Telecoms firm MTN hired former U.S. Attorney General Eric Holder in January to help it reduce a $3.9 billion fine imposed in Nigeria over unregistered SIM cards. Five months later, it struck a deal to pay less than half of that.
The entrance of Holder, who stood down as attorney general last year after presiding over some of the largest corporate settlements in American history, marked a change of strategy for the South African company.
MTN dropped a three-month legal challenge against the fine and, according to government sources and letters seen by Reuters, asked Nigerian Attorney General Abubakar Malami to put forward a proposal for a reduced fine to the communications regulator, the official authority in the dispute.
The regulator, the Nigerian Communications Commission (NCC), rejected the proposal as unjustifiable, documents show, but three months later it accepted a broadly similar deal. Reuters was unable to determine the role, if any, that Holder played in the change of heart.
MTN, Holder, Malami and the NCC all declined to comment on the negotiation process.
There is no indication that any individuals acted improperly, and companies have often reached settlements with regulators in Nigeria. Lawmakers have however criticised the opaque nature of the settlement process, saying it set a precedent for other firms dealing with Nigerian authorities.
The 780 billion naira fine - $3.9 billion at the exchange rate at the time - was set by the NCC in December over MTN's failure to deactivate more than 5 million SIM cards not registered by customers. Nigeria has been trying to halt the use of unregistered cards over concerns they are being used for criminal activity, including by Islamist militant group Boko Haram.
MTN, Africa's biggest telecoms company, initially launched a high court challenge against the fine, arguing the watchdog had no legal grounds to order it. The law states that the NCC does have the right to impose such a penalty.
In February, however, MTN withdrew the lawsuit and paid a "good faith" payment of 50 billion naira to the government which it said was part of efforts to reach an amicable settlement and would go towards the eventual fine agreed.
The NCC said at the time that it had not agreed to enter into any talks with MTN and that it stood by the 780 billion naira penalty.
Rather than dealing directly with the regulator, Holder approached Malami to help broker a settlement, according to the government sources and letters seen by Reuters.
In a letter dated the same day MTN announced it was dropping its court challenge - Feb. 24 - Holder wrote to Malami on behalf of the company offering to pay 300 billion naira and list MTN's local unit on the Nigerian stock exchange to end the dispute.
Under the Nigerian constitution, the attorney general can mediate in a dispute involving a state body after the matter has been taken to court.
Malami asked NCC to review the MTN offer but the regulator was not impressed, according to another letter seen by Reuters.
"The proposal to pay the sum of 300 billion naira ... is not supported by any verifiable justification," NCC Chief Executive Umar Garba Danbatta said in a March 1 letter to Malami.
Nor was the NCC convinced by MTN's sweetener of a local listing. "This is a business decision absolutely within MTN's prerogative and primarily to its benefit. There is no justification for bringing this along in discussing the present issue," Danbatta said.
But when MTN announced on June 10 that it reached a deal with the government to pay a fine of 330 billion naira - just 30 billion naira more - the NCC appeared to have altered its view, notifying parliament in a letter dated the same day of a "full and final" settlement.
"It was never about the money it was about making clear the rules are the rules," NCC spokesman Tony Ojobo told Reuters on June 13. "The MTN listing is a big positive for Nigeria and will benefit the country."
When asked about the March 1 letter and what had changed the NCC's view, Ojobo said he would not discuss the negotiations.
A parliamentary committee on telecommunications is reviewing the deal and the negotiations that led to it. Such reviews by lawmakers are standard practice after big corporate settlements and are aimed at ensuring that there has been no wrongdoing by any party involved and that the public interest has been served.
"What concerns us most is what MTN proposes in February is so similar to what is agreed in June. It is clear MTN were dictating the pace," committee chairman Saheed Akinade-Fijabi told Reuters.
"What does this say to other businesses? That to get the best deal you use unofficial back channels and keep the public in the dark?"
The deal has exposed divisions within the Nigerian government; officials within President Muhammadu Buhari's team were also unhappy with Malami's plans to strike a deal with MTN which they considered too generous, leading to heated discussions between the two camps, two government sources said.
There has been no official comment from Buhari on the settlement.
Holder was hired by MTN through his Washington-based law firm Covington and Burling which he joined last year after six years as U.S. attorney general.
Settlements he presided over in public office included the $13 billion JPMorgan Chase paid to settle charges of mis-selling mortgages in the run-up to the financial crisis and the BP Deepwater Horizon oil spill case, which has topped $20 billion.
It is unclear whether Holder has been based in Nigeria during his time working for MTN, which counts Nigeria as its biggest market. It also is unclear whether he still advises MTN. Covington and Burling declined to comment
Following the settlement MTN's share price, which had fallen around 30 percent between a fine being announced and Holder being hired, has risen by around 25 percent.