Financial Reporting Council Of Nigeria (FRC) Says Central Bank Of Nigeria (CBN) Is Shielding Stanbic IBTC Over Identified Corporate Governance Infractions
Row between Financial Reporting Council of Nigeria (FRC), and Central Bank of Nigeria (CBN), over alleged corporate governance breach by Stanbic IBTC deepened weekend with the council accusing the apex bank of shielding the embattled bank.
The FRC, in a letter dated November 10, 2015, and signed by its Chief Executive Officer, Mr. Jim Obazee, said that the CBN’s action on issues surrounding Stanbic IBTC was in bad faith adding that it amounted to embarrassing the council and the Federal Government.
According to the Financial Reporting Council, CBN’s action through a letter signed by the Governor of Central Bank of Nigeria, Godwin Emefiele, faulting the regulatory decisions of the Council on Stanbic IBTC also breached the understanding brokered by the Chief of Staff to the President, Mallam Aba Kyari, between the two regulatory bodies over identified infractions raised by FRC on Stanbic IBTC financial statements.
Recalling the sequence of events between the two regulatory bodies, the FRC drew attention to the outcome of a meeting with Kyari who advised the two regulatory bodies to schedule a meeting to come up with a harmonized position as two regulators on the review of Stanbic IBTC’s financial statements for 2013 and 2014 business years.
The FRC also recalled the position of Kyari to the effect that the CBN should be sanctioned if it was discovered that the errors observed in the said financial statements of IBTC were true, as the CBN had approved the said financial statements before they were issued.
Obazee wrote, “The Chief of Staff to Mr President met with you (Emefiele) and I in his office and advised that we reschedule a meeting to come up with a harmonised position as two regulators on the review of the financial statements of Stanbic IBTC for years ended 31st of December 2013 and 2014.
“He went further to state that the CBN should also be sanctioned if it is discovered that the errors observed in the said financial statements are true, because the CBN approved the said financial statements before they were issued. “
At that meeting, you claimed that what the CBN had done since you received the regulatory decisions of the FRC was to get an opinion from a consortium of lawyers on the provision of the FRC Act, 2011.”
Obazee further pointed out that at the end of that meeting, Kyari directed that the CBN should write the management of Stanbic IBTC to direct it to stop all negative publicity being sponsored against the FRC.
According to Obazee, instead of writing the letter, the CBN chose to clear the bank without the involvement of the FRC which had raised the issue of infractions against Stanbic IBTC.
“At that meeting,” Obazee noted, “His Excellency, the Chief of Staff directed as follows: That you should write to the management of Stanbic IBTC directing them to immediately stop all negative publicity being sponsored against the FRC. He directed you to send a copy of that letter to me.”
Obazee pointed out that “Up till now, you are yet to send a copy of that letter to my office and Stanbic IBTC has simply increased the negative publicity to even include my person.”
Deepening the chronological sequence of events on the matter, Obazee expressed great concern over the failure of CBN to act on issues agreed by both bodies, including the directive by the Chief of Staff to the President, instead the apex bank decided to unilaterally clear Stantic IBTC.
Obazee wrote: “The CBN issued a letter to our Council claiming that the CBN had cleared Stanbic IBTC and maligned the FRC. The said letter did not get to our office until 6.30pm on Tuesday, November 3, 2015.
“I have taken time to outline this sequence of events to you so as to let you know that the CBN has not acted in good faith and that the actions of the CBN were calculated to embarrass the FRC and indeed the Federal Government of Nigeria.”
On the financial issues raised by the CBN in its letter of Novermber 2, 2015, Obazee pointed out that the apex bank mixed up issues as a result of which it ended up with what it described as very wrong and hasty conclusions. It said that the regulatory decision of the FRC on a particular transaction by Stanbic IBTC was different from the one CBN evaluated.
“The CBN mixed up the issues and ended up with very wrong and hasty conclusions. The regulatory decision of the FRC refers to a particular ‘Purchase and Assignment of a Banking Application software’ request made to NOTAP by Stanbic IBTC on July 3, 2013 which is another transaction other than the one your letter addressed,” Obazee pointed out.
Drawing attention to the legal boundaries of the two regulatory bodies, Obazee said, “We request the CBN to also seek an independent opinion on these financial reporting matters from the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN) to enable the CBN reach an informed decision.
“We observed that the CBN attempted to interpret the FRC Act, 2011. We would like to inform the CBN that it does not have the competence nor the authority to evaluate the FRC Act.
That should be left for the office of the Attorney General of the Federation and Minister of Justice, or a court of competent jurisdiction.
“We make bold to say that we acted within the provisions of the FRC Act, 2011. Since the FRC is neither a department of the CBN nor a reporting agency of the CBN, we do not owe the CBN any explanation in this respect.”
Experts who spoke to The UNION expressed concern over the development. Executive Chairman, Society for Analytical Economics, Godwin Owoh, warned of grave consequences not only on the nation’s macroeconomic landscape but Africa and the entire black populace in the world because of the position of influence Nigeria occupies. He said, “I am talking to you as someone who has taken time to look through the representations of both the Central Bank of Nigeria and Financial Reporting Council of Nigeria. The CBN erred professionally. Their reply exhibited a lack of technical competence in financial reporting and financial regulation in Nigeria.”
– Sam Diala