Shareholders have expressed displeasure over the increasing level of financial donations by corporate organisations to various government and regulatory agencies in the country, calling on the federal government and the National Assembly to put a stop to the practice.
Findings by Financial Vanguard revealed that the Financial Reporting Council of Nigeria, FRCN, received financial gifts totaling N232.65 million from five banks towards the construction of the International Financial Reporting Standards (IFRS) Academy in 2012 alone. The banks include Access Bank Plc, Guaranty Trust Bank Plc, Diamond Bank Plc and Sterling Bank Plc.
Out of N173.229 million cash donations made by Access Bank within the same year, N50 million was given to FRC; Guaranty Trust Bank also donated a total sum of N50 million to the same FRC, while it donated N4.5 million and N3.12 million to the Nigerian Stock Exchange, NSE, and Ogun State Government Educational Development Programme respectively.
Diamond Bank on its part made N21 million donation towards construction of FRC/IFRS Academy and N3.15 million donation to the agency’s annual reporting summit. Sterling Bank also handed out N8.50 million to FRC; Lagos State Government got N20 million from the bank, as its contribution towards 2012 Economic Summit. It also donated N15.6 and N4.41 million to Lagos State Waste Management Authority and Lagos State Transport Management Authority respectively towards procurement of uniforms.
Over the years, some companies have religiously sponsored the NSE’s annual essay competition for secondary and tertiary institutions in the country. The shareholders therefore called on the Federal Government and the National Assembly, NASS, to give a blanket order that no regulatory body should take any kind of money from organisations they supervise.
“You remember the case of NASS and the Director-General of the Securities and Exchange Commission; the NASS has supervisory role over SEC and it started taking money from SEC and you know where that issue led to. So, I think the Presidency should intervene in this kind of issue.
The presidency should call them to order, be it SEC, NSE, National Insurance Commission, NAICOM, the Central Bank of Nigeria, CBN.
“All these supervisory bodies should be called to order that never should they accept any kobo from organisations they are supervising,” said Ambassador Olufemi Timothy of Renaissance Shareholders Association. He called on the Economic and Financial Crimes commission, EFCC, to commence probe into all such donations to regulators of financial sector by corporate bodies.
“If the FRC, which is a new body regulating the accounting system in these private companies is taking donations from them, how will they perform their functions. If you look at the IFRS accounting system the companies are adopting now, they are not well detailed. The FRC is supposed to probe this, but you cannot probe me when you have collected money from me,” Olufemi said. He also condemned a situation where the FRC directs all directors of quoted companies to register with them for a fee, saying that all directors should not be turned into accountants.
According to Sir Sunny Nwosu, National Coordinator, Independent Shareholders Association of Nigeria, ISAN, such gestures have moral hazards “because by the time companies start donating to these regulators and they pass on their account to them for review, they will just pass them because the companies have done what they want, especially the FRC, which of course all these accounts pass through before going to the other regulatory bodies. We want to see moral in everything we do.
“Government officials should see themselves in a position where they cannot take anything from anybody because of their office. From that position, we will begin to cleanse the system of immoral tendencies, bribery, corruption and all such evil,” he stated.
Corroborating his views, Chief Timothy Adesinyan, said government agencies that have subventions from the government must not be seen collecting gifts from corporate bodies, adding that all such donations going to all such institutions must be accounted for to the National Assembly.
He maintained that if actually the regulators want to perform their regulatory functions well, they must not take donations, saying that it is tantamount to watering down their effectiveness. He said,
“FRC is an establishment of government that monitors compliance with financial reporting standard; it is neither a College of Education nor a University, so why should corporate organisations be donating to it towards construction of FRC’s Academy? What we are saying is that money coming in form of donation to whether the NSE, the SEC, the CBN or FRCN should be accounted for to the NASS. It is said that a man’s gift makes way for him, so when you as a regulator keep collecting money from people you are supervising, there is bound to be some compromise in the quality of supervision you provide.”
He continued, “The Nigerian Stock Exchange used to collect donations from quoted companies; we see it in annual reports of these quoted companies. If actually the regulators want to perform their regulatory function well, they must not take donations. It is tantamount to watering down their effectiveness.”
History, role of FRC
The Financial Reporting Council of Nigeria, FRCN, formerly the Nigerian Accounting Standard Board, NASB, is a body charged with setting accounting standard in Nigeria. Established in 1982, NASB became a government agency in 1992, reporting to the Federal Minister of Commerce. Membership includes representatives of government and other interest groups. Both ICAN and the Association of National Accountants of Nigeria (ANAN) nominate two members to the board.