers’ assets lost in a hack last year.

According to Kehinde Lawal, senior associate at DLM Trust, "This is because of multiple breaches in the terms and conditions of agreement and trust between Patricia Technologies and DLM Trust Company."

This update arrives just four hours after DLM Trust issued a press statement to Bendada.com, announcing the termination of their escrow trustee partnership with Patricia.

Context: On Tuesday, DLM Trust disclosed that it was appointed as escrow trustee; an entity that holds property in trust for third parties while a transaction is finalised or a disagreement is resolved.

At the time of the announcement, the trust company announced that the first batch of repayments to Patricia's customers would commence next month.

However, the repayment plan is not without its challenges. DLM Trust does not typically handle digital assets, and the Nigerian SEC has maintained a firm stance against cryptocurrencies. Although the statement shared with Bendada.com did not clearly state the specific agreement breach, this is possibly one of the reasons for its latest stance.

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Patricia, a Nigeria-focused cryptocurrency platform, suffered a security breach in May 2023, which resulted in the loss of $2 million in customer assets. To address this issue, Patricia has adopted several measures including creating a native token which was roundly rejected by customers.

👀 In case you missed it

  • Husk Power raised $103 million: Cleantech firm Husk Power secured $103M to drive rural electrification and expand renewable energy services in Africa and Asia.
  • SA startups delivered $17 million in exit returns to investors: SA VC investors made a $17 million profit from exits in 2022, a 3x return. However, loss-making deals still outnumbered the return-making ones.
  • Wellahealth expanded to Kenya: Nigerian healthtech startup, Wellahealth has launched in Kenya through its subsidiary, Healthsend. This announcement comes after the launch of the subsidiary in Nigeria in June 2023. 
  • The Furex app launched: Furex app introduced innovative features designed to provide users with crypto trading experience.

💼 Opportunities

  • For cleantech startups: NITDA, in partnership with ONDI and with the support of JICA, is facilitating a one-week networking trip to Japan for chosen Nigerian CleanTech startups. Apply here.
  • Interested in becoming a technical talent? The Nigerian Federal Ministry of Communications, Innovation & Digital Economy is accepting applications for its 3 Million Technical Talent Program. Learn more about the program.

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