The Financial Reporting Council of Nigeria, FRC Investigates Stanbic IBTC Rights Issue

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The Financial Reporting Council of Nigeria says it has commenced investigations into allegations of financial impropriety made in the financial statements of Stanbic IBTC Bank Plc.

The Executive Secretary/Chief Executive Officer, FRCN, Mr. Jim Obazee, stated this shortly after a meeting with the Director-General, National Office for Technology Acquisition and Promotion, Mr. Dan-Azumi Ibrahim, in Abuja.

He said the move was in response to a petition written by shareholders of the bank, drawing the attention of regulatory authorities to some unapproved transactions allegedly conducted by the bank with its foreign technical partners.

In the petition, a copy of which was made available to our correspondent, members of Trusted Shareholders Association, had alleged that tens of billions of naira were yet to be returned into the profit and loss account of the bank.

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But reacting to the development, Obazee said that the council, based on preliminary discussions with both parties, had come to realise that the petitioners had a valid case.

He said, “The petition from the stakeholders of Stanbic IBTC is on issues relating to Stanbic IBTC and the way they have been accruing some monies in their account.

“And if you accrue money in your account, well there is nothing wrong with accrued monies, but it must be disclosed properly.

“Now they said the accruals were requiring the NOTAP approvals before they can make those payments. Now the person petitioning is saying that there is no need making those accruals because Stanbic IBTC have not being able to secure NOTAP approval.

“The petition kept coming and then we invited Stanbic IBC to hear their side in the matter. And listening to their side of the story, we believe that the petitioners have a good case.

“So, our next step is to look at the agencies that were duly involved. The NOTAP itself which will give the approval; this applies to the Central Bank of Nigeria as regulator and Securities and Exchange Commission because they were asking for general mandate for the treatment of third-party transactions, which we were against because that will not be in line with related party transactions accounting standards.

“We are here to also find out if the NOTAP approved any of these payments, such as historical fees. We are looking at transactions from 2011 to date.

“If they didn’t get approval for 2011 fees, didn’t get for 2012, 2013 and 2014. So why are they keeping these monies.”

He said the FRCN would also be visiting the top management of the SEC as part of its investigation activities on the matter, noting that after all these visitations, officials of the bank would again be invited for questioning.

He said apart from the protection of the rights of shareholders, the agency was interested in the case because the Federal Government might have lost huge revenue from taxes if the bank was actually making the deductions from profit before tax without necessary approvals from the NOTAP.

He said, “The other party that is part of this entanglement is the SEC. We intend to immediately put a call to them to stand down on whatever rights issue request that Stanbic IBTC is making in a hurry until this matter is resolved properly; this is because our jobs as government agencies is to protect investors and other stakeholders’ interest.

“Government is also involved in this matter because if you are taking out some money out of profit before tax, and you are warehousing it for a number of years, you are actually defrauding the Federal Government because the government is supposed to have taxes from the profit. But if you are keeping money from profits before tax, it means that that money was taken off and government was denied its share.

“So, government is losing out on it, and we want to straighten it out. We want to know if it wasn’t reported correctly in the financial statement. Otherwise they will be subjected to the FRC disciplinary procedure. We can even ask them to withdraw the financial statement and reissue it.”

Also commenting on the issue, the NOTAP boss said that no approval was granted by the agency to the bank for the transaction.

He said since the agency didn’t give the approval it would be wrong of the bank to make any payment to its foreign partners for franchise.

He said. “We regulate the inflow of foreign technology into the country and at the same time develop local technology.

“Well the NOTAP is expected to register Stanbic IBTC with its foreign partner and we have a guideline on how we do our registration. We are guided by the forex manual of the CBN.

“So whatever is not covered by the manual, we don’t approve. So, Stanbic IBTC applied for a franchising agreement, management fee agreement and we still did not render them that approval because management service agreement is not required in Nigeria. We have local firms that have this.”punch.