The conversations generated by the controversial corporate governance code are still trending. Iyobosa Uwugiaren, who has been following the issue, writes on the intrigues, the politics behind it and the untold story
The swiftness at which President Muhammadu Buhari moved to exonerate himself defines the sensitivity of the divisive National Code of Corporate Governance (NCCG) by the Financial Regulatory Council, created by the regime of former President Goodluck Jonathan.
Citing the controversial code, the General Overseer of the Redeemed Christian Church of God (RCCG), Pastor Enoch Adeboye, had announced his stepping down as the leader of the church in Nigeria. The 75-year-old well-regarded minister of God announced his retirement from the leadership of the Nigerian church last Saturday during the Annual Minister’s Thanksgiving at Shimawa area of Ogun State. The announcement was made in the presence of Vice President Yemi Osinbajo, alongside other senior pastors of the church.
Pastor Adeboye, who took over the leadership of the RCCG from late Pa Josiah Akindayomi, who founded the church in 1952, had named Pastor Joshua Obayemi as his replacement. But, the call by Pastor Adeboye at the event on his huge followers and members of RCCG to show keen interest in the nation’s politics, may have forced many of the Church members to change the narrative, suspecting that his resignation as ‘’General Overseer’’ was politically motivated. And it has since then generated huge controversy, different burning conversations and mixed feelings, mostly in the social/traditional media and in churches.
Gradually, the issue was taking precarious political/religious narrative; President Buhari was concerned and acted very fast by announcing the immediate removal/replacement of the Executive Secretary of the Financial Reporting Council (FRC), Mr Jim Osayande Obazee, whose enforcement of the code caused Adeboye’s resignation.
A statement by the Senior Special Assistant to the President on Media and Publicity, Mr Garba Shehu, said the president had appointed a new chairman and a new Executive Secretary for the council. The new council as approved by the president has Mr Adedotun Sulaiman, as chairman. Mr. Sulaiman is a former Managing Partner/Director of Arthur Anderson and later, Accenture. He is a Chartered Accountant and a product of the University of Lagos and Harvard Business School.
Apparently to further exonerate Buhari-led government of any complicity and ease tension, the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, also announced the federal government’s decision to suspend the divisive Code.
The minister based the suspension on the need: to allow for a detailed review and extensive consultation with stakeholders as well as reconstitution of the board of the FRC.”
“Government remains committed to restoring and enhancing market confidence and improving the ease of doing business in Nigeria”, the minister stated in a statement by his Special Adviser on Strategic Communication, Ms Constance Ikowkwu.
He further said that government was committed to strengthening FRC and enhancing its capacity to fulfil its core mandate.
FRC is one of the parastatals under the supervision of the Ministry of Industry, Trade and Investment. It is responsible for setting and promoting compliance with standards for accounting, financial reporting and auditing in Nigeria. It also regulates the practices of professionals involved in financial reporting and promotes good practices in financial reporting and corporate governance in Nigeria.
However, against the reason given by the minister, many observers believe that the code was suspended following mounting concerns over its content and implementation. And it is also believed that the recent resignation of Pastor Adeboye – as the General Overseer of RCCG Nigeria was a direct fallout of the code, which limits the tenure of heads of non-governmental organisations – including churches to 20 years.
Before then, Obazee had warned religious bodies, chiefly churches, registered with the Corporate Affairs Commission (CAC) as ‘Non-Profitable’ organisations that they may be stripped of that status and listed as profitable entities – should they fail to make their financial transactions public.
He had further told THISDAY in an interview in Abuja that religious institutions currently opposed to making their financial conducts public, were violating sections of the CAC Act, which they had signed at the point of registration that they would hold Annual General Meetings (AGM) and submit their financial conducts for public scrutiny.
But religious bodies and leaders who felt it was wrong to compel them to disclose their accounts publicly, had gone to court against the FRC to seek redress. But, Obazee had insisted that the churches lacked strong grounds not to make their financial statement public.
“You have to render stewardship and that’s our major challenges with the churches. We are insisting that non-profit organisations should prepare their accounts and send to us and churches are in court fighting us’’, the former FRC’s boss had insisted.
“But we are wondering why ordinarily people who are teaching you how to account to God, how you run your life, are refusing to account to stakeholders how they managed funds that are reviewed from people who believe in the objectives that they are pursuing.”
He added in an interview with THISDAY: “Government business is to protect its citizens and citizens are the ones putting money in all these non-profit, and so we want to know how accountable they are. And if they pursue non charitable activities like running schools, hospitals, airlines and all of that, we want them to account for those ones separately.”
