Legal Nigeria

Court strikes out Stanbic IBTC suit against FRC

A Federal High Court sitting in Lagos has struck out the suit filed by Stanbic IBTC Holdings Plc challenging the sanctions imposed on it by the Financial Reporting Council of Nigeria (FRC).
In striking out the suit, Justice Ibrahim Buba stated that the suit filed by Stanbic was a mere academic exercise and therefore lacked merit.
“All the issues argued are resolved against the plaintiff. This court must purposely, through judicial creativity, interpret our legislation meaningfully in these days of gross capital flight.”
Stanbic IBTC had filed its suit against FRC following the suspension of its Chairman, Mr. Atedo Peterside, the Chief Executive, Mrs. Sola David Borha, and two other directors by the council over alleged irregularities in the bank’s financial statements for the 2013 and 2014 financial year.
In the suit, the bank had asked the court to determine, among others, whether FRC had the power to impose a fine of N1 billion on it. Other reliefs sought by the bank include “A declaration that the first defendant has no power to dictate to a public interest entity the type of commercial agreements that it may enter into in the conduct of its business”;
“A declaration that the first defendant has no power to license directors or other office holders of a public interest entity who may sign financial statements of such entities, for example, by giving FRC numbers and insisting that the FRC numbers must be quoted in all financial statements signed by them”.
“A declaration that regulation 18 of the Inspection and Monitoring Regulations of the FRC is invalid, null and void.”
According to the court, the contract entered into by Stanbic IBTC with the Standard Bank of South Africa was against the provisions of Section 7 of the National Office for Technology Acquisition and Promotion (NOTAP) Act, which seeks to protect the country from being used as a dumping ground.
“Nigerian courts must protect Nigerian and non-Nigerian investors. This court is unable to agree with the plaintiff’s position,” the judge held.
Recall that before the main suit was heard, Justice Buba had given order restraining the FRC from obstructing the operations of Stanbic IBTC. The court had also restrained the council from preventing the plaintiff or its subsidiaries from carrying on with their lawful business.
The plaintiff also said since August 3 this year, the FRC had been investigating its audited accounts for the year ended December, 2014. The investigation by the FRC was in connection with the liabilities accrued in Stannic IBTC Bank’s 2014 accounts in respect of franchise fees owed to Standard Bank of South Africa, the registration of which it said has been pending before the (NOTAP) since 2011.
Daily Sun