A Federal High Court, presided over by Justice Okon Abang yesterday in Lagos refused to grant an order compelling the Financial Reporting Council (FRC) of Nigeria Chief Executive Officer Jim Obazee to appear in court to explain why he should not be held for contempt. The court also refused to make an order suspending the decisions by the FRC against Stanbic IBTC.
The orders were sought by the shareholders of Stanbic IBTC Holdings Plc. They brought the application through the Shareholders Association of Nigeria (SAN), but it could not be heard because a lawyer who represented FRC said he had just been briefed.
Mr Justice Abang held that the court could not shut out the defendants. He said they must be allowed to file their processes before the court could hear the contempt application.
Another judge, Mr Justice Ibrahim Buba, had on Wednesday restrained FRC from obstructing the operations of Stanbic IBTC Holdings Plc.
Stanbic IBTC Holdings Plc shareholders are urgung the Federal High Court in Lagos to compel Obazee to appear in court to explain why he should not be held for contempt.
Its former lawyer, Fabian Ajogwu (SAN), was said to have withdrawn.
The shareholders want the FRC chief sanctioned for enforcing the FRC Guidelines/Regulations for Inspection and Monitoring of Reporting entities despite their pending suit.
The shareholders said FRC was aware of the suit challenging the financial regulations that formed the basis of which Stanbic IBTC Holdings directors were sanctioned.
The suit, which was filed by 10 members of SAN led by its chairman Timothy Adesiyan is also challenging the implementation of the FRC Regulations. The other members of SAN are Sulaiman Adenrele, Sunday Ogunnowo, Frederick Oduyemi, Robert Igwe, Bello Owonikoko, Lazarus Onwuka, Tajudeen Adeshina, Peter Okoh and John Ogundipe.
The plaintiffs in the suit filed in February, are praying the court to determine whether theMinister of Industry, Trade, and Investment can, in the exercise of the powers conferred on him by Section 73 of the FRN Act, 2011 make regulations, proceed to “create new offences and impose sanctions and or penalties and or otherwise expand the scope of the principal Act itself, or lay down entirely new regulations which are not ancillary to the provisions of the Act”.
The shareholders also want the court to determine whether regulations which set out new offences and sanctions other than those contained in the principal Act, are not ultra vires (beyond) the minister’s powers.
They sued the Minister of Trade and Investment, FRC, the Attorney-General of the Federation, and the Steering Committee on the National Code of Corporate Governance.
Yesterday, the defendants’ lawyer Emmanuel Akpudugu prayed the court for more time to respond. He said he had just been briefed on the case and would require a short adjournment.
The plaintiffs’ lawyer Kemi Pinheiro (SAN), however, urged the court to make a temporary order suspending all the decisions made by FRC while the case was pending.
According to Pinheiro, the court must make the order because FRC’s decisions were seriously affecting his clients, who are shareholders of Stanbic IBTC.
He said the Council acted in disregard of the court’s authority, therefore, it should not be allowed to get away with it.
But Akpudugu stated that the court must hear FRC first before making any order in the interest of justice and fair hearing.
Justice Abang held that the court cannot shut out the defendants. He said they must be allowed to file their processes before the court can hear the contempt application.
Justice Buba had granted an order of interlocutory injunction restraining FRC or its officers “from interfering with, or otherwise impeding, obstructing, molesting or hindering” the plaintiffs’s operations.
FRC had last week sanctioned Stanbic IBTC over its audited accounts for 2013 and 2014.
It suspended the Financial Reporting Numbers of the bank’s chairman, Mr. Atedo Peterside, and its Chief Executive, Mrs. Sola David-Borha, and others.
It also barred them from vouching for the integrity of any financial statements in Nigeria, and imposed N1billion fine on the bank.
FRC said they were suspended for attesting to “misleading” financial statements, and would remain suspended till investigations were concluded.
It pointed out several inconsistencies in the bank’s reporting, including its alleged failure to disclose what exactly millions of naira grouped under “donations” and “others” were used for.
The Council instructed Stanbic IBTC directors to withdraw the Financial Statements and restate them in accordance with the provisions of the law.
But the Central Bank of Nigeria (CBN) had accused FRC of not following due process before imposing sanctions on the bank.
“Without prejudice to the foregoing financial issues, the CBN is concerned about the apparent failure of the FRC to follow due process as laid down by its own FRC Act and Regulations in arriving at the regulatory decision,” CBN governor Godwin Emefiele had said.
Justice Abang adjourned to November 20 for hearing.