Bashorun J. k. Randle's speech exposes the state of the country plus River Niger set to dry up! - Paul Ukpabio's Blog


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Thursday, 10 March 2016

Bashorun J. k. Randle's speech exposes the state of the country plus River Niger set to dry up!

The beauty and style of Bashorun J.K.Randle’s writings compel the publishing of this piece on this blog. Of great importance, are the memories, the camaraderie inherent in the outflow of words: But more importantly are the national issues raised therein, and the fear of the worst that could happen to the River Niger being the drying up of the water, a reality that begs only for imagination..

With pleasure, I invite you to read on, the words of the beautiful man of letters:

Paul Ukpabio.

                                         KPMG AND SIR RONALD LEACH
                                             - By Bashorun J.K. Randle, OFR, FCA
Bashorun J.K Randle

The retired partners of KPMG who are still awaiting their gratuity and pension were in great spirits as the old year (2015) went into voluntary liquidation.  Accompanied by our spouses, we had gathered at the
Four Seasons Hotel,
Avenue de La Menara,

to roll in the New Year.
The choice of Marrakech was heavily influenced by the CNN vigorous advertising of the city and the exotic endorsement of Morocco as:
“The land of snake charmers
Acrobatic dancers
And money doublers.”
If we do manage to double our money, we shall certainly be back here next year.  Insha Allah!!
A quick roll call confirmed that gem of witticism from Arc (Chief) Femi Majekodunmi (product of St.
Gregory’s College):
“We are all here – except those who are not here.”
 It has gone viral on internet.”
He is a great guy and an outstanding professional who rose to become President of the Commonwealth Institute of Architects.  Fancy running into him and his charming wife Victoria in Marakesh of all places.

Over several lashings of Tangin (the local delicacy) accompanied with Moroccan wine, we (chartered accountants) came to the conclusion that Sir Ronald Leach who was the Senior Partner of KPMG from 1975 to 1977 will forever remain an icon of the accountancy profession.
According to J.R. Edwards’s book:
“A History Of Financial Accounting”
“Sir Ronald Leach, senior partner of Peat Marwick Mitchell & Co (which later became KPMG) and the “unfortunate president of the English Institute [now the Institute of Chartered Accountants in England and Wales] at that time (his own words) was besieged by members demanding action from the Council of the Institute to stem the mounting criticism of the profession in the press.

The background to it all is that the accountancy profession was engulfed in a slew of scandals which provoked stringent criticism from Edward Stamp in his famous letter to “The Times” newspaper (dated 11 September 1969).

Here is the Witness Statement of Edwards:
“Interestingly, accounting standards were an even later development than true and fair audit opinions.  In fact, another of the great and good, Ronald Leach played a major role in starting their development not long before I joined Peats.”

However, Leach was not alone.  We also have a testimony from John Carter who was reminiscing about Price Waterhouse in the 1950’s and 1960’s:
“The whole ethos of the firm then was “judgement.”  The whole approach to the audit was:  what is true and fair in my judgement?  To hell with the law or whatever.  You have to bear in mind that was before accounting standards came into being so in any particular circumstances you faced you had to make your own judgement based on what had happened before in similar situations.”
We are also provided with robust evidence of power shift – by Donald Brittain:
“There was consensus that auditors, prior to say 1970, tended to get their way with clients more easily.  There was very little input from the client in those days.  Auditors were treated with more respect in that the auditor was the sole arbitrator of what was true and fair.  There was no negotiation because you had to get it right without fear or favour.  In my day, the auditor was a semi-god.  I know it sounds daft, but even as a humble clerk you could go and ask for information, and you got it.”

Sir Ronald served as an officer in the Royal Air Force during the Second World War and was based in Egypt.  His wartime services are a matter for another day.  He was wounded but that did not stop him from achieving  great heights in his chosen profession – accountancy.  What was remarkable was that even as Senior Partner of Peat Marwick Mitchell, he insisted on direct supervision of the Church for British Air Force Officers – St. Martins In The Fields
Trafalgar Square
London WC2N 4JJ
United Kingdom.

