The Securities and Exchange Commission (SEC), on Tuesday, withdrew its earlier approval for the proposed N20.4 billion rights issue of Stanbic IBTC Holding Company Plc in view of the notice of an investigation into allegations of financial impropriety by the Financial Reporting Council of Nigeria (FRC) on the group’s financial statements. The SEC stated categorically that the rights issue exercise had been suspended until proper resolution of issues raised. Proceeds of the offer, the bank’s Chief Financial Officer, Arthur Oginga, had told investors recently, is to help Stanbic IBTC to “maintain adequate capital.” However, the SEC informed the investing public, particularly the shareholders of Stanbic IBTC, to beware of the proposed rights, in view of letters received from the National Office for Technology Acquisition and Promotion (NOTAP), the Central Bank of Nigeria (CBN) as well as the FRC. Reacting to the suspension in a two-paragraph statement, also on Tuesday, the management of Stanbic IBTC noted the suspension, promising that it would “continue to engage with the relevant regulatory bodies to ensure that these enquiries are addressed. Stanbic IBTC Bank Plc, the banking subsidiary of Stanbic IBTC Holdings Plc, remains well capitalised and has sufficient liquidity.” Specifically, the Executive Secretary/Chief Executive (FRC), Jim Obazee, who spoke after a meeting with the Director-General (NOTAP), Dan-Azumi Ibrahim, in Abuja, said the move was in response to a petition written by shareholders of the bank, which drew the attention of regulatory authorities to some unapproved transactions allegedly conducted by the bank with its foreign technical partners. In the petition, members of Trusted Shareholders Association alleged that tens of billions of naira were yet to be returned to the profit and loss account of Stanbic IBTC Bank. Based on preliminary discussions with both parties, Obazee said that the council realised that the petitioners had a valid case. Obazee said: “The petition from the stakeholders of Stanbic IBTC is on issues relating to Stanbic IBTC and the way they have been accruing some monies in their account. “And if you accrue money in your account… well there is nothing wrong with accrued monies…, but it must be disclosed properly. “Now they said the accruals were requiring the NOTAP approvals before they can make those payments. Now the person petitioning is saying that there is no need making those accruals, because Stanbic IBTC has not been able to secure NOTAP approval. “The petitions kept coming and then we invited Stanbic IBC to hear their side in the matter. And listening to their side of the story, we believe that the petitioners have a good case. “So, our next step is to look at the agencies that were duly involved. The NOTAP itself which will give the approval; this applies to the Central Bank of Nigeria as regulator and Securities and Exchange Commission, because they were asking for general mandate for the treatment of third-party transactions, which we were against because that will not be in line with related party transactions accounting standards. “We are here to also find out if the NOTAP approved any of these payments such as historical fees. We are looking at transactions from 2011 to date. “If they didn’t get approval for 2011 fees, didn’t get for 2012, 2013 and 2014, so why are they keeping these monies?” He said the FRC would also be visiting the top management of the SEC as part of its investigation on the matter, noting that after all the visitations, officials of the bank would again be invited for questioning. He also said that apart from the protection of the rights of shareholders, the agency was interested in the case because the Federal Government might have lost huge revenue from taxes if the bank was actually making the deductions from profit before tax without necessary approvals from the NOTAP. He said: “The other party that is part of this entanglement is the SEC. We intend to immediately put a call to them to stand down on whatever rights issue request that Stanbic IBTC is making in a hurry until this matter is resolved properly; this is because our jobs as government agencies is to protect investors and other stakeholders’ interest. “Government is also involved in this matter because if you are taking out some money out of profit before tax, and you are warehousing it for a number of years, you are actually defrauding the Federal Government because the government is supposed to have taxes from the profit. But if you are keeping money from profits before tax, it means that that money was taken off and government was denied its share. “So, government is losing out on it, and we want to straighten it out. We want to know if it wasn’t reported correctly in the financial statement. Otherwise, they will be subjected to the FRC disciplinary procedure. We can even ask them to withdraw the financial statement and reissue it.” Also commenting on the issue, Ibrahim said that no approval was granted by the agency to the bank for the transaction, following which it would be wrong of the bank to make any payment to its foreign partners for franchise. In his words: “We regulate the inflow of foreign technology into the country and at the same time develop local technology. “Well, the NOTAP is expected to register Stanbic IBTC with its foreign partner and we have a guideline on how we do our registration. We are guided by the forex manual of the CBN. “So whatever is not covered by the manual, we don’t approve. So, Stanbic IBTC applied for a franchising agreement, management fee agreement and we still did not render them that approval because management service agreement is not required in Nigeria. We have local firms that have this.”