3rd November, 2015
A Federal High Court sitting in Lagos will on November 5, 2015 determine whether to invite the Chief Executive Officer (CEO) of the Financial Reporting Council of Nigeria, Mr Jim Obazee, to appear before the court and show cause why he should not be committed for contempt.
This follows the implementation of the Financial Reporting Council of Nigeria- Guidelines/Regulations for Inspection and Monitoring of Reporting entities, published as Notice 94 in the official gazette of government dated October 6, 2014 (FRC Regulations).
The report was published despite being aware of a suit pending before the court challenging the financial regulations which formed the basis on which the bank and its directors were sanctioned.
Justice Okon Abang on Friday, 30 October 2015, gave the adjourned date sequel to a motion on notice filed by members of the Shareholders’ Association of Nigeria challenging the implementation of the FRC Regulations, despite the fact that there is a suit before the court, since February 27, 2015, challenging the FRC regulations.
On 27 February, 2015, 10 members of the Shareholders’ Association of Nigeria led by the Chairman, Chief Timothy Adesiyan, had filed an Originating Summons before the court seeking the court to determine whether the Minister of Industry, Trade, and Investment can, in the exercise of the powers conferred on him by Section 73 of the FRN Act, 2011 to make regulations, proceed to “create new offences and impose sanctions and or penalties and or otherwise expand the scope of the principal Act itself, or lay down entirely new regulations which are not ancillary to the provisions of the Act.”
The shareholders also wanted the court to determine “whether regulations published as government notice No 94 of October 6, 2014 particularly the provisions of Rules 10, 16, 17, 18, and 24 to the extent that those provisions set out new offences and sanctions other than those contained in the principal Act, are not ultra vires the first defendant (Minister) having regard to the provisions of section 73 of the Act under which the first defendant purportedly acted to issue and or make the regulations.”
Joined with Adesiyan as plaintiffs in the suit are Mr Sulaiman Adenrele, Prince Sunday Ogunnowo, Mr Frederick Oduyemi, Chief Robert Igwe, and Mr Bello Owonikoko. Others are Mr Lazarus Onwuka, Mr Tajudeen Adeshina, Mr Peter Okoh, and Mr John Ogundipe.
The defendants are the Honourable Minister of Trade and Investment, the Financial Reporting Council of Nigeria (FRN), the Attorney General of the Federation, and the Steering Committee on the National Code of Corporate Governance.
The defendants had entered appearance before the court through their lawyer, Dr. Fabian Ajogwu (SAN) on April 24, 2015. After filing appearance, the matter came up before the court on 18 June, 2015 and and Justice Abang subsequently adjourned the suit till 30 October, 2015.
However, prior to the adjourned date, the FRCN went ahead with the implementation of the regulations under contention before the court. It sanctioned Stanbic IBTC Holdings in relation to the company’s financial statements for the years ended December 31, 2013, and 2014.
Through a letter that was signed by the Executive Secretary/Chief Executive Officer of FRCN, Mr. Jim Osayande Obazee, the FRC sanctioned Stanbic IBTC over its audited accounts for 2013 and 2014 and suspended the Financial Reporting Numbers of the bank’s chairman, Mr. Atedo Peterside, and its chief executive, Mrs. Sola David-Borha, and also barred them forthwith from vouching for the integrity of any financial statements in Nigeria.
The FRC also suspended two other directors – Mr. Arthur Oginga and Dr. Daru Owei – for attesting to what it termed the “misleading” 2013 and 2014 financial accounts of Stanbic IBTC, as well as Ayodele Othihiwa of KPMG Professional Services for his firm’s alleged complicity in the infractions highlighted in the financial reports for the two-year period. Furthermore, FRCN fined Stanbic IBTC a sum of N1 billion for alleged contravention of the regulations.
When the suit came up for mention on 30 October, 2015, the lawyer to the plaintiffs, Mr Kemi Pinheiro (SAN), told Justice Abang that the act of the defendants is in “utter disregard for the powers of the court in relation to the eventual determination of the suit”.
He argued that some of the plaintiffs are shareholders of Stanbic IBTC Holdings. He, therefore, urged the court to restrain the defendants from further implementing the regulations.
The defendants’ counsel urged the court to dismiss the plaintiffs’ application on the ground that Stanbic IBTC is a separate and distinct entity that had the right to seek redress for any purported act committed against it.
Thereafter, the court adjourned the suit till 5 November, 2015 for hearing of the plaintiffs’ application for injunction.