Stanbic IBTC’s Fight With FRC Continues, Group Can’t Still Report FY 2015 In June 2015

The last has not been heard over the imbroglio between Stanbic IBTC and the the Financial Reporting Council of Nigeria, FRC.

Stanbic IBTC is still unable to release its full year 2015 earnings result due to the matter. In order to quell the anxiety of its shareholders, investing publics and the market in general, the company has given an update on the matter to The Exchange.

The problem started when some Stanbic IBTC’s shareholders wrote a petition against the bank for making unauthorised deductions in the company’s gross revenue for management franchise agreements with its South African counterparts. These monies were held in suspense accounts as the National Office for Technology Acquisition and Promotion, NOTAP did not approve the agreement.

The FRC and NOTAP therefore ordered that the bank cannot keep the amounts in the balance sheet. The disagreement that ensued thereafter led to the suspension of Sola David-Borha, Chief Executive Officer Stanbic IBTC Holdings and other principal officers. The FRC was overruled by the CBN, while the bank did go to court to seek redress, Stanbic IBTC lost the case.

A Federal High Court sitting in Lagos dismissed its suit against the FRC and NOTAP. According to Vanguard newspaper:

“Mr Justice Buba, in his judgment,  held that the questions raised by Stanbic IBTC regarding FRC were hypothetical and academic and he did not deal with them.

The court held that section 7 of the NOTAP Act 1979 expresses important national public policy of Nigeria, namely to avoid the dumping of obsolete and inappropriate technology in Nigeria and to raise revenue for the Federal Government of Nigeria. According to the court,  an agreement that seeks to circumvent the registration requirement under the NOTAP Act would not be enforced by the courts.

Stanbic IBTC in the appeal before the Court of Appeal, is contending that the lower court did not addressed the position where an agreement was submitted for registration and NOTAP fails or refuses to register or where an agreement is for a period of years and NOTAP gives approval to make payment in relation to some (but not all) of the years.”

Stanbic IBTC has since appealed the case and it indicated that it would go as far as the Supreme Court.

“The FRC has informed Stanbic IBTC Holdings PLC that it will not comply with the court orders or engage constructively with Stanbic IBTC Holdings PLC unless and until there is a non-appealable decision of a court of competent jurisdiction. It is pertinent to mention that only decisions of the Supreme Court of Nigeria are nonappealable.”

Investors and its shareholders would have to wait to know what is going on. With no historical precedence to this matter, it is interesting to see how this matter will be concluded.

Shares of Stanbic IBTC currently trades at NGN 16.81 kobo per share. The company’s stock has fallen by 71% in the last 12 months.

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