FRCN Lawyer reacts: over Stanbic Sanction

Something  is rotten in the state of Stanbic IBTC’s financial reporting. Earlier this week the Nigerian Financial Reporting Council withdrew four directors’ rights to sign off on the financial statements of the Standard Bank subsidiary, alleging that there was a raft of irregularities in the company’s 2013 and 2014 annual financial statements.

Stanbic denies it, with CEO Sola David-Borha saying the irregularities the council "alleges to be wrong are not wrong in any material respect, and many are in any event, not matters of financial reporting at all".

However, in financial reporting a standard can be ignored if the net effect of doing so is so tiny that a reader of the statements would not be misled. But the council alleges Stanbic concealed more than 6.9-billion naira (about R469m) for various expenses in a line item called professional fees. That is nearly 21.5% of Stanbic’s reported profit for the 2014 year, so if the allegation is true it is certainly material.

The regulator also accused Stanbic of recording directors’ fees as "other expenses". The firm does disclose such fees directly, so if it did sneak in more under a different line item, suspicion would be justified.

Stanbic

David-Borha says by releasing the statement on the bank’s alleged infractions, the Nigerian council has ignored set processes "in preference for self-help and media publicity".

Even so, it would appear Stanbic has some explaining to do.

AMID the mayhem of the student fee protest, Eskom CEO Brian Molefe quietly announced changes to the state power utility’s executive committee. Other than finance head Anoj Singh, who Molefe brought with him from rail and freight company Transnet, there has been no infusion of new blood into the exco.

New group capital executive Abram Masango previously served as project director for the Kusile mega power station currently under construction, which has missed so many deadlines most of the media have stopped asking when it will come online, focusing instead on sister station Medupi. Perhaps Molefe can awaken the old-new exco from its stupor and bring the rest of the units at both Medupi and Kusile and the Ingula pumped storage scheme online promptly.

Finance Minister Nhlanhla Nene said last week economic growth was considerably lower than projected in February. "This is in part a consequence of the global slowdown, but it also reflects our energy constraint(s) and structural weaknesses in our economy."

How Molefe plans to attend to energy constraints with the old guard in place remains to be seen, but right now the country is depending on him to keep the economy ticking over.