The Federal High Court today in Lagos again adjourned hearing till December 3 in the fundamental human rights suit filed by KPMG Professional Services and its Partner, Ayodele Othihiwa, against the Financial Reporting Council (FRC) and its Executive Secretary, Osayande Obazee.
Presiding judge Ibrahim Buba had last week adjourned hearing till today to allow the defendants to file their response to the suit, but the court did not sit, and the parties agreed to the adjournment.
Last week, Norrison Quakers, appearing for FRC, told the court that having just been briefed about the matter, he needed time to file a response.
Babatunde Fagbohunlu, representing the applicants, also informed the court that they had been unable to serve the court process on Mr. Obazee. In view of that development, he told the court he might be bringing an application for substituted service.
The court then restated its order restraining FRC and Mr. Obazee from taking any action, sanction or measure against KPMG and Mr. Othihiwa pending the hearing and determination of the suit filed by the applicants.
The interim order was granted two weeks ago sequel to an application argued before the court by Barrister Chuka Ikwuazo of the law firm of Aluko and Oyebode, urging the court to restrain the respondents from taking any sanction and also for accelerated hearing of the suit.
Justice Buba also ordered the FRC to maintain the status quo in a related case filed by StanbicIBTC bank also pending before the court.
KPMG and Mr. 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, as well as its ‘regulatory decision’ conveyed in another letter of 30 October, on the financial statements of StanbicIBTC Holdings Plc for 2013 and 2014.
In one of its regulatory decisions, FRC 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.
The 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 also Section 15(2) b, 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, as the last one 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 to be 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 the Financial Reporting Council. However, in his reaction, Yomi Sanni, the Chief Operating Officer, faulted the decisions of FRC. He argued that 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.