Analysts in the nation’s financial system have expressed concerns over what they called over-bearing attitude of the Financial Reporting Council of Nigeria (FRC), saying the office of the Vice President, which is saddled with the management of the nation’s economy, should pull the break on some of the council’s regulatory activities.
An Abuja-based analyst, who told BusinessDay he had been following the regulatory activities of the FRC, said the suspension of FRC Numbers of the chairman and chief executive officer of Stanbic IBTC Bank, Atedo Peterside and Sola David-Borha, respectively, and barring same forthwith from vouching for the financial integrity of any financial statement in Nigeria was the height of “over-regulation.”
The analyst wondered why the FRC failed to explore all reasonable means to resolve the allegations against the individuals and institution before going to the press.
“This attitude of trying and convicting highly regarded individuals and institutions in the press should be stopped forthwith by our regulatory and other agencies. It is barbaric and is damaging the nation’s image and will cost a lot of FDIs loss,” the analyst, who does not want his name in print, told BusinessDay.
The FRC had Monday last week announced that it had suspended the FRC Numbers of Peterside and David-Borha over alleged irregularities in the Stanbic IBTC Holdings plc audited accounts for 2013 and 2014. It also barred the duo from vouching for the integrity of any financial statement in Nigeria.
The FRCN also suspended two other directors – Arthur Oginga and Daru Owei – for attesting to what it termed the “misleading” 2013 and 2014 financial accounts of Stanbic IBTC, as well as Ayodele Othihiwa of KPMG Professional Services for his firm’s alleged complicity in the infractions highlighted in the financial reports for the two-year period.
The council based its sanctions on issues raised by the bank’s minority shareholders led by the Mahtani brothers who own the Churchgate conglomerate, to some other regulatory agencies such as the National Office for Technology Acquisition and Promotion (NOTAP), Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN).
The council stated that it met with NOTAP on September 1, this year and also exchanged several correspondences on the matter thereafter.
It also invited the CBN, Economic and Financial Crimes Commission (EFCC) and the Federal Inland Revenue Service (FIRS) to investigate Stanbic IBTC. The suspension, which was contained in a statement endorsed by Jim Obazee, executive secretary, FRC, is expected to be in place “until the investigation as to the extent of their negligence in the concealment, accounting irregularities and poor disclosures in the said financial statements is completed in accordance with Section 62 of the Financial Reporting Council of Nigeria Act.”
In a swift reaction to the allegation, Stanbic IBTC, in a statement endorsed by David-Borha and the company secretary Chidi Okezie, said although the matter was in court, it decided to respond to certain aspects of the report for the benefit of its stakeholders and the general public.
According to Stanbic IBTC, FRC’s allegations were “inaccurate and unfortunate”, adding that the manner in which it chose to make them was procedurally defective.
“Whilst FRCN takes refuge in Regulation 21 of the Directorate of Inspection and Monitoring Guidelines Regulations 2014 for the wide publicity that it has given to its regulatory decision, Regulation 21 only applies ‘where the panel and the entity agree that accounts are to be rectified by way of revision or restatement.’”
Another analyst working with a private equity firm based in Lagos said it was a shame that most regulators in Nigeria always go to the press first before thinking through their actions. “It is a shame. We need investors and yet our body language does not correlate with our actions”, the analyst added.
An analyst who simply wants to be referred to Ogbeide and works with a financial institution with head office in Lagos and flourish regional office in Abuja asked: “Why are our regulatory institutions performing the functions of law courts? Is there anyone or authority calling these regulators to order when they err?”
Ogbeide told BusinessDay that he is of the view that such pronouncement by FRC should be tested in a court of competent jurisdiction. “I am recommending this because it is Stanbic IBTC today, it could be your firm or my own tomorrow”, he added.
BusinessDay gathered in Lagos at the weekend that the FRC was too hasty in its decision to sanction Stanbic IBTC Holdings Plc and its officials without fair hearing and publishing same in the media.
It was learnt in Abuja that the Council’s legal advisers and counsels based in Lagos have withdraw their services to the regulator on the back of the incident
Sources close to the legal advisors said the legal experts were particularly concerned that immediately FRC announced the suspension of the bank’s directors’ FRC Numbers on its website, it also went ahead to penalized the bank to the tune of N1 billion, against the Act setting up the council and laid down procedures.
It was also learnt that the lawyers had also advised that it would be unfair for the council not to give Stanbic IBTC fair hearing before the huge sanctions.
By our reporters
