The Financial Reporting Council of Nigeria on Tuesday said it had
begun an investigation into the disclosures made in the financial
statements of Stanbic IBTC Bank Plc.
The Chief Executive Officer of FRCN, Jim Obazee, said this while
addressing newsmen after meeting with officials from National Office
for Technology Acquisition and Promotion.
Obazee said the move was in response to a petition written by
shareholders of the bank, drawing the regulatory authority’s attention
to some unapproved transactions entered into by Stanbic IBTC bank.
Members of Trusted Shareholders Association of Stanbic IBTC had
alleged that tens of billions of Naira were yet to be returned into
the profit and loss account of the bank.
The petition alleged: “Stanbic IBTC Holdings Plc has applied to the
Securities and Exchange Commission for approval of its proposed Rights
issue, without refunding tens of billions of Naira deducted from gross
revenue earned.
“This has been illegally stashed in an account since 2011 for the
credit of its controlling shareholder, Standard Bank of South Africa
as payment for franchise and management fees without prior approval by
NOTAP which is mandatory.
“As tens of billions of Naira are yet to be returned to the profit and
loss account, the present balance sheet as currently stated, is not a
true and fair representation.”
Obazee said the council decided to pursue the case further after
meeting with Stanbic IBTC bank and its shareholders.
He said based on the meetings, the council concluded that the
petitioners had a valid case.
He said: “We are here to also find out if NOTAOP approved any of these
payments, such as historical fees, among others.
“We are looking at transactions from 2011 to 2014.
“If they didn’t get approval for 2011 fees, didn’t get for 2012, 2013, 2014.
“So why are they keeping these monies?
“It is illegal.”
Obazee said the council would visit the Securities and Exchange
Commission and the Central Bank of Nigeria as part of its
investigation on the matter.
He said that after the visitations, Stanbic IBTC Bank would again be
invited for questioning.
Obazee said apart from the protection of the rights of shareholders,
the agency was interested in the case because Federal Government might
have lost huge revenues as taxes.
He said this was because the bank was making the deductions from
profit before tax without including the monies that the shareholders
were grieving about.
He said: “Government is 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.
“Federal Government is supposed to have taxes from the profit.
“But if you are keeping money from profits before tax, it means that
the money was taken off and government was denied its share.
“So we want all these straightened out as well. We want to know if it
wasn’t reported correctly in their financial statement.
“Otherwise they will be subjected to the FRCN’s disciplinary
procedure. We can even ask them to withdraw the financial statement
and reissue it.”
The Director-General of NOTAP, Dan-Azumi Ibrahim, said that no
approval was granted by the agency to the bank for the transaction.
Ibrahim said since the agency didn’t give the approval, it would be
wrong for the bank to keep money or make any payment to its foreign
partners as management fees.
He said: “NOTAP is saddled with the responsibility of regulating the
inflow of foreign technology into the country and at the same time
develops local technology.
“So NOTAP was expected to register Stanbic IBTC with its foreign
partner, Standard Bank of South Africa and we have a guide line on how
we do our registration.
“So Stanbic IBTC applied for a franchising agreement, management fee
agreement year after year and we did not render them approval because
management service agreement is not required in Nigeria.”
Ibrahim reiterated NOTAP’s readiness to collaborate with FRCN to
resolve the Stanbic IBTC issue.
NAN.
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