FRC, StanbicIBTC faceoff: Shareholders threaten boycott of investments

  • Plan to stage peaceful protest

Shareholders of StanbicIBTC Bank Plc have threatened to boycott further investments in the South African bank and also sell their stakes if the controversy surrounding its face-off with the Financial Reporting Council persists.

Uba Group

This threat is coming one year after the FRC wielded the big stick over StanbicIBTC, and suspended its Chairman and Managing Director, Mr. Atedo Peterside and Mrs. Sola David-Borha, respectively, over the financial institution’s delayed 2013 and 2014 audited accounts, which was allegedly laced with infractions.

According to the shareholders, the wise move will be to sell off the shares before the tussle erodes their value on the Nigerian Stock Exchange. Contrary to the directive of the NSE that all quoted companies should submit their audited accounts 90 days after their financial year-end or report their hindrances to the regulator within the same period, the investors accused the StanbicIBTC management of keeping them in the dark for almost two years.

Since 2011, the bank has been debiting and accruing tens of billions of naira from gross revenue earned in a suspense account, as payment of management/ franchise and Information Technology fees to its controlling and majority shareholder

Aggrieved shareholders, who spoke with The Point on the nondisclosure of the 2013 to 2015 financial statements, said that plans were afoot to stage a peaceful protest, which they believed might affect the operations of the bank in its key branches across the country. According to them, the planned protest is aimed at getting the Federal Government to investigate the allegations made against the management of the bank and FRC.

The Chairman of the Minority Shareholders Association of Nigeria, Alhaji Mukhtar Mukhtar, alleged that the delay was a ploy by the management of the bank and its parent firm in South Africa to frustrate key Nigerian shareholders to sell their stakes in the institution.

He further alleged that the bank’s Chairman had been allegedly involved in some financial misappropriation. Mukhtar disclosed that, at the moment, the parent South African firm, Standard Bank, holds a controlling equity of 53 per cent in StanbicIBTC.

He added that if the planned rights and script issues, which the majority shareholders had allegedly converted to shareholding, was allowed to hold, the parent firm would own about 85 per cent equity in StanbicIBTC, leaving indigenous shareholders with a paltry 15 per cent. If the move is carried out as planned, Mukhtar noted, the development would amount to violation of Nigerian tax laws by the management of the bank.

He said, “Since 2011, the bank has been debiting and accruing tens of billions of naira from gross revenue earned in a suspense account, as payment of management/franchise and Information Technology fees to its controlling and majority share holder, without complying with the National Office for Technology Acquisition and Promotion Act.

This has been the practice till date, which is unlawful. “It is this infraction, wrongdoing and misleading of indigenous minority shareholders that necessitated our petitions to the regulatory authorities.

The NOTAP Act clearly provides that such agreement for transfer of technology must be registered and approved, before any payment can be made to any person outside Nigeria.” He noted that Peterside had been aiding infraction, occasioned by the illegal yearly deduction from the gross revenue for payment as management/franchise fees, adding that this had adversely affected the bank’s balance sheet from 2011 to date.

“The balance sheet, as it is, cannot be said to be a true and fair position of the state of the company,” he argued. Mukhtar also alleged that N3.13 billion and N3.38 billion were debited in 2013 and 2014, respectively, making a total of N6.467 billion, for part time recruitment in the bank.

He said it was unjustifiable that such an amount was required for part-time recruitment of experts and advertisement for just two years. President, Nigeria Shareholders Renaissance Association, Mr. Olufemi Timothy, disclosed that the intention of the management of the bank and the South African-based Standard Bank, was to severely dilute Nigerians shareholding in the bank. Like Mukhtar, he alleged that the South African parent company planned to hold majority equity of about 85 per cent of Stanbic IBTC Bank, leaving indigenous shareholders with only a paltry 15 per cent.

“I strongly agree on the ploy and infractions that led to the delay of the 2013-2015 issue. Imagine, we have not received our script dividend that was declared in 2014 year-end till now; no Annual General Meetings for two years now.

The institution lacks corporate governance,” he said. Though, the National President, Constant Shareholders’ Association, Alhaji Shehu Mikail, admitted that the management deserved a fair hearing over the allegations, he said the Federal Government, through other regulatory agencies like the Nigerian Stock Exchange and Securities and Exchange Commission, should set up an investigative panel to look into the issues.

“We know that Stanbic IBTC is one of the strongest banks in the country and such allegations should not be treated with levity. We should not wait till the worse happens before taking necessary actions. The government must take proactive measures in resolving this issue before it gets out of hand as it appears there is a hidden agenda,” he told The Point.

The President, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, however, said that the FRC, through some of its actions, had put the shareholders in a dilemma, and thus hindered StanbicIBTC from publishing its results. According to Okezie, the FRC’s court cases against the bank are gradually frustrating the activities of the bank and the investment of the shareholders.

He said, “It appears the Federal Government is confused on how to check FRC on its conducts. It should call the FRC to order. The government is the one that created the agency. It is high handed and it is not transparent in what it is doing “It is often said that when two elephants fight, it is the grass that suffers.

In this matter, it is the shareholders that are feeling the trauma. What we are talking about here is the 2015 result, and 2016 is running out.” KPMG’s STAND However, as the controversies rage, the audit firm that investigated the allegations levelled against StanbicIBTC Bank by FRC, KPMG defended its audit opinions on StanbicIBTC Holdings Plc over the controversial financial statements.


Partner and Chief Operating Officer, KPMG, Mr. Yomi Sanni, had insisted that the accounts of the financial institution were clean. “We wish to state that KPMG does not agree with the decision taken by the FRC, as it does not reflect the true position in this matter.

the delay iwws a ploy by the management of the bank and its parent firm in South Africa to frustrate key Nigerian shareholders to sell their stakes in the institution

Our position is that the decision of the FRC is erroneous on its merits and the process that led to it is significantly flawed, and not in compliance with the requirements of the FRC Act,” he said.

Reassuring stakeholders of the bank, Sanni said KPMG would take all necessary and lawful steps to address the situation. NSE AWARE OF CHALLENGES – StanbicIBTC Meanwhile, debunking the allegation levelled against it by its shareholders that it had failed to report its hindrances to the NSE, the David-Borha-led management of StanbicIBTC Bank, claimed that the NSE had been aware  of the constraints of the bank since May.

“We have informed the NSE, shareholders and other stakeholders about the reporting challenges we are experiencing with FRC, regarding our financial statements, which subsequently led to the engagement of an external auditor on the appropriate presentation of certain items in the accounts, which are the subject of ongoing legal proceedings,” Peterside had said at a forum.

Efforts to get the response of the bank to the allegations leveled against it by the shareholders, did not yield results as the Head, Marketing and Communications, Stanbic IBTC, Mrs. Nkiru Olumide -Ojo, did not respond to telephone calls.