It’s been a tough day for South African companies operating in Nigeria. Following the news that MTN was served a $5.2 billion fine by the country’s telco regulator, Standard Bank was told their top executives at Stanbic IBTC were suspended following alleged wrongful disclosure of franchise fees. They say it’s tough in Africa, and given the economic stress Nigeria finds itself under, it may just get tougher for foreign-owned companies as the country clamps down. The executives are only under suspension for the duration of the investigation, while the Securities and Exchange Commission has been asked to suspend a pending 20.4 billion Naira rights issue. – Stuart Lowman
LAGOS, Oct 26 (Reuters) – The chairman, chief executive and auditor of Nigerian bank Stanbic IBTC were suspended by the country’s financial regulator on Monday, over allegedly misleading disclosures relating to fees owed to its parent, South Africa’s Standard Bank.
The regulator, which also told Stanbic IBTC to restate its 2013 and 2014 accounts, had said last month it was investigating the lender over alleged wrongful disclosure of franchise fees owed to Standard Bank, payable for matters such as use of the parent’s software.
Stanbic IBTC said in response it did not agree its accounts were defective or required rectification and said it complied with international disclosure requirements. It said the regulator’s allegations were inaccurate and its directors had not been ousted.
Stanbic had been prevented from paying the fees from 2011 by a regulatory body in Nigeria, prompting it to accrue the sum in its accounts.
The goings on in Nigeria wrt Standard Bank and MTN is not good news for the "Africa Rising" Investment story.
— Piet Viljoen (@pietviljoen) October 26, 2015
But Jim Obaze, head of the Financial Reporting Council (FRC), said the fees were still being charged on profit before tax, without this being made clear, meaning Stanbic could be liable to pay additional corporate taxes.
The FRC said on Monday Stanbic IBTC had an “other operating expenses” category in its accounts for financial years 2011 through 2014, in which expense items were not properly disclosed.
The FRC said Stanbic IBTC had disclosed 6.08 billion naira ($31 mln) in 2014 as professional fees, but this included several unrelated items which required separate disclosure to give a good understand of their nature.
Stanbic IBTC had sought agreement to pay Standard Bank an annual license fee of 151.5 million rand ($11.1 mln), which was declined.
Read also: Standard Bank “Moving forward” in the rest of Africa
“Stanbic went ahead with their plan anyway and neither reported the sale of the said software nor showed any annual fee income relating to it in their statement of profit or loss … for years ended 31st December 2013 and 2014”.
The regulator said it acted after minority Stanbic IBTC shareholders complained about irregularities in the company’s financial statements. It said Stanbic IBTC was fined 28 million naira last year for flouting central bank regulations.
Stanbic IBTC Chairman Atedo Peterside, Chief Executive Sola David-Borha and KPMG audit partner was suspended until the investigation is completed, the FRC said, adding that it asked the Securities and Exchange Commission to suspend a pending 20.4 billion naira rights issue.
Stanbic IBTC shares, which have fallen 12.4 percent so far this year, shed 5 percent on Monday to 21.85 naira.
