FRC suspends Stanbic IBTC directors, KPMG

FRC suspends Stanbic IBTC directors, KPMG
 0
By Our Reporter  on October 27, 2015
The Financial Reporting Council (FRC) has requested that the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) investigate Stanbic IBTC and KPMG Professional Services for financial misstatements.
 In a report released by the FRC on Monday, the council suspended the registration of four directors of Stanbic IBTC and that of its audit engagement partner, KPMG, until KPMG’s innocence is ascertained. The four directors suspended are Atedo Peterside, Sola David-Borha, Arthur Oginga and Dare Owei. The bank is alleged to have misstated its financial reports for the 2013-2014 fiscal year and ceded its banking application rights to Standard Bank of South Africa against the directives of National Office for Technology Acquisition and Promotion (NOTAP).
 According to FRC, “the schedules supplied to the council by Stanbic IBTC revealed that the total fee paid to KPMG for non-audit services was inconsistent with what was disclosed in the financial statements for the years under review.” The bank was also alleged to have flouted a number of financial regulations, including a regular flouting of CBN regulations. “In 2014, for instance, a total penalty of N28 million was imposed on the group. Among the contraventions was improper disclosure of public sector deposits in 2014,” FRC said in its report. “Stanbic IBTC seems to have a penchant for poor disclosures which further corroborates the findings in this report.”
In view of all the allegations established by FRC, the council decided that CBN assist by taking regulatory disciplinary actions against those expected to guarantee the integrity of the aforementioned financial statements to safeguard the interest of stakeholders of Stanbic IBTC.
“We are convinced that once the monies are properly accounted for and used to shore up their Tier 1 capital, the institution shall become stronger,” the panel’s resolution read in part. “The Federal Inland Revenue Service (FIRS) is requested to ensure that the related taxes are paid and the government is not unduly shortchanged.
“The EFCC is requested to assist in this effort by questioning those involved in the concealment and sale of the banking application software that was developed in Nigeria which, other than the financial implication, has also robbed Nigerians of national pride.”
But in reaction to the development, Stanbic IBTC acknowledged the FRC statement, which it described as inaccurate and unseemly allegations.
 In a statement jointly signed by the Chief Executive Officer, Mrs. Sola Borha-David, and Company Secretary, Chidi Okezie, and made available to Daily Sun yesterday, the bank noted that although the matter is in court, it is constrained to respond to some aspects of the report:
“FRC’s allegations are inaccurate and unfortunate, and the manner in which it has chosen to make them is procedurally defective. While FRC takes refuge in Regulation 21 of the Directorate of Inspection and Monitoring Guidelines Regulations 2014 for the wide publicity 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’.
“That is not the case here, because Stanbic IBTC does not agree that its accounts are defective or require rectification.  Moreover, Regulation 27 makes clear that where a reporting entity does not accept FRC’s position, FRC ‘shall institute a legal action against the entity’. FRC has ignored this laid down process in preference for self-help and media publicity.
“The matters that FRC alleges to be wrong are not wrong in any material respect and many are in any event not matters of financial reporting at all, but matters of business decision and judgment for Stanbic IBTC and its board of directors. For example, the decision whether to enter into a sale and lease back, whether in relation to intellectual property or any other asset, is a business decision and entirely a matter for the board of directors of Stanbic IBTC and certainly not a matter for FRCN.
“In the same vein, NOTAP’s refusal to register a franchise agreement does not render the agreement null or void, or indeed relieve Stanbic IBTC of its liability. It merely means that any foreign currency payment due to the foreign counterparty under the unregistered agreement cannot be remitted. Stanbic IBTC has not and will not make any remittance, which is subject to NOTAP approval without obtaining such approval.
“Stanbic IBTC is a very responsible organisation and fully complies with all extant laws and regulations in Nigeria and international best practices applicable to the conduct of its business. It is the only Nigerian bank that is AAA rated by Fitch. It has met the disclosure requirements of Nigerian law and international financial reporting standards applicable in Nigeria. Contrary to the media reports, the books of Stanbic IBTC have been fully disclosed and provide a true and fair view of its assets and liabilities, profits and losses, and its overall financial position.”