Business

Stanbic IBTC under investigation for alleged infractions

Published

9 years ago

September 2, 2015

In from Ali Smart …
Stanbic IBTC Bank Plc is being investigated by the Financial Reporting Council of Nigeria (FRCN) for allegedly engaging in unapproved transactions conducted by the bank with its foreign technical partners in the last four years, Ripples has learnt.
Investigation by Ripples revealed that some shareholders had expressed concern over the rising level of infractions committed by the bank but the management were said to have maintained studied silence on the matter.
Confirming this development, the Executive Secretary/Chief Executive Officer, of FRCN, Mr Jim Obazee disclosed that the FRCN was determined to get to the root of the matter.
The FRCN boss who was a guest at the office of the Director General, National Office for Technology Acquisition and Promotion (NOTAP), Mr Dan-Azumi Ibrahim, disclosed that the Council was responding to a petition written by shareholders of the bank.
According to Obazee, the shareholders drew the attention of regulatory authorities about some unapproved transactions conducted by the bank with its foreign technical partners.
“The petition from the stakeholders of Stanbic IBTC is on issues relating to Stanbic IBTC and the way they have been accruing some monies in their account.”
At issue, Obazee said, is whether Stanbic IBTC properly disclosed these accruals into its account which is what the FRCN is investigating.
The accruals, he said: “must be disclosed properly and they (Stanbic IBTC) require NOTAP approvals before they can make those payments. Now the person petitioning is saying that there is no need making those accruals because IBTC have not been able to secure NOTAP approval.”
Obazee maintained that “the petition kept coming and then we invited Stanbic IBC to hear their side of the matter. And having listened to their side of the story, we believe that the petitioners have a good case.”
In line with its investigation, the FRCN boss said the Council will be meeting with regulatory agencies like the “NOTAP which will give the approval, Central Bank of Nigeria as regulator and Security and Exchange Commission because they (Stanbic IBTC) were asking for general mandate for the treatment of third party transactions which we were against because that will not be in line with related party transactions accounting standards.”
The FRCN came to NOTAP to “find out if NOTAP approved any of these payments, such as historical fees, transactions from 2011 to date. If they didn’t get approval for 2011 fees, didn’t get for 2012,2013, 2014. So why are they keeping these monies” he queried.
Obazee stated that “government is also 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. Because the federal government is supposed to have taxes from the profit. But if you are keeping money from profits before tax, it means that that money was taken off and government was denied its share. So government is losing out on it.”

As part of the investigation, the FRCN would “want to know if it wasn’t reported correctly in the financial statement. Otherwise they will be subjected to the FRCN disciplinary procedure. We can even ask them to withdraw the financial statement and reissue it.”
To prevent further undercutting the system, the FRCN boss said the Council “intends to immediately put a call to SEC to stand down on whatever rights issue request that Stanbic IBTC is making in a hurry. Until this matter is resolved properly, because our job as government agencies is to protect investors and other stakeholder’s interest.”
Commenting on the development, NOTAP boss said “no approval was granted by the agency to the bank for the transaction.”
He agreed with the FRCN boss that his agency didn’t give the approval it would be wrong of Stabic IBTIC to make any payments to its foreign partners for the franchise.
According to him, “we regulate the inflow of foreign technology into the country and at the same time develop local technology. NOTAP is expected to register Stanbic IBTC with its foreign partner and we have a guideline on how we do our registration. We are guided by the forex manual of the CBN.”
He added that “whatever is not covered by the manual, we don’t approve. So Stanbic IBTC applied for a franchising agreement, management fee agreement and we still did not render them that approval because management service agreement is not required in Nigeria. We have local firms that have this. So we felt we do not need foreigners to come and teach us how to manage banks. And also a franchise arrangement is not covered under banking facility.”

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