Obazee had said that organisations that were talking of not bringing their accounts were churches-religious organisations; but that they didn’t really have a very strong platform to stand on, saying FRC was ready do one more workshop to educate them and thereafter call on the Corporate Affairs Commission to start delisting them.
“They are registered with the Corporate Affairs Commission because if you are registered with the Corporate Affairs Commission under part C as a non for profit organisations and you refuse to be accountable, because when they do their registration, they put within the registration document they give to CAC that they’ll be holding annual general meetings and presenting to their members audited financial statements”, he had further stated.
“So if they refuse to prepare their accounts, and we lay this before the CAC, they’ll delist them and once they delist them, they cease to be non-for-profit, they become with profit and so every of their collections will now be subject to tax.”
A Case of Insurbodination
Since 2013 when the Council initiated the unified NCCG, the policy had been enmeshed in controversy, leading to a court case initiated by some aggrieved private sector operators. A public hearing on the code billed for May 2015 was postponed following an interim injunction against FRCN granted by a Federal High Court granted. However, the case was later struck out on the grounds that the claimant lacked the locus standi to institute it. That court victory was all Obazee needed to roll out the controversial code last October with a commencement date of October 17, 2016. Not oblivious of the controversy and several unsettled issues surrounding the code, the Federal Government suspended the enforcement of the code until all outstanding issues were resolved and the buy in of stakeholders received.
The Council however went ahead with the implementation of the code insisting that it derived its powers to enforce corporate governance code from Section 50 of the FRC Act, 2011, which among other things requires the directorate of Corporate Governance to develop the principles and practices of Corporate Governance applicable in Nigeria.
That was the beginning of what could be described as the power tussle between the council led by Obazee and the Minister of Trade and Investment Mr. Ekechukwu Enelamah, whose ministry supervises the council. Enelamah was said to have viewed this as insubordination and disobedience of lawful directive and was said to have issued a query to Obazee to explain why he should not be disciplined. The controversy and disaffection caused by the resignation of Pastor Adeboye as RCCG Nigeria general overseer based on the implementation of the code was however the last straw that broke the camel’s back which led to the sack of Obazee.
The Politics
But those who know the politics within the church said that the issue between Obazee and Pastor Adeboye may not be too far from ‘’personal’’ matter.
An insider had claimed that Obazee was a senior pastor in the RCCG about four years ago. They were said to have fell apart when Obazee was suspended from the RCCG over moral issues; Obazee later left the church and joined the Latter Rain Church.
‘’When the issue of the Code started coming up, GO (Pastor Adeboye) sent for Obazee; but Obazee told the GO to come to his office if he wanted to see him. And at that time Obazee was now with Latter Rain Church – as a senior pastor’’, the insider stated.
The source, a pastor in the RCCG, suspected that the code provided a huge opportunity and strong weapon for Obazee to get back at Pastor Adeboye.
However, ingenious as Buhari and his men were in handling the vexed and controversial issue, the conspiracy theory surrounding the enforcement of the code by Buhari Administration is still piping hot. Some have argued that Obazee was a sacrificial lamb of Buhari’s mismatch political action.
Ekiti State Governor Ayodele Fayose has described the sack of the Executive Secretary of the FRC, in connection with the implementation of the controversial Code as an ‘’afterthought and cover-up’’ to stem the tide of negative public reactions to the implementation of the code that stripped Pastor Adeboye and others of their positions.
In a press statement by the governor’s Special Assistant on Public Communications and New Media, Lere Olayinka, the governor said that “when they realised the implication of their action on President Muhammadu Buhari’s 2019 ambition, especially the personality like Pastor Adeboye that is involved, they quickly sacked an innocent man who must have acted on instruction.’’
Fayose added: ‘’Obviously, their attention is more on 2019, not on justice and any love for the sustenance of Christianity in Nigeria. Mind you, they have only suspended the implementation of the regulation, they did not abrogate it.’’
He said it is obvious that they have an agenda, saying the president’s pattern of life, has always suggested that he is a sectional leader, whose appointments reflect sectionalism and nepotism.
The tough-spoken governor said it was funny that a president that is over 70 years would be the one to implement a regulation limiting the age of General Overseer(GO) of Churches to 70 years, asking “if men of God like Pastor Adeboye, Pastor W. F. Kumuyi, Bishop David Oyedepo, Bishop Mike Okonkwo and others cannot be GO of their church beyond 70 years of age, how do we now justify a man like President Buhari who is over 74 and still willing to be president beyond 2019 that he will be 77?”
