FRC sees red as court declares it incompetent to deal with Akingbola’s petition

A Federal High Court sitting in Lagos on Friday declared that the Financial Reporting Council of Nigeria (FRC) lacks competence to entertain a petition before it, filed by Erastus Akingbola, former managing director of the defunct Intercontinental Bank.

Akingbola, among other things, had asked the FRC to investigate the acquisition of the defunct Intercontinental Bank (IBPLC) by Access Bank Plc, and to also investigate Aigboje Aig-Imoukhuede, former group managing director/CEO, Access Bank and Herbert Wigwe, group managing director/CEO, Access Bank (plaintiffs), for their roles in the said acquisition.

Delivering judgment in suit no. FHC/L/CS/485/2014: Aigboje Aig-Imoukhuede and Herbert Wigwe V. Financial Reporting Council of Nigeria, Justice Mohammed Idris held that by a combined reading of the functions and objects of the FRC as contained in the Financial Reporting Council of Nigeria Act, 2011, the said functions and objects do not include investigation of mergers and acquisitions and other business combinations.

“The vires (powers) to conduct such investigations is donated to Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) pursuant to their respective enabling Acts and not the Financial Reporting Council,” he stated, holding further, that Akingbola’s petition purportedly inviting the defendant to unwind the acquisition of IBPLC by Access Bank ,does not fall within the statutory functions of the FRC (the defendant).

Following a petition by Akingbola, the FRC had invited the plaintiffs to appear before it on March 26, 2014 in respect of what it termed an “ongoing investigation of the Central Bank of Nigeria (CBN)” to review Akingbola’s letter of complaint in relation to the plaintiffs’ activities and functions as former group managing director and deputy group managing director of Access Bank, respectively.

Appearing before the council, the plaintiffs asked to view the said petition and after due consideration of the issues put forward, plaintiffs through their counsel, Paul Usoro (SAN) sought to challenge the competence of the council to investigate the transactions culminating into the merger.

In an originating summons filed in court on April 7, 2014, the plaintiffs’ asked the court to determine whether the Financial Reporting Council of Nigeria by the construction of its objects and functions, is competent to investigate, sit over and/or look into the petition of Akingbola, and whether by entertaining this petition, the FRC was not acting ultra vires its said objects and functions, as outlined in Section 8 of the FRCN Act, 2011.

It further asked the court to determine whether the attempt by the FRC to investigate and sit over a petition pertaining to the acquisition of the defunct Intercontinental Bank by Access Bank Plc is not subjudice by virtue of it being the subject matter of a pending litigation – Suit No: FHC/ABJ/CS/203/2014 between Abdullahi M. Sani & 2 others V. Mallam Sanusi Lamido Sanusi & 2 others, before Justice Mohammed J of the Abuja Division of the Federal High Court and therefore beyond the competence of the FRC (the defendant).

The plaintiffs, therefore, asked the court for a perpetual order of injunction “restraining the defendant, by itself or through its agents, privies, associates and/or officials, from inviting the plaintiffs for any hearing, session or meeting, or demanding from, questioning, harassing, requesting or asking the plaintiffs for any representations, contributions, perspectives, thoughts, opinions, defence or comments whatsoever, relating to the acquisition of the defunct Intercontinental Bank Plc by Access Bank Plc.”

In response to this application, the defendant filed a notice of preliminary objection with a supporting affidavit dated April 28, 2014, where it challenged the jurisdiction of the court on the basis that all methods of grievance resolution provided for in the FRC Act, were not exhausted before the plaintiffs sought external resolution of the matter by filing the instant suit before the Federal High Court.

They argued that the plaintiffs ought to have approached its Technical and Oversight Committee for redress before seeking the court’s intervention. The defendant also filed a counter affidavit and a written address in opposition to the plaintiffs’ originating summons.

At the hearing on July 9, 2014 and after listening to the arguments of counsel on both sides, the court established that the plaintiffs’ suit had challenged the powers of the council as opposed to any decision of its directorate. In view of this, the court held that there was no substance whatsoever in the defendant’s argument that the suit is premature. To this end, the court dismissed the defendant’s preliminary objection in this regard, stating that it lacked merit.

It agreed with the submissions of plaintiff’s counsel that the reliefs sought in the suit could not be situated within or connected to any decision of any of the defendant’s directorates and are therefore not subject to any of the administrative remedies available under the FRC Act.

The court also held that as it relates to the banking transaction between United Alliance Company and the defunct IBPLC, it is only the CBN who has the power to investigate such banking transactions.

“It is baffling that Dr. Akingbola forwarded his petition to the defendant for investigation. It is even more baffling that the defendant attempted to investigate the petition considering the fact that the petition was inviting the defendant to investigate mergers & acquisition,” the judge stated.

He further cautioned that it should not be understood to say that the plaintiffs could not be investigated. “Such an investigation must be done in accordance with the rule of law,” he explained. In view of this, the court thereby resolved the first issue as to whether the defendant was competent to entertain the petition without acting ultra vires its objects and functions, in favour of the plaintiff.

On the question of subjudice, the court again ruled in favour of the plaintiffs, rejecting all of the FRC’s arguments on this issue. The judge held that what really mattered was not whether the parties were the same but whether the subject matter and reliefs sought in the Abuja suit and the contents of Akingbola’s petition were actually the same.

To this end, Justice Idris resolved all the issues in favour of the plaintiffs, Aigboje Aig-Imoukhuede and Herbert Wigwe, endorsing the submissions and arguments canvassed in support of their originating summons. Thereby, granting an order of perpetual injunction restraining the Financial Reporting Council of Nigeria from conducting any such investigations.

THEODORA KIO-LAWSON