Stanbic IBTC sanctions: CBN acted in bad faith – Financial Reporting Council

The Financial Reporting Council of Nigeria has responded to the letter by the Central Bank of Nigeria which claimed the regulatory council lacked the authority to order the suspension of Stanbic IBTC and its directors.

The Executive Secretary of the council, Jim Obaze, said in a letter dated November 10, 2015 with reference No. FRC/2015/DIM/Regulatory/002, that despite the intervention of the presidency in the matter, the CBN has refused to keep agreements.

Copies of the letter were sent to the National Office for Technology Acquisition and Promotion, Securities and Exchange Commission, and the Ministry of Industry Trade and Investment.

Following the meeting with the Chief Of Staff to the President, Abba Kyari, the FRC said it was agreed that CBN should write to Stanbic IBTC directing it to immediately stop all negative publicity against the council. The council was in turn asked to desist from similar media publications.

Besides, the CBN was directed to visit Stanbic IBTC to review the records to establish whether the errors were as a result of oversight, incompetence or compromise, while FRC should secure written positions on the matter from external auditors of the bank.

Although the FRC said it had since written to KPMG professional services, to send within seven working days the relevant documents as advised by the COS, the CBN was yet to comply.

“CBN actions are calculated to embarrass the Council and the Federal Government,” the FRC said. He accused the CBN of mixing up issues and ending up with a very “wrong and hasty conclusions”.

The council said the CBN did not have the competence, nor the authority to evaluate the FRC Act, adding that the process of inspection of the FRC, should be left for the office of Attorney General of the Federation and Minister of Justice or a court of competent jurisdiction.

The Council listed a series of procedural infractions committed by the regulator – rather than the bank – and dismissing all allegations of “financial misstatements” brought against the bank.”

FRC accused the CBN of not acting in good faith over the matter, by harmonising their positions on the review of the financial Statements of Stanbic IBTC for the year ended December 31, 2013 and 2014.

“The Council asked that the CBN should equally be sanctioned if it was discovered that the observed errors in the financial statements were true since the CBN approved the said financial statements before they were issued,” the statement said.

Mr. Obazee said the “Purchase and Assignment of Banking Application software” request made by (NOTAP) by Stanbic IBTC on July 3, 2013 was another transaction other than the one the CBN addressed.

He denied that Stanbic IBTC actually obtained the necessary approval for the software at the NOTAP, referring to alter that stated that the request was not approved.

“The transfer/reclassification of computer software in 2012 of N1.367 billion was not properly accounted for in the financial statements,” he disclosed, pointing out that the “inconsistencies and poor disclosures made the financial statements esoteric and incomprehensible, even to financial literate users.”

Apart from directing the two financial regulatory bodies in the country to ensure the problem was corrected and a consensus reached before the years ended 31st December, 2013 and 2014 respectively, the presidency had directed that they found the way to resolve the issue.

The Council sought an independent opinion of the financial reporting matter from the Institute of Chartered accountants of Nigerian (ICAN) and the Association of National Accountants of Nigeria (ANAN) to enable the CBN reach an informed decision.

The CBN Director of Communications, Ibrahim Mua’zu, said the bank was not in a position to comment any further on the issue for now, since the public had faulted FRC decision that it could not be the accused and the judge in the case.