Governor Fayose, who described those defending President Buhari by claiming that the law was made when Dr Goodluck Jonathan was President as hypocrites. And asked: “Even if the law was made before President Buhari assumed office, who is to blame for its implementation? Could President Buhari have implemented a law he does not believe in and could the sacked FRC boss that they have now used as the sacrificial lamb have implemented the law without the consent of the presidency?”
He questioned the speed at which the President reacted by sacking the FRC boss: “Why was there no such swiftness in his action on Southern Kaduna killings – where a race was almost wiped out, with people killed like goats? Why didn’t the President react swiftly to the Senate indictment of the EFCC Acting Chairman, Ibrahim Magu?”
Divergent Views
On the contrary, a constitutional lawyer – Senior Advocate of Nigeria (SAN), said the controversy, which the code generated was unnecessary.
‘’Gates Foundation, Ford Foundation etc are strictly regulated by law in the United States. Mrs Hilary Clinton had to explain to the American electorate that the Clinton Foundation had not violated the law. Mr. Donald Trump has announced that the Trump Foundation can no longer raise funds to avoid conflict of interest’’, the SAN argued.
‘’Leaders of religious institutions and foundations are tried and jailed regularly in the United States. A pastor who currently operates in an atmosphere of impunity in Lagos ran away from London when he was going to be jailed.’’
He added that all branches of Nigerian churches in the UK, USA and South Africa are regulated by law in those countries, because churches are registered as charity institutions, saying that funds belonging to them cannot be diverted to establish investments cornered and privatised by any cleric.
The constitutional lawyer added: ‘’In Nigeria, private jets are bought by pastors with church funds, but registered in the names of private individuals.
‘’The other day, a jet was bought by a church for the purpose of spreading evangelism. But the pastor in whose name it was registered decided to lease it. To the embarrassment of the nation the jet was used sometime in 2014 to smuggle millions of dollars from Abuja to South Africa.
‘’In Nigeria, universities are established with tithes and registered in the names of pastors and their family members. NGOs also collect millions of dollars annually to execute projects but the funds are diverted. Not too long ago, banks in Nigeria were converted into family businesses until the law had to intervene to check the gross mismanagement of those financial institutions.’’
Drawing example from the Catholic Church, the SAN further argued that the compulsory retirement age for Bishops is 75 years, adding that in the wisdom of the leadership of the church young bishops and cardinals are no longer made Popes.
‘’A few years ago, a General Overseer in Nigeria almost destroyed one of the Pentecostal churches when he wanted a third term whereas the constitution of his church provides for a maximum period of two terms’’, he stated.
‘’Another one who ought to have retired at 70 defied the constitution of the church and decided to remain in office for life. Those who say that the government cannot insist that the constitutions of churches and mosques be complied forget that these religious bodies are registered under part C of the Companies.’’
The argument of the senior lawyer is that regulating private societies to operate within the ambit of the law of the land and their registered constitutions is not a violation of the fundamental right to freedom of association.
But, against the lawyer’s argument, the House of Representatives Minority Leader, Hon. Leo Ogor, said that Section 50 of the FRC Act 2011 provides the agency with powers to set guidelines for commercial entities and not for not-profit organisations.
Raising the issue as a ‘’matter of urgent importance’’ at plenary Tuesday, he argued that the regulation was a pure creation of the agency and not the National Assembly, noting that the FRC had gone beyond its mandate.
He added that the outrage, which greeted the enforcement of the regulation, had caused national embarrassment.
The House of Representatives on Wednesday while adopting the prayers of the motion sponsored by Hon. Ogor directed its Committee on Delegated Legislation and Public Accounts Committee (PAC) to investigate the activities of FRC and thoroughly examine its regulations. The lower chamber noted that the corporate governance code enacted by the FRC was not ratified by the National Assembly which empowered the agency to set regulatory guidelines for commercial entities and not-for-profit organisations.
Barrister Frank Tietie, the Executive Director, Citizens Advocacy for Social & Economic Rights (CASER), shares the lawmaker’s position.
He maintains that the said provisions of the Governance Code for not-for-profit organisations regarding the tenure of a founder or leader of a not-for-profit, amounts to a violation of the fundamental right to freedom of thought conscience and religion, together with the fundamental right to associate freely as provided for respectively by Sections 38 and 40 of the Nigerian 1999 Constitution.
His argument: ‘’Whereas, the Financial Reporting Council (FRC) is competent at law to make regulations guiding financial issues, it becomes ultra vires where any of its regulations covertly attempt to derogate from the right of a group of people to decide the way and manner their association would be governed based on their religious beliefs.’’
