The Central Bank of Nigeria (CBN) says it is seriously concerned that the Financial Reporting Council of Nigeria (FRC) could take what it described as a drastic regulatory decision on the Stanbic IBTC holding – under its regulation and supervision- without any form of consultation with the apex bank and fair hearing to the institution involved.
In a letter personally signed by Godwin Emefiele, CBN governor, with a reference number: GVD/GOV/CON/DGF/93/113 dated November 2, 2015 and sent to the Executive Secretary/Chief Executive Officer, FRCN, the CBN said “Yet, such a regulatory decision and the manner of the announcement is not only capable of eroding investor confidence, but also inimical to financial system stability.”
In the letter, the CBN noted that the FRC’s action has precipitated a fall in the value of the shares of Stanbic IBTC by about 18 percent since the announcement of the regulatory decision.
“In the light of the foregoing facts, which clearly show that FRC did not follow due process, the bank regrets to inform you that it is unable to accede to your request to take disciplinary action against SIBTCH.
“Indeed, the CBN does not see any reason to advise/compel SIBTCH to obey the sanctions meted to it by the FRCN,” Emefiele noted in the letter seen by BusinessDay.
He however assured that the CBN would continue to take all necessary steps to protect the interest of depositors and to ensure the safety and soundness of the financial system in the 13 paragraph letter.
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 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”.
Emefiele’s letter which was in response to FRC letter dated 26th October, 2015 with reference number FRC/2015/DIM/REGULATORY/001 in which Obaze asked the CBN to sanction Stanbic IBTC for the alleged infraction, specifically cleared the bank of any wrong doing, after carefully reviewing all relevant documents and the said financial statements.
The CBN, for instance noted that contrary to FRC claim that SIBTCH did not obtain approval for the National office for Technology Acquisition and Promotion (NOTAP) for the payment of affiliate software license, their review revealed that the bank actually obtained necessary approval from NOTAP to pay for the licence from Standard Bank South Africa, for a period of three years, covering June 1, 2012 to May 30, 2015. It added that the remittance from June 2015 to date is still awaiting approval from NOTAP.
While explaining its decision on another FRC allegation, the CBN said “SIBTCH used its judgement to capture the donation of N275 million under ‘others’ because it was of the opinion that it was not a charitable donation but a mandatory contribution towards the victims of terrorism in the country.
“For the avoidance of doubt, this contribution was agreed at a bankers’ committee meeting with the share for each bank clearly spelt out. Therefore, we agree with SIBTC’s position as presented,” the apex bank added.
The CBN moreso raised concerns that an institution under its regulation was not given fair hearing to clear the allegations leveled against it by the FRC.
“In conducting investigation into possible breaches of the FRC Act, and /or the regulations, the FRC is required to give the entity concerned 60 days from the service of final notice to restate its account, where both the panel and entity agree on the need for restatement.
“In this case our understanding is that FRC called a meeting with the board of SIBTCH at 11 am on the 26th October, 2015. But rather than holding the meeting, FRC went ahead to convene a press conference at 8am on the same day to announce its sanctions against SIBTCH.
“Our review further indicates that both FRC and SIBTCH did not agree on a need for restatement of the account before the stations were announced,” the letter read.
Onyinye Nwachukwu
