Justice Ibrahim Buba of the Federal High Court, Lagos, yesterday, barred the Financial Reporting Council of Nigeria, FRCN, from disrupting the activities of Stanbic IBTC Holding Plc.
Justice Buba issued this order in an interlocutory injunction restraining FRCN and its officers from “interfering with, or otherwise impeding, obstructing, molesting, harassing or hindering” the plaintiff’s operations.
He also ordered the FRCN not to prevent the plaintiff or its subsidiaries “from carrying on with their lawful businesses.”
Justice Buba further restrained the council from inviting the entire Stanbic IBTC Holdings’ board of directors to any meeting in connection with the defendant’s statutory investigation of the plaintiff’s statements.
The judge said that the orders will subsist “until the hearing and determination of the proceedings.”
While ruling on a motion on notice for orders of injunction against FRCN and the National Office for Technology Acquisition and Promotion, NOTAP, the plaintiff said the FRCN had been investigating its audited accounts from August 3, for the year ended December 2014.
According to the plaintiff, “the investigations concern liabilities accrued in respect of franchise fees that owed Standard Bank of South Africa, SBSA, in respect of which applications for registration have been pending with the second defendant NOTAP since 2011.”
The plaintiff said FRCN labelled the franchise agreement as illegal and invited IBTC Holdings’ Chief Executive Officers to appear before it.
Following a meeting on October 16, the council informed the plaintiff that it committed criminal offences and that it would be reported to the Economic and Financial Crimes Commission, EFCC, the Central Bank of Nigeria, CBN, and the Securities and Exchange Commission, SEC.
FRCN then asked the entire Stanbic IBTC board to meet with the council “to know the extent of your board involvement” in the matter.
No statutory or other powers
However, the plaintiff contended that the council had no statutory or other powers to summon the plaintiff’s entire board of directors to a meeting in order to determine their complicity or otherwise in any alleged criminal offence.
While arguing the plaintiff’s application, Prof Fidelis Oditah (SAN) said FRCN had been acting beyond its powers. He said SEC issued a public notice suspending the plaintiff’s N18 billion right issue that the commission had previously approved, citing a letter received from FRCN.
“On September 15, SEC put on hold the plaintiff’s application to pay scrip dividends out of its 2014 profits, citing a letter received from FRCN,” Oditah said.
According to him, the council “is not a prosecutor or a court,” that it engaged in a campaign of calumny against the plaintiff.
Oditah argued that Stanbic IBTC’s share price fell from N23 to less than N19 within a week as a result of the development.
Dismissal of application
Meanwhile, FRCN’s counsel, Chief Olusina Sofola (SAN) urged the court to dismiss the application because the invitation had been overtaken by events.
“The day of the meeting has come and gone and they (plaintiff) did not attend. The heavens did not fall. They have not said they are being invited to another meeting. The meeting did not hold, so what is this court being asked to stop?
“As we speak, they’re carrying out their business. The letter does not run foul of the law. If they feel we acted outside our powers, they should bring an application to challenge our powers. I urge my lord to dismiss their application,” he said.
However, Justice Buba while ruling on the application held that the application had merit. “There is a strong case for the maintainance of status quo. There is a case made for the grant of the interlocutory injunction,” he said.
According to the judge, FRCN is aware of the suit, therefore, the best thing was for all parties not to take steps that could “undermine” the case in court.
The judge said: “The whole essence of having a court of law in any civilised society is to ensure everything is done according to law and not otherwise.
“No court will stop a statutory authority from performing its statutory duties. However, the court must emphatically add that where it is alleged that a statutory authority is acting ultra vires its statutory powers, the courts have powers and are imbued with jurisdiction to enquire into whether it true or false.”
He further held that “the application had merit and is hereby granted.”
In the substantive suit, the plaintiff is asking the court to determine among others whether FRCN has the power to impose a fine of N1 billion on it.
FRCN 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.
It also barred them from vouching for the integrity of any financial statements in Nigeria.
FRCN also suspended two other directors Mr. Arthur Oginga and Dr. Daru Owei for attesting to what it termed the “misleading” 2013 and 2014 financial accounts of the bank, as well as Ayodele Othihiwa of KPMG Professional Services for his firm’s alleged complicity in the infractions highlighted in the financial reports for the two-year period.
It based its sanctions on issues raised by the bank’s minority shareholders led by the Mahtani brothers who own the Churchgate conglomerate, to some other regulatory agencies such as NOTAP, SEC and CBN) among others.
The bank is also asking the court to determine whether or not the FRCN has the power to license directors and other office holders of public interest entities and if it can suspend the said licence by suspending a director or other office holder of a public interest entity.
Justice Buba however adjourned the case to November 6, for the hearing of a motion to join a shareholder in the suit.