FRC: Obazee Has Lots of Fences to Mend


Adewale Obanuwa

“Touch not my anointed and do my prophet no harm” – Psalm 105:15. 

Every Christian, including the most nominal ones, knows this passage by rote. The erstwhile Executive Secretary, Financial Reporting Council of Nigeria (FRCN), Jim Obazee, who was reported to be a pastor, has no doubt preached the passage hundreds of times. Yet, he fell into the trap every person of faith avoids like a plague. He touched God’s anointed; he engineered the removal of the most revered religious figure in Nigeria, Pastor Enoch Adeboye, General Overseer of the Redeemed Christian Church of God (RCCG), through his vilified Corporate Governance Code, which specified tenure for religious leaders, among other controversial provisions.

Why would Obazee do such a thing? Perhaps he had an inkling he would soon be sacked, so he wanted to go out with a loud noise. This assumption wouldn’t be out of place knowing that Obazee, while he held sway at the FRC, seemed to relish controversies, personal and professional. There is a catalogue of reported altercations involving the former FRC man. Obazee’s FRC had picked up too many fights and the agency was beginning to give the Buhari administration a bad name. 

Pastor Adeboye had announced on January 7, 2017 at a meeting with RCCG pastors that he was stepping down as the general overseer of the church, in compliance with the now suspended Corporate Governance Code by FRC. The new code had stipulated tenure cap for heads of Not-For-Profit Organizations (NFPO), including churches and mosques. According to the code, the heads of NFPOs have a maximum tenure of 20 years after which they must retire or at the attainment of 70 years. And the code restrained handing over to family members.

The backlash of the issuance of the code was swift. Two days after Pastor Adeboye’s forced resignation, the government sacked Obazee. Many believed he was sacked because of the General Overseer. He was reported to have breached established approval procedure for such regulations. According to reports, he neither obtained his supervising ministry’s approval nor that of the Federal Executive Council’s before the code was issued. He was said to have vowed to unseat Pastor Adeboye as General Overseer of RCCG, hence the haste to issue the code. Unfortunately, he got burnt in the process. As executive secretary of FRC, without a board, Obazee wielded too much power and that must have gone to his head. Such tendency simply reflects human frailties and the need for proper checks and balances in relationships.     

Perhaps, Obazee should have taken heed from an almost similar occurrence in the US to temper his actions. Many of us would still remember a one-time New York State Attorney General, Eliot Spitzer, who, like Obazee, wielded so much power that he went after businesses and individuals with impunity before his eventual disgrace from office. Spitzer took several investment banks to court for infractions ranging from biased investment advice, inflated stock prices, to manipulation of initial public offerings and insider trading, late trading, and market timing, among many other wrongs. In a landmark settlement in 2002, Spitzer forced 10 investment firms: Lehman Brothers, Morgan Stanley, UBS Warburg, Bear Stearns, Credit Suisse First Boston, Salomon Smith Barney, J.P. Morgan Chase, Deutsche Bank, Goldman Sachs and Merrill Lynch to pay $1.4 billion in compensation and fines. Another fallout was the creation of new rules and establishment of enforcement bodies to oversee stock analysts and IPOs. Brokerage firms were also insulated from pressures by investment banks. 

These were laudable achievements and understandably, Spitzer’s stock rose. He was hailed as “the single most effective battler against corporate abuses.” He, however, allowed his popularity to weigh on his judgment when he took on a former chairman of the New York Stock Exchange, Richard Grasso, accusing him of fraud. Grasso challenged the accusation and labeled it a cheap publicity stunt for Spitzer, who was then gunning to become governor of New York. The case went all the way to appeal and the claims against Grasso were dismissed. Spitzer did become governor of New York but was eventually disgraced out of office following financial and prostitution scandals. Like Spitzer, Obazee became too ambitious in his touted quest to become the next CBN governor and forgot to apply the breaks, even when it was obvious he was too close to the edge.

We may recall similar high profile altercations with individuals and organizations: former CBN governor Lamido Sanusi, KPMG, Stanbic IBTC, among others readily comes to mind. The most notable and recent of these fights was the long-drawn disagreement with KPMG, the audit firm, and Stanbic IBTC over a so-called financial accounts “misstatement”. Obazee had stated that the FRC was investigating Stanbic IBTC over issues that bordered on payment for franchise and management fees to its parent company, Standard Bank of South Africa. This was strange and many could not fathom the development. Franchise fee is a standard, well established global practice and shouldn’t have caused any sleepless nights. Companies like Nestle and KPMG pay such fees to their parent companies.  

