More criticism for proposed Corporate Governance Code

A renown board room expert, Olusegun Osunkeye has criticised some of the provisions of the suspended National Code of Corporate Governance, saying it is capable of affecting Foreign Direct Investments (FDI) into Nigeria.

Osunkeye, who chaired the opening session of an ongoing two-day annual corporate financial reporting summit in Lagos, stunned the teeming audience when he said “there are some controversial areas in the Code”.
He further said: “The mandatory nature of the Code is contrary to the global corporate governance trend and Nigeria should not be operating in isolation, if we are to attract needed investments into the country.”
This year’s annual corporate financial reporting summit is themed, “National Code of Corporate Governance & New Audit Report (ISA 701): A Paradigm Shift”.
Osunkeye, who had chaired the board of so many successful companies –like Nestle Nigeria Plc, Lafarge Africa Plc, among others –is currently the chairman, Society for Good Corporate Governance. “If a house is divided among itself, it cannot stand. There is a conflict between the Companies and Allied Matters Act (CAMA) and the Code”, he said.
The now ‘controversial’ National Code of Corporate Governance is solely championed by Jim Osayande Obazee, Executive Secretary/Chief Executive of the Financial Reporting Council of Nigeria (FRC) organisers of the summit. The Financial Reporting Council of Nigeria is an agency under the supervision of the Federal Ministry of Industry, Trade and Investment.
Obazee had in October, issued the Code it referred to as the “National Code of Corporate Governance for the Private Sector in Nigeria 2016” claiming it became effective from October 17, 2016.
Early last month, following series of criticisms by industry stakeholders and shareholders on the implication of the Code of Corporate Governance to the Nigerian business community, the Federal Government swiftly suspended the Code and issued a query to the Financial Reporting Council, seeking written responses and relevant documents within seven days.
In the three-paged query to the FRC signed by Okechukwu Enelamah, Minister of Industry, Trade and Investment, the Financial Reporting Council was asked to provide among others, the regulatory approach that undergirds the Code; the clear conflict between provisions of the Code and the Legislation –Financial Reporting Council of Nigeria Act, 2011.
As a strategic document, FRC was also asked to provide evidence of the adoption of the Code by the Board of the Council and the minutes of the meeting at which the Code was adopted by the Board.
The Financial Reporting Council was also to tell the Federal Government whether the committee on Corporate Governance, in Section 51 of the Financial Reporting Council of Nigeria Act, 2011, empowered to issue the Code of Corporate Governance, in a position to act in the absence of the Board of the Council in the light of provisions of Sections 2 (1) and 10 (d) of the Act.
“The provisions of the Code should take note of its impact on the economy. The inconsistency with the provisions of CAMA will require amendment of CAMA. A section of the Code takes away the powers of the board to elect its chairman. Those who have no financial stake in business are given special powers against those who may have financial stake,” Osunkeye said.
“I am aware that the organised private sector has made its views and submissions on this Code. The Code should not be cast in iron. It is expedient that the FRC should amend the Code for national interest. If FRC makes paradigm shift on effecting the changes recommended in the Code, it will be seen as living up to the responsibility of promoting investment in this country,” he told the teeming participants.
Obazee in his response, argued that the Code does not scare and will not scare foreign direct investors. “His (Osunkeye) comments and views show that we are getting to the right direction. We will look at his speech with bigger lenses”.
His words: “Some highly placed persons have been desperately seeking for my removal and assassination. The Code is not because of recession,” adding that the immediate results of Nigeria’s mismatched monetary policies is what we call recession.
“The Code does not scare and will not scare foreign investors, rather it will enhance it. Corporate Governance failure has been proved to be at the heart of financial crisis. The Code is not in conflict with the FRC Act”, Obazee said, adding that some of Osunkeye’s views are not acceptable.
The Corporate Governance Code which a law firm, Olaniwun Ajayi LP , described as a “one-size-fits all” seeks to supersede other corporate governance codes which regulate other sectors and would have forced changes in board structure of so many companies –particularly in the financial sector of the Nigerian economy.