Ex MD Alleges Crisis in Afribank

Proshare

October 16, 2006/thisday

 

 

 

A major crisis reminiscent of the Enron saga is rocking Afribank Nigeria Plc as its immediate past Group Managing Director, Mr. Patrick Olayele Akinkuotu, alleges that the latest financial report of the bank for the year ended March 31st, 2006 is cooked.


But the bank’s external auditors –Akintola Williams Deloitte, insist that their audit report on the bank’s accounts are a true, fair and accurate representation of its financial health for the year under review, stressing that the Central Bank of Nigeria (CBN) has given their job a clean bill of health.


Also refuting Akinkuotu’s claim, Afribank’s spokeman, Mr. Lanre Alabi, said the bank’s accounts were in order, contending that if it were not so, they “would not have been approved by the Central Bank of Nigeria (CBN).”
Afribank had few weeks ago, reported gross earnings of N14.65 billion; pre-tax profit of N3.69 billion; post-tax profit of N2.4 billion; total assets of N131.27 billion and shareholders’ fund of N27.06 billion.


But Akinkuotu in a petition to the regulators and the National Assembly titled: “Report of Conspiracy by the Board of Directors and the External Auditors against the Group Managing Director of Afribank – Urgent Need for Your Intervention to Prevent the Bank’s Failure,”’ a copy which was obtained by THISDAY, alleged that the results were manipulated by Afribank’s board and its external auditors –Akintola Williams Deloitte.


He noted that the board and management meeting of 12th April 2006 where the unaudited accounts for the financial year ended March 31, 2006 was presented, showed gross earnings of N17.7 billion; pre-tax profit of N7.5 billion; total assets of N137.5 billion and shareholders fund of N31.03 billion.

Akinkuotu however, stated that at the completion of the audit exercise by the external auditors, the draft accounts for the period in review showed that Afribank recorded gross earnings of N16 billion; loss before tax of N6.3 billion; loss after tax of N6.9 billion; total assets of N127.5 billion with shareholders’ fund dropping to N17.845 billion compared with the 2005 N21.39 billion.

The main reason for the wide differences between the management figures and the audited figures according to the former group managing director, is “simply as a result of the huge non-performing risk assets in prior years, which the bank had been carrying erroneously as performing risks assets with the knowledge of the board and their external auditors, who incidentally still remain the auditors – till date.”

Realising the implication these developments on its reputation when the audited results go public, Akinkuotu alleged that “the auditors modified their position a few days later and forwarded to management the amended draft audited accounts,” details of which was the published version of the bank’s reports.

He noted that at the final audit meeting between the management of Afribank and the auditors prior to the board meeting convened to consider the draft audited accounts, he as the MD/CEO, insisted that the auditors would need to present “a true, fair and accurate accounts” to the board together with the schedule of additional provisions earlier prepared by them notwithstanding their subsequent modified position at the meeting.

He said all efforts made by him to draw attention to the first draft accounts, together with the schedule of additional provisions prepared by the same auditors were stiffly resisted by the chairman and some other board members at the meeting.

But the Chief Executive of Akintola Williams Deloitte, Segun Odubogun, said the prudential guidelines were strictly adhered to in the course of auditing Afribank’s financials.

While admitting that the accounts which presented pre-tax and post-tax losses of N6.3 billion and N6.9 billion respectively and a shareholders fund of N17.845 billion might have been obtained by Akinkuotu from one of its staff who used the report as a working paper, he maintained that the said report was not officially sent to Afribank and “we can totally disclaim it.”

He submitted that the published accounts of Afribank were indeed the true state of affairs of the bank.
He said: “In our 30 years of existence this is the first time someone would accuse us of modifying our reports.

“We apply the rules 100 per cent, we don’t bend the rules at all. Our firm has a world renowned in-house audit approach system called Deloitte audit that ensures our audit are carried out in full compliance with all applicable auditing and accounting standards both local and international.

“We have designed a method of timely escalation of issues of non-availability of schedules to support the management accounts. As a result we make full provisions on any account balance that schedules are not readily made available, such that at any point in time we have a draft account.

“As the audit progresses and as management produces more audit evidence to support relevant account balances we are able to revise our draft accounts.

“Hence, in the course of an audit we prepare several draft accounts, one of which is quoted by the petitioner.
“Our work is completed when a final draft is submitted to the board of directors after passing through and being cleared by our in-house Engagement Quality Assurance (EQAR) department headed by a neutral Partner not involved on the audit engagement.

“Our final audited account for Afribank Nigeria PLC supported by our audit working papers was presented to the directors at a meeting of the board of directors on 6 July 2006.

“Overall, we are a firm that is known for high integrity and ethical values and cannot be accused of suppression of financial information. If the petitioner has any issues with anyone, including the board of directors, the external auditors should not be dragged into such squabbles.

“Whoever goes to equity must go with clean hands. I think whoever presented those figures (the inflated results) to the management was having some funny ideas He is not somebody that can be regarded as a clean person. We ended up with a figure which was substantially lower.

“CBN has reviewed our work and they are satisfied with what we have done. We don’t just work, we also have people who look into what we have done, the  Akintola Williams Deloitte chief executive stressed.

Ironically, Akinkuotu was  employed as Afribank CEO by Akintola Williams Deloitte in October 2005 with four new executive directors after the Board had relieved all former members of the executive management of their jobs. 
The Afribank spokesman in his response, advised Akinkuotu not to disparage the bank.

“Since the CBN has approved our financials as far as we (Afribank) are concerned, our financials were not cooked. It is the true state of the affairs of the Bank. Akinkuotu should not cook up stories to disparage the bank,” he stressed.

Akinkuotu however, stated that when the Afribank chairman and some members of the Board refused to discuss the accounts at the meeting which was intended for the Board to be aware of the bad and doubtful accounts in the Bank, “I expressed my dissatisfaction with the way the issue of the account was handled by the Board and stated that I will not be in the position to sign the account that do not satisfy all the requirements of prudential guidelines of the CBN.”

At the end of the meeting, “the chairman with the support of some directors decided that I must proceed on my vacation immediately and constituted a Board Panel of Investigation to investigate me as the MD/CEO as if I have committed any crime in the first place. This obviously was diversionary as the main reason was for these board members to have their way by getting the acting MD/CEO to sign the account in my absence.”

Explaining why he had to resign from Afribank, Akinkuotu said upon completing his annual vacation on July 10, 2006 with the intention of resuming on September 4, 2006, “the chairman and some of these directors who are bent on running Afribank have decided that I  must stay away from the office to face the board panel of investigation deliberately  put together to humiliate me, tell lies against me with no concrete proofs, indict me and possibly remove me from office principally to pave way for them to finalise the fraudulent financial statement already presented to the CBN for approval.”

The Board of Afribank has since mandated Mr. Sebastian Adigwe, an Executive Director in the Bank, who has since been acting as the Managing Director to continue in that capacity.

READ MORE:
Related News
SCROLL TO TOP