The manner the Stanbic IBTC, FRC issue was resolved late last year also seems to support the assumption that Obazee knew he would soon be sacked. Many have suggested that the sudden settlement with KPMG and Stanbic IBTC was his way of mending fences with some of his professional colleagues and his constituency. The resolution was so sudden and without fuss, very unlike Obazee and contrary to his earlier avowed stand to pursue the matter to a logical end, however long it would take him. The Stanbic IBTC saga went on for over a year, with Obazee adamant he won’t blink first. Yet he eventually did.

To help put the assumption about Obazee’s foreknowledge in perspective, it is important to understand the Stanbic IBTC saga and the FRC posturing before the eventual capitulation. FRCN is a government parastatal which by law, the Financial Reporting Council of Nigeria Act No. 6, 2011, is empowered to ensure accuracy and reliability of financial reports and corporate disclosures, give guidance on issues relating to financial reporting and corporate governance to professionals, protect investors and other stakeholders, among other duties. On 2 September 2015, its Executive Secretary, Obazee, told the world the agency was investigating disclosures made by Stanbic IBTC in its financial statements dating back four years, from 2011. Obazee, according to the reports, stated that the investigation was in response to a petition written by shareholders of the bank, which drew its attention to some unapproved transactions entered into by Stanbic IBTC Bank. Eventually, FRCN purportedly “suspended” four key officers of Stanbic IBTC, the Chairman of the group, Mr Atedo Peterside, the Chief Executive Officer of the group, Mrs Sola David-Borha, and Executive Directors Mr Arthur Oginga and Mr Dare Owei from signing financial statements and also placed a “N1 billion fine” on Stanbic IBTC, in complete disregard of the FRC Act. Part VII of the Act titled “Review and Monitoring of Standards”, which deals with sanctions for non-compliance by an entity clearly stated a maximum fine of N20 million, after such entity has been “convicted” of the offence.

 Regulation 64 states: “Any public interest entity which fail to comply with the notice referred to in sub-section (2) of this section commits an offence and is liable, on conviction to a fine not exceeding N20,000,000.00 and restate the said financial statement within 30 days thereafter.” Of course the sanctions were quickly challenged in court.

That was the setting before the surprising volte face by Obazee’s FRC in December 2016.  Stanbic IBTC informed the Nigerian Stock Exchange in December that FRC had given it the go ahead to release its outstanding results following the lifting of the suspensions on Peterside, David-Borha, Oginga and Owei. The sudden change of mind by Obazee after repeatedly vowing to unearth Stanbic IBTC’s supposed illegalities could have meant one thing: he had no case. He must have known all along that Stanbic IBTC is a law abiding organization and that he would fail in court. 

Wherever Obazee is now, he would most certainly be contemplating his time at the agency: what he did right and those things he wished he had done differently, while planning his next moves. One of those things many believe he would wish he did differently would be his attempts to destroy otherwise unblemished reputations; allowing himself to be manipulated into trying to destroy people’s reputations. He was manipulated into trying to destroy Sanusi Lamido, former governor of the CBN. Thankfully, he failed as the court exonerated Sanusi and castigated him for playing out a hidden agenda. He was equally manipulated into tarnishing the images of respected business figures and organisations.

These individuals and organizations could easily have sued for damages against the FRC and Obazee, but to what end. We know how such cases can be a drain on resources and emotions as they drag on. As Obazee plans his next move, it would be wise to reach out to Pastor Adeboye, Sanusi, Peterside, David-Borha and many others he had willfully tried to destroy through spurious allegations to make restitutions.     

Surely, Obazee understands the concept of restitution, perhaps better than most, having served as a pastor. He needs to put aside pride and mend his ways. He should know that failure to restitute may continue to prey on his mind and affect his effectiveness in his next endeavour. A simple phone call to Daddy Adeboye, Sanusi and other individuals he had maligned while in FRC is all he needs to kickstart the restitution.

–Adewale Obanuwa is a corporate governance expert and head of Obanuwa Associates, 2 Adeyemi close Anifowose, Ikeja, Lagos