FRC prays court to throw out KPMG’s suit

By Ali Smart

The tension generated by the suspension of directors of Stanbic IBTC Holdings and the KPMG is yet to abate with the appeal by the Financial Reporting Council of Nigeria (FRC) to the Federal High Court in Lagos to dismiss a suit filed against it by KPMG Professional Services.

KPMG through its lawyers, Ayodele Othihiwa, had asked the court to stop FRC from sanctioning it over its role in the financial statements of Stanbic IBTC Holdings.

However, the case could not be heard on Thursday as the plaintiff’s lawyer, Mr. Babatunde Fagbohunlu (SAN) informed Justice Ibrahim Buba that he filed a new application to oppose FRC’s Notice of Preliminary Objection.

The respondent’s lawyer, Mr Norrison Quakers (SAN), said he needed time to respond.

“I’ve just been served. I’ll not be opposing the application,” he said.

FRC is praying the court to dismiss the suit in its entirety because the court lacks jurisdiction to entertain it.

The council is contending that the applicant’s Originating Motion discloses no cause of action against it.

FRC said it merely performed its statutory functions and duties and cannot be stopped from doing so.

The council said the plaintiff did not appeal to FRC’s Technical and Oversight Committee or exhaust laid down procedures for resolution of disputes before filing the suit.

In effect, it said the plaintiffs did not comply with “a condition precedent before initiating, instituting or commencing legal action.”

Besides, FRC said the applican’s right to fair hearing was not infringed on because KPMG was “given the opportunity for fair hearing.”

Justice Buba had on November 6 restrained FRC from imposing any sanction on KPMG until the firm’s suit was determined.

He barred FRC’s Executive Secretary Mr. Jim Obazee from sanctioning Othihiwa.

FRC, in an October 30 letter, conveyed its ‘regulatory decision’ to the applicant, following its role in the financial statements of Stanbic IBTC Holdings Plc for 2013 and 2014.

The council said it had suspended Othihiwa “until the investigation as to the extent of the negligence of KPMG Professional Services is ascertained.”

KPMG and Othihiwa said the FRC’s decision was published and issued without informing or notifying them of the nature of the allegations made against them, nor were they invited to respond to the allegations.

They claimed the FRC’s decision not only violated their right to fair hearing, but flouted Section 62(2) of the FRC Act, which spelt out the procedure to be adopted in investigating a professional body for any ‘complaint or dishonest practice, negligence, professional misconduct or malpractice.’

Justice Buba adjourned the case till Monday for hearing.

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