He added that the FRC cannot dictate to any set of religious adherents when their founder or leader should cease to perform governance or management roles, saying that the competency of the FRC is seriously restricted especially in matters regarding these fundamental rights to freedom of beliefs/ religion and association.
‘’The FRC can give guidelines as to enhancing accountability and transparency but it goes too far to a serious point of illegality where any of its regulations becomes an attempt to stifle the freedoms of religious people as to the tenure of their founder or leader or to who he would appoint as a successor’’, the legal practitioner further argued.
‘’There is nothing wrong or illegal if a people by their religious freedom believe and are convinced that their founder or leader should exercise management and control of their church or mosque for life. The choice must be that of the religious adherent and not that of any authority.’’
He views the rights violations as an unnecessary interference of state authorities in the sphere of religion which would have grave consequences in the long run in matters of faith.
The lawyer urged the highly revered Pastor Adeboye to change his mind and rescind his resignation as the General Overseer of the RCCG because the said provision of the Code upon which he made his decision contravenes the provisions of the Constitution of Nigeria and to that extent, it is null and void.
Obazee’s Other Controversial Battles
Obazee first came into national consciousness when the FRC under his leadership wrote a report that indicted the then CBN governor, Mr. Sanusi Lamido Sanusi. The FRC report was viewed as a desperate move by President Goodluck Jonathan to ease Sanusi out of office following the CBN governor’s allegation that $20billion oil revenue was unaccounted for. It was on this basis of this controversial report that Jonathan asked Sanusi to proceed on suspension. After Sanusi was removed, he had thought he would be made governor of CBN, but he was not. Godwin Emefiele was appointed. He made attempts to control him, but when he was rebuffed by Emefiele, he tried to undermine him by writing nasty report about CBN.
It was not long before Obazee was in the news again. This time, his agency announced the suspension of the registration of the chairman, Stanbic IBTC Holdings Plc, Mr. Atedo Peterside, the chief executive, Mrs. Sola David-Borha, and staff of KPMG Professional Services for alleged infractions in the “2013 and 2014 statements of financial position of the company. His agency also urged the CBN and EFCC to investigate the affected officials. The investigation by the CBN however absolved them of any wrong-doing. The CBN report specifically expressed concern about the “apparent failure” of FRC to “follow due process as laid down by its own FRC Act and Regulations, in arriving at the Regulatory Decision.”
The National Code of Corporate Governance
Referred to as the National Code of Corporate Governance for the Private Sector in Nigeria 2016, it is a product of a directive given to the steering committee on the National Code of Corporate Governance on January 13, 2013 by the Minister of Trade and Investment under former President Goodluck Jonathan.
The focal responsibility of the committee chaired then by Mr. Victor Odiase, was to synchronize and coalesce all the existing sectorial corporate governance codes in Nigeria. The codes discernible at the commencement of the steering committee’s work were: the Code of Corporate Governance for Banks in Nigeria Post-Consolidation 2006; Code of Corporate Governance for Licensed Pensions Operators 2008; Code of Corporate Governance for Insurance Industry in Nigeria 2009; SEC Code of Corporate Governance in Nigeria 2011, and CBN Code of Corporate Governance for Banks and Discount Houses 2014. The need for harmonization and unification, according to the then Jonathan-led government, was the fact that there were not too many nations, and in fact none was observed during the steering committee’s very extensive corporate governance literature reviews, that have adopted this sectorial multiplicity of governance codes.
‘’These Codes later became very confusing in view of their conflicting provisions on apparently same subject matters’’, the government had said.
The terms of reference given to the steering committee include, the development of a National Code of Corporate Governance that will enable the Financial Reporting Council of Nigeria, among other things, to: promote the highest standards of corporate governance; promote public awareness about corporate governance principles and practices; act as the national coordinating body responsible for all matters pertaining to corporate governance in both private and public sectors of the Nigerian economy.
It was also intended to encourage sound systems of internal control and information systems control to safeguard stakeholders’ investment and assets of public interest entities; promote sound financial reporting and accountability based on true and fair financial statements duly audited by competent independent auditors; and ensure that audit committees of public interest entities keep under review the scope of audit and its cost effectiveness, the independence and objectivity of the auditors.
According to the document, ‘’The code shall be applicable to the following: All public companies (whether listed or not); all private companies that are holding companies or subsidiaries of public companies; and regulated private companies including non-governmental and charity organisations
Compliance with the provisions of the Code, according to the document, is mandatory; and violations of the provisions of the Code will occasion both personal sanctions against the persons directly involved in the violation, and sanctions against the companies or firms involved in such violation.