It was exceptionally gracious of him to have handed over the audit of the church to me with instructions that I would report to him directly on completion of the assignment.  I was thrown in at the deep end.  On my arrival at the church to commence the audit, the Chaplin astonished me.  There he was seated behind a huge oak desk and he proceeded to deliver his sermon:
“Young man, all the income of the church is in the drawer to my right and all the expenses are in the left drawer.  Now get on with it.  I shall see Sir Ronald in church on Sunday.”
By every yardstick Sir Ronald was a great leader.  He was also a great communicator.  At one of the firm’s annual Christmas parties, which was held at the Savoy Hotel also in The Strand, London WC1, he summed up his abiding philosophy:
“The Air Force taught me the profound lessons of life and leadership.  There is no such thing as engine failure or pilot’s error.  If you are the pilot (the leader), your first priority is to ensure that you are fully alert and that your aircraft is in excellent working condition.”
He was also a caring leader.  He would personally sign the Christmas cards for retired partners and send letters to specially invite them to the firm’s events, especially the annual Christmas party.

He never wavered in the firmness of his grip in managing the firm’s business or defining its moral compass in terms of ethics, ethos and discipline.  Some of us witnessed it when one of the most senior partners in the firm, Allan Smith was ambushed by a con man into issuing a clean audit report in respect of an American company whose activities were shrouded in mystery under the pretext that they were “STRICTLY SECRET”.  The only people who were privy to the details were the Prime Minister of Pakistan; the head of the Pakistani Secret Service and the American Ambassador to Pakistan.   As fate would have it, all three of them perished in a plane which crashed after suffering missile attack.  The totally unforeseen disaster created a huge credibility gap and reputational risk for the firm.

Poor Allan Smith was immediately sent on “Garden Leave”.  In effect, he was on suspension.  It was the equivalent of being sent to the doghouse.  His office was locked up and he was compelled to spend all his time with the firm’s lawyers as they struggled valiantly to clean up the mess.  It was an excruciatingly painful ordered for Allan who had bagged a first-class degree in engineering from Cambridge University before venturing into accountancy.  He rose rapidly and became the partner in charge of supervising the firm’s business in Nigeria, Ghana and Sierra Leone.  He never fully recovered.  Nevertheless, he was a brilliant man.  Maybe he was just unlucky.

Perhaps it was inevitable that KPMG’s involvement in the controversy over the accounts of Stanbic IBTC Nigeria Plc for the year ended 31st December 2014 and the issues raised by the Financial Reporting Council of Nigeria would attract the attention and interest of retired partners of KPMG.

Since the matter is still the subject of litigation, fairness and prudence demand that we confine ourselves to what is already in the public  domain:

