Court adjourns KPMG suit against FRC till next week

Court adjourns KPMG suit against FRC till next week

Wednesday, November 11, 2015 1:41 pm

New Date given in case against FRC
Akin Kuponiyi

Justice Ibrahim Buba presiding over a federal high court in Lagos south west Nigeria today adjourned till Thursday, 19  November  hearing in the fundamental human rights suit filed against Financial Reporting Council(FRC) and its Executive Secretary Osayade Obazee by KPMG Professional Services and its Partner Mr Ayodele Othihiwa.

When the matter was mentioned,Mr Norrison  Quakers SAN appearing for FRC told the court that he had just been briefed about the matter and he was still studying the file  and  needed time to file a response.

Mr Babatunde Fagbohunlu SAN representing the applicants, informed the court that they have not been able to serve the court process on Jim Osayande Obazee. Because of this, he told the court , he would  need  to bring an application for substituted service

Based on the submission and mutual agreement  of the two lawyers,Justice Buba adjourned the matter till next week when all the parties must have been served.

Meanwhile the  court restated its order t restraining Financial Reporting Council of Nigeria (FRC) and its executive secretary and CEO, Mr. Jim Osayande Obazee, from taking any action, sanction or measure against KPMG Professional Services and Mr. Ayodele Othihiwa, a Partner in the firm, pending the hearing and determination of the suit filed by the applicants.

The interim order was granted  last week sequel to an application argued before the court by Barrister Chuka Ikwuazo from the law firm of Aluko and Oyebode, urging the court to restrain the respondents from taking any sanction and also order an accelerated hearing of the suit, now fixed for 19th of November,2015, when the respondents must have been served all the ‘originating processes’ in the matter.

It was the second interim order  granted by the court  last week against the FRC . On 4th of November, Justice Buba also ordered the FRC to maintain the status quo in a related case filed by  now pending before the court.

KPMG and its Partner Ayodele Othihiwa had filed an application for the enforcement of their fundamental rights following the FRC letter of 26 October 2015, which it called a final notice and its ‘regulatory decision’ conveyed in another letter of 30 October, on the financial statements of StanbicIBTC Holdings Plc for 2013 and 2014.

The FRC in one of its regulatory decisions had suspended Othihiwa  “until the investigation as to the extent of the negligence of KPMG Professional Services is ascertained”.

KPMG and Othihiwa contend that the FRC decision was published and issued without informing or notifying them of the nature of the allegations made against them and inviting them to respond to the allegations.

FRC decision, KPMG and Othihiwa claimed not only violated their constitutional right to fair hearing but also offends Section 62(2) of the Financial Reporting Act, which spells out the procedure to be adopted by the FRC in investigating a professional body for any  ‘complaint or dishonest practice, negligence, professional Misconduct or malpractice’.

The section states that FRC shall “ notify the professional whose conduct, act or omission is under investigation of the nature of the complaint and it shall summon or hear the professional”.

The applicants further contended that FRC and Mr. Obazee, did not only breach this section, but they also breached Section 15(2) b of the FRC Act, which states that a Technical and Oversight Committee shall review “ sanctions to be meted out to any professional accountant, professional or public interest entity”.

KPMG and Othihiwa further claimed that even where the Technical and Oversight Committee had ratified the decision of the FRC, the FRC had failed to exhaust the provisions of its own law, by allowing them to exercise their right of appeal to the Technical Committee and by subjecting its decision to the approval of the FRC board.

The FRC at the moment has no board. It was dissolved on 16 July 2015. “In effect the respondents purported to make and they seek to enforce the aforesaid ‘regulatory decision’ at a time when the statutory means of recourse stipulated under the Act does not exist”, KPMG and Othihiwa stated in their application.KPMG and Othihiwa in asking the court for accelerated hearing averred that they have been greatly affected and have the potential of suffering greater loss of business opportunities and turnover of business, as a result of the action of the FRC, which they consider unfair, ultra vires and a breach of their fundamental rights to a fair hearing

The court case marked the second reaction of KPMG Professional Services to the decisions of Financial Reporting Council. Last week, the chief operating officer, Mr. Yomi Sanni faulted the decisions. He said his firm complies with the requirements of all regulations, acts and policies that govern its business and still stands by its audit opinions on Stanbic IBTC Holdings.


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