Courts adjourns to November 19 on KPMG vs FRC.

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Justice Ibrahim Buba of Federal High, Lagos has adjourned till Thursday, 19  November, hearing in the suit filed by KPMG Professional Services and its Partner Mr Ayodele Othihiwa against the Financial Reporting Council of Nigeria (FRC) and its Executive Secretary, Jim Obazee.

The adjournment is based on the submission and mutual agreement  of the counsels for the two parties . 

Norrison Quakers, counsel to the FRC told the court that was still studying the file  and  needed time to file a response as he had just been briefed.
Also, Babatunde Fagbohunlu, counsel to KPMG and Otihiwa informed the court that Jim Osayande Obazee is yet to be to be served the court process and as such needed to apply for substituted service.

Justice Buba adjourned the matter till next week when all the parties must have been served.

The court restated its order restraining Financial Reporting Council of Nigeria (FRC) and its executive secretary and CEO, Obazee, from taking any action, sanction or measure against KPMG Professional Services and 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.

The KPMG order is the second granted by the court against the FRC . StanbicIBTC bank had last week got Justice Buba to order the FRC to maintain the status quo in a related case that is 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 published and issued the decision without informing or notifying them of the nature of the allegations against them and inviting them to respond.

KPMG and Othihiwa claimed that the FRC decision violated their constitutional right to fair hearing and also in disregard of 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 having been dissolved on 16 July 2015 alongside others by the current administration of President Muhammadu Buhari. ”

“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.

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