FRC indicts Stanbic IBTC management for fraud, suspends Atedo Peterside, David-Borha
The Financial Reporting Council of Nigeria (FRC) has suspended the Chairman of Stanbic IBTC bank, Mr. Peterside Atedo and the Managing Director, Mrs. Sola David-Borha from the board of the bank for alleged fraudulent activities.
Specifically, FRC said the two were involved in accounting irregularities, and improper disclosures in the bank’s 2013 and 2014 financial statements.
Also suspended were KPMG’s Arthur Oginga, Dr. Daru Owei and Ayodele H. Othihiwa for their alleged roles in the breach.
The FRC in a statement on Monday said they remained suspended “until the investigation as to the extent of their negligence in the concealment, accounting irregularities and poor disclosures in the said financial statements is completed in accordance with Section 62 of the Financial Reporting Council of Nigeria Act No. 6, 2011. Accordingly, they are not allowed to vouch the integrity of any financial statements issued in Nigeria.”
Below is full statement by the FRC.
Pursuant to Provisions of the Financial Reporting Council of Nigeria Act No. 6, 2011 (“FRC Act”) and Regulation 3 of the Financial Reporting Council of Nigeria
– Guidelines/ Regulations for Inspection and Monitoring of Entities, 2014 (“the Regulation”) some matters came to the fore from the review of the financial statements of Stanbic IBTC Holdings Plc (Stanbic IBTC) and major subsidiaries of the holding company for the years ended 31st December 2013 and 2014.
Material irregularities of the said entities were also brought to the attention of the Council by some minority shareholders of Stanbic IBTC relating to the Financial Statements of the said entity for years ended 31st December 2011, 2012, 2013 and 2014.
The issues raised by the minority shareholders were also addressed to some other regulatory agencies such as the National Office for Technology Acquisition and Promotion (NOTAP), Securities and Exchange Commission (SEC) the Central Bank of Nigeria (CBN), among others.
The Council met with NOTAP on 1st September, 2015 and have also exchanged several correspondences on the matter thereafter. A number of issues, even well beyond the complaint of the minority shareholders, which also bordered on the financial reporting of Stanbic IBTC for the relevant years, became manifest.
The Council wrote to the Securities and Exchange Commission on 3rd September, 2015 informing them that from the preliminary report from the documents at the disposal of our Council and the meetings held with Stanbic IBTC, there will be material adjustments required in the financial statements of Stanbic IBTC that may affect the decision of stakeholders.
The Council requested SEC to consider withholding her authorisation of any request made by Stanbic IBTC on Rights Issue and Scrip Issue until the matter that is brought to our joint attention is resolved and the relevant financial statements corrected.
At the time, Stanbic IBTC’s attempt to enhance its operations by way of Rights Issue and Scrip Issue were publicly available. SEC graciously acceded to this request and issued a Public Notice on 7th September, 2015 suspending Stanbic IBTC’s Rights Issue pending the conclusion of the investigation by our Council.
Stanbic IBTC Holdings Plc is a company domiciled in Nigeria.
Stanbic IBTC is made up of the following eight subsidiaries:
Stanbic IBTC Bank (including Stanbic Nominees Nigeria Limited)
Stanbic IBTC Pension Managers Limited
Stanbic IBTC Asset Management Limited
Stanbic IBTC Stockbrokers limited
Stanbic IBTC Trustees limited
Stanbic IBTC Ventures Limited
Stanbic IBTC Capital Limited
Stanbic IBTC Investments Limited.
Stanbic IBTC Holdings Plc is a member of Standard Bank Group with headquarters in South Africa and with a controlling stake of 53.25% in Stanbic IBTC Holdings Plc.
The Inspectorate Unit (the Panel) had a number of meetings with representatives of Stanbic IBTC between August 3, 2015 and October 16, 2015. In the meetings, representatives of the KPMG Professional Services, Stanbic IBTC’s External Auditors, were in attendance. Various correspondences were also exchanged between Stanbic IBTC and the FRC.
The final meeting held on October 16, 2015 between FRC panel of inspectors and a team representing Stanbic IBTC made up of Stanbic IBTC’s Chief Executive Officer, Legal Adviser, as well as the Engagement Partner at KPMG Professional Services (Stanbic IBTC’s External Auditors) and six other staff of both Stanbic IBTC and KPMG.
The purpose of the meeting was to afford Stanbic IBTC Directors a final opportunity to provide factual information regarding the discrepancies observed in its Financial Statements and general financial reporting, ensure fair hearing for the directors and reach an agreement for a resolution.
The Panel was mindful of the fact that it is the duty of the directors to prepare financial statements for an entity; as provided for by Sections 331 to 334 of the Companies and Allied matters Act CAP C20 LFN, 2004. By virtue of Section 334 of the Act, the authors of the financial statements (of Stanbic IBTC) under review are its Directors.
Sir Ronald Leach would no doubt be furious over the following front page report in the “Financial Times” newspaper of 27 November 2015:  Headline:      “FOUR SENIOR KPMG PARTNERS HELD IN BELFAST.”
“KPMG, the professional services firm, has placed four of its senior partners on administrative leave after they were arrested in Northern Ireland in connection with an investigation into alleged tax evasion.

The four men were detained after officers from HM Revenue & Customs visited KPMG’s Belfast office in connection with what the HMRC said was “suspected tax evasion”.
The four are Jon D’Arcy, KPMG’s chairman in Northern Ireland; Eamonn Donaghy, the senior tax partner in Belfast; Paul Hollway, head of the firm’s Irish corporate finance business; and Arthur O’Brien, a senior partner.

KPMG confirmed yesterday that HMRC officers had visited its Belfast office on Wednesday in connection with an investigation and said the firm was co-operating.  “It is important to emphasise that we do not have any indication that this investigation relates to the business of KPMG or the business of our clients,” the firm said.
“Pending further information and inquiry, we can confirm that four partners in our Belfast office are on administrative leave.”
Neither HMRC nor KPMG would comment beyond their statements.
The arrests come as a blow to Northern Ireland’s tightknit business community, which has been hit by a scandal surrounding the £1.2bn sale of a portfolio of property loans to Cerberus, a US private equity company.  This year, allegations emerged that some Northern Ireland politicians stood to gain from a £7m “fixer’s fee” linked to that deal.  The purchase of the loans is the subject of criminal investigations in the UK and the US.

