FRC axes Stanbic’s Peterside, others

•Bank rejects sanction

Were there “material irregularities” in Stanbic IBTC financial statements between 2011 and 2014?

There were, says the Financial Reporting Council of Nigeria (FRC), which is pushing for the bank’s probe by the Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS) and Economic and Financial Crimes Commission (EFCC).

In its Regulatory Decision on Stanbic IBTC, FRC appealed to CBN, FIRS and EFCC to help  bring Stanbic IBTC to book.

CBN, it said, was “requested to assist in this effort by taking regulatory disciplinary actions against those whom the CBN expects to guarantee the integrity of the financial statements in order 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.”

It urged FIRS “to ensure that the related taxes are paid and the government is not unduly shortchanged.”

FRC wants EFCC “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.”

Reacting, Stanbic IBTC claimed that “FRCN’s allegations are inaccurate and unfortunate, and the manner in which it has chosen to make them is procedurally defective.”

A statement signed by its Chief Executive Officer, Mrs Sola David-Borha,  and Company Secretary, Chidi Okezie  said: “Whilst FRCN takes refuge in Regulation 21 of the Directorate of Inspection and Monitoring Guidelines Regulations 2014 for the wide publicity that 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”.

The bank went on: 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 FRCN’s position, FRCN ‘shall institute a legal action against the entity’. FRCN has ignored this laid down process in preference for self-help and media publicity.”

Yesterday, FRC said its attention was drawn to Stanbic IBTC’s “material irregularities” on its financial statements between 2011 and 2014 by some minority shareholders.

A controversial issue in Stanbic IBTC financial statements, it alleged, was the disclosure that auditors earned “fees for other services” in addition to the audit fee as follows.

2014: N7,000,000; 2013 –N5,000,000; 2012: N 37,000,000; 2011: N13,000,000. The Council said it was interested in knowing the nature of these non-audit services, the fees actually earned and the possible impact on auditor independence and objectivity.

The Council took exception to the posting under “others”, saying it has always made it known to reporting entities and their external auditors that descriptions in the financial statements such as “others”, “sundries” and “miscellaneous”, especially when these were substantial and material, were poor disclosure and should be avoided at all cost.

The Council said it “observed that Stanbic IBTC regularly flouts CBN regulations. In 2014 for instance, a total penalty of N28,000,000 was imposed on the group. Among the contraventions was improper disclosure of public sector deposits in 2014. Stanbic IBTC seems to have a penchant for poor disclosures which further corroborates the findings in this report.

“The Directors of Stanbic IBTC were then directed 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 provisions of Section 64 (2) of the Financial Reporting Council of Nigeria Act No. 6, 2011 and Regulation 21 of the Financial Reporting Council of Nigeria – Guidelines/ Regulations for Inspection and Monitoring of Entities, 2014.

“The FRC numbers of the following persons who attested to the misleading statements of financial position of Stanbic IBTC Holdings Plc for years ended 31st December 2013 and 2014 have been suspended 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 No. 6, 2011.

“Accordingly, they are not allowed to vouch for the integrity of any financial statements issued in Nigeria. The persons are: Atedo N. A. Peterside FRC/2013/CIBN/00000001069; Sola David-Borha FRC/2013/CIBN/00000001070; Arthur Oginga FRC/2013/IODN/00000003181; and Dr. Daru Owei  FRC/2014/NIM/00000006666.

Stanbic IBTC said “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.”

“Our books have been fully disclosed and provide a true and fair view of our assets and liabilities, profits and losses, and our overall financial position.

Its directors, it said “have not been ousted. The directors, who are from Nigeria and elsewhere, are reputable individuals who uphold the best corporate governance practices and whose credibility, integrity and proven track record are impeccable.”