The Federal High Court sitting in Lagos has barred the Financial Reporting Council of Nigeria (FRCN) from interfering in the operations of Stanbic IBTC Holdings Plc pending the final determination of a suit challenging the actions of the regulatory agency.
Presiding Justice Ibrahim Buba in a ruling on the motion for interlocutory injunction filed by Stanbic IBTC Holdings also restrained FRCN from inviting the company’s entire Board of Directors to any meeting in connection with any statutory investigation of its financial statements until the final determination of the pending suit.
Stanbic IBTC Holdings had dragged the FRCN and the National Office for Technology Acquisition and Promotion (NOTAP) to court over allegations of material mis-statements in its financial accounts which culminated in a one-billion Naira fine.
The court’s proceedings have been adjourned till Friday, November 6, for the hearing of the motion for joinder by an interested party.
The Main Suit
In the main suit, the bank is asking the court to determine whether FRCN has the power to impose a fine of one billion Naira on it.
The bank also wants the court to determine whether or not the FRCN has the power to license Directors and other office holders of public interest entities and if it also has the power to suspend the said licence by suspending a Director or other office holder of a public interest entity.
It also wants the court to determine if the council has the power to bar any Director or other office holder from signing the entity’s financial statements without informing the affected Director or other office holder what he/she has done wrong and giving him/her the opportunity to show cause why disciplinary action should not be taken against him?
It further asked the court to answer the question whether “the true construction of the National Office for Technology Acquisition and Promotion (NOTAP) Act 1979 is non-registration of an agreement registrable under the NOTAP Act a criminal offence”?
Other reliefs sought by the bank include: “A declaration that failure to register a registrable agreement under the NOTAP Act is not a criminal offence.
“A declaration that failure to register a registrable agreement under the NOTAP Act does not render the agreement illegal and unenforceable or render the agreement null and void.
“A declaration that the effect of non-registration of a registrable agreement under the NOTAP Act is as stated in section 7 of the NOTAP Act, namely to prevent payment or remittance of money to any person outside Nigeria in respect of the unregistered agreement.
“A declaration that the first defendant has no power to dictate to a public interest entity the types of commercial agreements that it may enter into in the conduct of its business.
“A declaration that the first defendant has no power to license Directors or other office holders of a public interest entity who may sign financial statements of such entities, for example by giving the directors or other office holders FRC numbers and insisting that the FRC numbers must be quoted on all financial statements signed by them.
“A declaration that Regulation 18 of the Inspection and Monitoring Regulations is invalid, null and void”.
FRCN had last week sanctioned Stanbic IBTC over its audited accounts for 2013 and 2014 and suspended the bank’s chairman, Mr Atedo Peterside, and its Chief Executive, Mrs Sola David-Borha.
The FRCN 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 the bank, 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.
The sanctions were based on issues raised by the bank’s minority shareholders led by the Mahtani brothers who own the Churchgate conglomerate, to some other regulatory agencies such as NOTAP, Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN), among others.