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SEC suspends Stanbic IBTC N20.4bn rights issue

By on September 10, 2015

The Securities and Exchange Commission on Tuesday suspended Stanbic IBTC Holding Plc’s N20.4bn rights issue, pending the conclusion of investigation by the Financial Reporting Council of Nigeria into allegations of financial impropriety by the group.

The commission explained in a notice published on its website that it suspended the rights issue after it was notified of the investigation.

The notice, which was dated September 7, read, “This is to inform the investing public (particularly the shareholders of Stanbic IBTC Holding Company Plc) that the proposed rights issue earlier approved by the commission is hereby put on hold in view of letters received from the National Office for Technology Acquisition and Promotion, the Central Bank of Nigeria as well as the Financial Reporting Council.

“The Securities and Exchange Commission has also been notified of an ongoing investigation by the FRC on the financial statements of Stanbic IBTC Holding Plc.”

The PUNCH had reported on Monday that the FRCN had opened an investigation into Stanbic IBTC in response to a petition written by shareholders of the bank, drawing the attention of regulatory authorities to some unapproved transactions allegedly conducted by the bank with its foreign technical partners.

The Executive Secretary/Chief Executive Officer, FRCN, Mr. Jim Obazee, had disclosed this after a meeting with the Director-General, NOTAP, Mr. Dan-Azumi Ibrahim, in Abuja.

Obazee had explained that the petition from the stakeholders of Stanbic IBTC was related to the way the group had been accruing some money in its account.

He added, “And if you accrue money in your account, well, there is nothing wrong with accrued money, but it must be disclosed properly.

“Now, they said the accruals were requiring the NOTAP approvals before they can make those payments. Now, the person petitioning is saying that there is no need making those accruals because Stanbic IBTC has not been able to secure NOTAP approval.

“The petition kept coming and then we invited Stanbic IBC to hear their side in the matter. And listening to their side of the story, we believe that the petitioners have a good case.”

Obazee had explained that apart from the protection of the rights of shareholders, the agency was interested in the case because the Federal Government might have lost huge revenue from taxes if the bank was actually making the deductions from profit before tax without necessary approvals from the NOTAP.

In carrying out the investigation, he said the FRCN would find out if NOTAP approved any of the payments, such as historical fees, adding that transactions from 2011 to date would be reviewed.

“If they didn’t get approval for 2011 fees, didn’t get for 2012, 2013 and 2014, why are they keeping the money?” he asked.

The report quoted Ibrahim as saying that NOTAP did not grant the bank approval for the transaction, adding that it would, therefore, be wrong of the bank to make any payment to its foreign partners for franchise.

 

[Punch]

One Comment

  1. GOK

    October 27, 2015 at 2:51 am

    Honestly speaking, the issues raised – fees disclosed as” other
    services rendered” by KPMG & the sale of banking software developed
    in-house ordinarily should not have raised dust if proper explanations
    were sought & provided.

    Without holding brief for
    StanbicIBTC and KPMG, services such as compliance (regulatory) returns,
    contractual matters like report independently provided on the affairs
    of the company to lenders or investors, consultancy including accounting
    services where information is largely derived from audited financial
    statements among others can be provided by the auditors to their clients
    without compromising their independence roles.

    I also think
    StanbicIBTC has done well to have classified “non-audit” separate from
    “audit” fees, instead of lumping them under a more convenient audit fees
    expense head. Sure most organizations would rather lump their non-audit
    fees as part of audit fees in order to escape being questioned by FRCN
    and other regulators.

    Also, wondering how these yearly figures
    here (between N5m -N37m) will significantly affect the overall structure
    of the bank’s financial affairs. How will this also help the
    shareholders??

    FRCN should have waited for the outcome of the
    EFCC’s investigation on the disposed banking software before concluding
    that “they have robbed Nigerians of national pride”. Who knows whether
    the software can no longer support a global brand like Standard Bank
    (StanbicIBTC is a member of Standard Bank) or may be the software has
    even been repackaged into some other solutions.

    Although, I do
    not really support FRCN/StanbicIBTC on the way and manner this matter
    has been handled, but at least it shows that FRCN is being more
    painstaking in its financial inspection and monitoring (regulatory)
    roles. Most organizations will have to sit up and take notice going
    forward!!!