We are ready for fair resolution, says Standard Bank
The Standard Bank Group, the parent company of Nigeria’s Stanbic IBTC Holdings, said it remained ever committed to doing business in Nigeria and open to a peaceful resolution of the feud with the Financial Reporting Council of Nigeria (FRC).
Besides, it said that its business in Nigeria is anchored on building constructive relationships with the authorities based on clear communication and transparency.
The Chief Executive Officer, Standard Bank Group, Sim Tshabalala, speaking during a meeting with a delegation of the Nigeria-South Africa Chamber of Commerce in Johannesburg, said: “In the short term, we will continue to engage with the relevant authorities to resolve these issues as quickly as possible.
“In the longer run, indeed for as long as there is such a thing as the Standard Bank Group, we will continue to uphold the highest standards of corporate governance, of adherence to the law and of ethical conduct.”
While acknowledging that disagreements are inevitable in partnerships, Tshabalala said Nigeria and South Africa, as the continent’s foremost economies, have to complement each other to drive overall growth on the continent.
The bank chief, who expressed confidence that the current dispute between Stanbic IBTC and FRC will be resolved ‘fairly, appropriately and reasonably,’ reiterated that the group fully complied with appropriate Nigerian laws and regulations, and with international financial reporting standards applicable in the country, except that the lender’s reports were misunderstood.
The Central Bank of Nigeria, last week, after examining the bank’s past financial statements, said it did not find any case of ‘material misrepresentation’ by Stanbic IBTC and saw no need to ask it to restate them.
But earlier, FRC had faulted the bank’s audited accounts for 2013 and 2014 and ordered a restatement of the accounts, which CBN said did not follow due process.
Tshabalala recalled that the genesis of the controversy was franchise arrangement between Stanbic IBTC and Standard Bank, saying that the Group’s operating model, which covers a wide range of services, including IT, are provided by the Standard Bank Group to all its franchises in Africa.
He noted that in the case of Stanbic IBTC, the charges for these services amount to approximately five per cent of the total cost base of Stanbic IBTC.
“Over the past few years, the Nigerian National Office for Technology Acquisition and Procurement (NOTAP) has objected to the payment of the fees, which resulted in the accumulation of an outstanding inter-company balance between Stanbic IBTC and Standard Bank South Africa as these charges cannot be remitted without NOTAP’s regulatory approval,” he said.
“FRC’s assertion that the absence of approval for the franchise fee and recent IT license fees from NOTAP invalidates the accruals raised for such intra-group items, and that the reflection of these accruals as liabilities on the financial statements as a misstatement, is incorrect.
“Essentially, in our view, the regulator has sought to reject the validity of an established contractual arrangement between Standard Bank SA and Stanbic IBTC. We argue that the regulator is not in a position to make this call, and we are not alone in this opinion.
“To quote KPMG, ‘we wish to state categorically that KPMG does not agree with the decision taken by the FRC as it does not reflect the true position in this matter. 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 requirement of the FRC Act,” Tshabalala further stated.
The Standard Bank chief said the charges for services and IT licenses have been correctly reflected as liabilities under International Financial Reporting Standards, despite the fact that foreign currency payments due to the Group cannot be remitted in the absence of NOTAP’s approval.
“More fundamentally, we believe that these are not matters of financial reporting at all but matters under the commercial discretion of Stanbic IBTC’s board of directors,” he said.