As well as working together at KPMG, the four men are investors in a property company called JEAP Ltd.  The company is registered in County Down and has a trading address at College Square East in Belfast, the same address as KPMG.  They are listed as JEAP’s directors and shareholders and its articles of association describe its purpose as “to engage in property development activities.”

Local media reports said one of the developments the property company invested in was at Killea in County Donegal, which lost money.  According to documentation at Companies House, JEAP showed a shareholders’ deficit of £4.3m at March 2014, with current assets and net liabilities of the same amount.
It is not clear if the arrests are linked to the activities of that company.  Property development was a popular investment among professionals on both sides of the border during Ireland’s property boom, which ended in 2008 when the global financial crisis hit.
An island-wide collapse in property prices triggered Ireland’s financial and banking crisis from 2008 to 2010, which reverberated almost as loudly in Northern Ireland as it did in the republic.  Many investors lost heavily in the crash.
The arrests of four such senior staff is a setback for KPMG in Northern Ireland.  Its operations in Belfast are among the biggest of any professional services firm.  It is understood senior staff from the Dublin office have been sent north to ensure the office is able to carry out its day-to-day functions.

Mr. Donaghy has been a leading figure in the successful campaign for Northern  Ireland to be given the devolved power to set its own corporation tax.
The province is to introduce a 12.5 per cent corporation tax rate from 2018, which will put it on the same level as the rate in the Republic.  Northern Ireland based companies pay the same 20 per cent corporate tax rate as the rest of the UK.”
However, in Nigeria our challenges are somewhat different going by the front page report of “The Nigerian Tribune” newspaper of 3 December 2015.
-       Auditor-General
•       Says River Niger Might Dry Up.
“Auditor-General of The Federation (AGF), Mr. Samuel Ukura, on Wednesday accused the National Assembly of frustrating the 14 audit reports submitted by his office to the legislature since 1999.
The Auditor-General, who stated this at retreat jointly held with Public Account Committees (PAC) of the National Assembly in his office in Abuja, said the National Assembly had failed to process all the 14 audit reports forwarded to the legislature since 1999.

He said the reports contained details of fraud and corrupt practices in Ministries, Departments and Agencies (MDAs).
He regretted that while his staff usually produced the reports after due diligence and painstaking efforts, such documents were usually left unattended to by the committees of the National Assembly.
According to him, the determination of the present administration to fight corruption would only achieve desired results if the audit reports were treated with dispatch.  He canvassed the passage of the Audit Bill, which according to him, would empower his office to discharge its duties with financial and administrative independence.   Representative of the Department For International Development (DFID) in Nigeria, Mr. Ben Mellor, told the gathering that audit reports remained the most effective tool for oversight functions.  He stated that there was every need for the PAC of the National Assembly to ensure that the hopes of Nigerians who voted for accountability, probity and good governance were not dashed.

Mellor said:  “The PAC are the most powerful instruments of parliament to check wastage and corruption and they are required to provide real leadership to rid the public service of corruption.”
He advised the committees to ensure they involved journalists in their public hearings and meetings before, during and after the exercise.   He noted that staff of the National Audit Department were constantly on secondment to the PAC, to provide technical support in the United Kingdom, and therefore, urged the Federal Government to consider the adoption of such practice, because it would enable PAC members to understand the report of the Auditor-General.
He said PAC must get adequate media coverage which would ensure prompt publication of audit reports.   Senate President, Dr. Bukola Saraki and the Speaker of the House of Representatives, Honourable Yakubu Dogara, said in their contributions that the National Assembly would ensure prompt consideration of audit reports in the eighth National Assembly.

Saraki, at the event, was represented by Senate Minority Whip, Senator Abiodun Olujimi, while Dogara was represented by the chairman, House Committee on Public Accounts, Honourable Chinda Kingsley.

While speaking on the latest environmental audit report carried out by the United States, the Auditor-General raised the alarm that River Niger might dry up in the next few years.
The Auditor-General said: “We just came back from an environmental working group in Dakar, Senegal and we have the approval of the working group to do an environmental audit of the River Niger.

This exercise will involve nine countries and we will do the environmental audit because there are some reports by the United States that River Niger is one of the rivers that will, in the next few years, dry up like what we are experiencing in the Lake Chad.”
 Bashorun J.K. Randle is a former
 President of the Institute of Chartered Accountants of
 Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa
Region.  He is currently the Chairman, JK Randle Professional Services.


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