By Kelechi Mgboji
Assistant Business Editor
Shareholders of Stanbic IBTC have blasted the crass lack of circumspection by the non-regulatory Financial Reporting Council of Nigeria (FRC) for failure to take the bank to court but instead,
took to the media with its reckless and questionable allegations against a corporate entity which made them lose money in share price fall in the capital market.
They argued that the role of FRC is to help enhance the quality of financial reporting and reminded the council that it is neither a regulator of banks, nor is it a regulator of the capital market.
Consequently, its reckless pronouncement against Stanbic IBTC Holdings and its directors in an unsophisticated capital market has led to unnecessary panic among investors.
“Unfortunately, this recklessness has already made this happen as we have recorded losses in our share price over the last two days on account of the misguided actions of the FRC,” one complained.
Thus a fresh twist is unfolding over the sanctions against led by a shareholders’ group, under the aegis of Progressive Shareholders Association of Nigeria (PSAN) led by Boniface Okezie, which faulted the sanctions meted out to the bank’s Chairman Atedo Peterside and the Chief Executive Officer Sola David-Borha.
FRC also barred KPMG’s Arthur Oginga, Daru Owei and Ayodele H. Othihiwa for their roles in the infractions and creative accounting that led to a boost to its profit of approximately $5 million and claimed to have paid an average interest rate on its current accounts of 11.3 percent to attract the current account deposits.
Most Nigerian banks charge interest on current accounts rather than pay.
Some shareholders of Stanbic IBTC Bank are not happy that it is paying Franchise/Management fees to Standard Bank when the latter is the majority shareholder of Stanbic IBTC and, therefore, alerted the council.
But Okezie, who addressed newsmen in Lagos on Wednesday at the instance of XLR8, the public relations managers of Stanbic IBTC, accused FRC of carrying its operations in a manner capable of destroying businesses and the economy at large and called on the Federal government to look into the activities of the council.
“We are shocked by the actions of the FRC which did not follow due process. It is an indictment on itself that years after accepting a financial statement, FRC could fault the document. It means that the Council is not thorough.
“It is an indictment of the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) that regulate the sector,” Okezie told newsmen.
It is worthy of note that another minority shareholder group had petitioned FRC against the bank alleging accounting irregularities, and improper disclosures in the bank’s 2013 and 2014 financial statements.
The FRC in a statement on Monday said the bank’s chiefs remain suspended “until the investigation as to the extent of their negligence in the concealment, accounting irregularities and poor disclosures in the its financial statements is completed in accordance with Section 62 of the FRC Act No. 6, 2011.
“Accordingly, they are not allowed to vouch for the integrity of any financial statements issued in Nigeria,” said the statement.
The council also directed the directors of the bank to withdraw the financial statements of Stanbic IBTC Holdings Plc for years ended 31st December 2013 and 2014 and restate them in accordance with the law.
The issues raised by the minority shareholders were also addressed to some other regulatory agencies such as the National Office for Technology Acquisition and Promotion (NOTAP), Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), among others, which are also likely to sanction the bank.
On September 8, 2015, the SEC withdrew its earlier approval for the proposed N20.4 billion rights issue of Stanbic IBTC Holdings in view of the notice of an investigation into allegations of financial impropriety by the FRC on the group’s financial statements.
Citing the enabling Act of FRC (Regulation 27 of the Directorate of Inspection and Monitoring Guidelines Regulations), Okezie and his shareholder group said that in a case where a corporate body disagrees with FRC’s interpretation of its accounts, FRC should have gone to court.
“Instead, FRC took to the media to make several questionable allegations against a corporate body. We would have expected FRC to recognize that circumspection ought to be its guiding standard,” he said.
He added that the role of FRC is to help enhance the quality of financial reporting in Nigeria, adding that “it is not a regulator of banks, neither is it a regulator of the capital market.”
Okezie noted that FRC ought to have recognised the implication of their “reckless pronouncement” in an unsophisticated capital market, as it could lead to panic among investors.
“Unfortunately, this recklessness has already made this happen as we have recorded losses in our share price over the last two days on account of the misguided actions of the FRC,” he said.
Affirming confidence in the leadership of the board of Stanbic IBTC, Okezie added: “We have always commended the transparency and commitment by the board in conducting business in line with world class corporate governance principles.
“It is on account of this that Stanbic IBTC Holdings is the only bank in Nigeria that has an AAA Fitch rating. Shareholders support the bid to expand the operations of the bank as this would guarantee optimal returns on our investment,” he said.
He alleged that FRC is currently “operating without the necessary oversight to moderate its excesses,” and urged President Muhammadu Buhari to urgently constitute a board for the FRC.
“Such a Board will exert control and limit the excesses of the FRC, which is currently run as a one-man-show by its Executive Secretary. The President should deploy a tested technocrat to head the Ministry of Trade and Investment.
“The minister will also exert a controlling influence on the activities of the FRC and help to ensure that good intentions of government are not thwarted by the incompetence and lack of exposure of publicity-seeking and egocentric professionals,” he said.
He called on shareholders of the bank to, “in the collective interest of our overall investment in the bank, seek internal mechanisms to resolve any differences rather than resort to the use of manipulative regulators.”
