The Federal Government on Monday announced the removal of the Executive Secretary of the Financial Reporting Council of Nigeria (FRC) Jim Obazee following the controversies surrounding the Corporate Governance Code issued by the regulator. The code, it was believed, led to the shocking retirement of the General Overseer of one of Nigeria’s most powerful churches RCCG, Pastor Enoch Adeboye. Ironically Obazee was once a member of the RCCG. Vice President Professor Yemi Osinbanjo is a member of the Church and served as a senior Pastor in the church just before he was elected as Vice President in the Buhari Administration. Minister of Trade, Dr. Okey Enelamah, the supervising minister of the FRC is also a member of the church.
Mr Obazee’s sack has drawn just as much controversy with critics suggesting that it was throwing the baby and the bath water. This is not the first of Mr Obazee’s controversies though this was perhaps the last straw. He is chided somewhat secretly by the accounting community in Nigeria and has also been involved in several high profile cases with notable organisations.
We have dug into our archives to pick out some of the notable controversies involving the FRC under the leadership of Obazee.
TIMELINE OF FRCN CROVERSIES
FRC vs Eko Hotel
- In 2012, Eko Hotel received a notice from the FRC requesting for its registration with the FRC and payment of dues for 2011 and 2012.
- Eko Hotel responded through its legal counsel that it was neither a public company or a public interest entity.
- FRC challenged the legality of the counsel to make representation, on the basis of its not being registered with the FRC.
- Eko hotel approaches a federal high court on the issue.
- The court gives a verdict on the 21st of March 2014 ruling in favour of Eko Hotels.
- The court held that Eko hotel was not required to pay any fees or register with the FRC.
- The court also held that there was no legal power by the FRC to exercise power over a private body.
FRCN v Sanusi
- In 2014, the FRCN raised allegations against the ex CBN governor, Sanusi Lamido under his leadership for financial recklessness.
- Mallam Sanusi who had declined an invitation to appear before the FRC mandated to probe his tenure, wondered whether the council “is the appropriate statutory body” to conduct such an investigation.
- Speaking through his media consultant, Celine Loader, he made reference to the enabling statute of the FRC Act 2011, particular Sections 7, 8, 11, 25, 28, 58(2) and 62 which said “it does not give the FRC the authority and the powers to conduct the investigation it seeks to undertake.”
- Sanusi later appeared to court after several declines of invitations.
- Sanusi lawyer stated that his defendant was wrongly accused by the FRC.
- The judge resolved all the issues for determination in Sanusi’s favour, saying the suspended CBN boss was right not to honour FRC’s invitation.
- Sanusi was later suspended from the office in February 2014 by then President Goodluck Jonathan as a result of the erroneous allegations by the FRC.
FRC vs Stanbic IBTC
- In October 2015, the FRC suspended the FRC registration of Atedo Peterside and three other directors of Stanbic IBTC Holdings (SIBTCH) and barred them from authorizing any financial statement in the country.
- Ayodele Othithiwa, the KPMG auditor involved in the audit also had his registration suspended.
- They were accused of improper disclosures in the financial statements for 2013 and 2014.
- The council ordered the bank to withdraw the statements, insisting that they were not in tandem with IFRS regulations, hence misleading.
- They also asked the Securities and Exchange Commission (SEC) to withhold approval for the rights issue which Stanbic had intended to undertake.
- It also called on the Central Bank of Nigeria (CBN) and Economic and Financial Crimes Commission (EFCC) to investigate both Stanbic-Ibtc and KPMG.
- The council also urged the Federal Inland Revenue Service (FIRS) to investigate the bank regarding proper payment of taxes.
- The FRC was apparently acting on a petition by minority shareholders accusing the bank of making unauthorized accruals running into billions of naira.
- The accruals were in respect of franchise/licence payments to the parent company of Stanbic, Standard Bank of South Africa.
- The petition also alleged that there were irregularities in respect of the bank’s purchase of software and categorization of other expenses in its financial statements from 2011 to 2014.
- The council then fined the bank the sum of N1 billion naira.
- The CBN eventually responded chiding the FRC for not following “due process” and that they were “unable to accede” to their “request to take disciplinary action against SIBTCH”
FRC v. MTN
- In 2016, the Financial Reporting Council of Nigeria, in its presentation, blamed the regulator, the Central Bank of Nigeria, for any irregularities in the alleged $13.9bn.
- The Executive Secretary, FRC, Mr. Jim Obaze, blamed the CBN for the continuous depletion of the nation’s foreign reserves.
- Nigeria foreign reserves, which stood at $30.2bn in July 2015 from $29.9bn it was in May 2015, dropped to $24.2bn.
- Obaze stated that the problem was caused by poor and weak accountability by the regulator.
- He also said that, as long as cash inflow and outflow are not matched by the regulator, problem of foreign reserves depletion will always occur.
- The FRC boss had called for a review of the law regulating financial institutions and multinational companies operating in the country, which, he said, would make the FRC to discharge its responsibilities more efficiently and effectively.
FRC v Pastor Enoch Adeboye
- According to the Financial Reporting Council of Nigeria (FRC), Founders/Leaders of Not for Profit Organisations must resign after spending “more than 20 years (in office) or upon attaining age 70 years and above.”
- This has caused Pastor Adeboye to step down and the council of the church to appoint Pastor Joshua Obayemi as national overseer for RCCG.
- Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, did not support this regulation.
- Pastor Adeboye remains the general overseer of RCCG worldwide.