Concerns over Sulaiman’s Dual Roles as FRC, Cadbury Chairman

By Dike Onwuamaeze

Some financial market experts have expressed concerns over the recent appointment of the Chairman of the Financial Reporting Council of Nigeria (FRC), Mr. Adedotun Sulaiman, as the chairman of the Board of Directors of Cadbury Nigeria Plc.

They said with the appointment, the integrity of the FRC as an objective and an impartial regulator could be undermined.

They stated that Sulaiman must relinquish one of the appointments as his continued retention of both positions would expose the FRC to ethical issues as well as conflict of interest in the discharge of its responsibilities.

Cadbury Nigeria Plc had last month named Sulaiman as chairman of its board, effective immediately. He replaced Mr. Atedo Peterside, who stepped down on June 30.

Sulaiman’s appointment was contained in a statement issued by the company’s Corporate Communications and Government Affairs Manager for West Africa, Mr. Frederick Mordi.

Efforts by THISDAY to get the view of Sulaiman on the matter were unsuccessful as he didn’t reply to a text message, a WhatsApp message as well as phone calls.
Similarly, the Executive Secretary/Chief Executive Officer, FRC, Mr. Daniel Asapokhai, failed to respond to THISDAY’s inquiries.

When contacted, a source at Cadbury, who pleaded to remain anonymous said it was a matter for the FRC and not for the company.

But speaking with THISDAY yesterday, a former President of the Chartered Institute of Bankers of Nigeria (CIBN) and Managing Director/Chief Executive Officer of Maxifund Securities Limited, Mr. Okechukwu Unegbu, said the chairman of the FRC ought to be somebody not linked to any business or company that the FRC would supervise.

Unegbu said: “One thing I keep saying is that we don’t respect the code of ethics in Nigeria. How can you be the chairman of the FRC that also regulates the accounts of the Cadbury Nigeria that you are also its chairman? With him as the chairman, do you think that they can find anything wrong with the accounts of the Cadbury? They will not.

“They will even fear him and won’t be able to report properly. Most of our regulators are making this mistake. These are regulators that ought to know that the code of ethics must be respected. It is very sad for me. These things are an abuse of processes and also an abuse of our nation by portraying us as stupid people. It is very sad.”

He also advised Sulaiman to pick one of the two appointments in order to preserve his integrity, saying transparency of the FRC is at stake.

“His integrity would have restrained him from holding both appointments at the same time. Transparency is at stake. He already has a name so what is he trying to achieve?”

“To be the chairman of the FRC and the chairman of Cadbury simultaneously is really indicting. This is my personal opinion, others may see it differently but this is my opinion,” Unegbu added.

According to him, the country must begin to get certain things right in order to pass an unstained baton to the next generation.

The Founder and Chairman of Proshare Nigeria Limited, Mr. Olufemi Awoyemi, also faulted Sulaiman’s dual role as the chairman of the FRC and the Cadbury respectively because such appointments that required an individual to operate from both sides of the market as a market regulator and market operator always have serious ethical issues.

He said: “There is a general breakdown in governance that happens when the chairman of a regulatory body is also the chairman of a quoted company. It is even worse in the case of Cadbury Nigeria because of its recent history of market infractions.

“This even raised the question that should such an infraction occurs, will the FRC be in a position to objectively do its job? Or will the chairman have to excuse himself either as the chairman of the Cadbury or chairman of the FRC?”
He explained that not even Sulaiman’s uncommon good standing in the market could compensate for the potential damage his position on the two entities would wrought on the transparency of the FRC.

“It is all about corporate governance and they (FRC) need to have an appearance of objectivity irrespective of the pedigree of Sulaiman.

“It is all about the principle of corporate governance issue and not about doing the things that are right in law because he has not violated any law. But it is unethical. He has to do one. He cannot do both. It is not done. There is an inherent absolute conflict of interests,” Awoyemi said.

He referred to the battle that forced the former Director-General of the Nigerian Stock Exchange, Prof. Ndi Okereke-Onyiuke, to relinquish her appointment as the board chairman of the Transcorp Corporation, saying that “there are precedents to cite to show that the market has taken a stance on this matter.”

Similarly, a Senior Lecturer, Department of Accounting, Faculty of Business Administration, University of Lagos, Dr. Okwy Okpala, noted that Sulaiman’s dual appointments at the FRC and the Cadbury Nigeria would squeeze the FRC into regulatory capture.

Okpala said: “This truly raises the issue of ethics and potential conflict of interest. There is the possibility of public perception of the regulatory capture of the FRC by the entity that it is being regulated. It may not be advisable to hold the top position as a regulator and another in an entity subject to your regulation simultaneously. In such a situation the person may consider resigning from one to keep the other.”

He described regulatory capture as a situation whereby the regulated seems to have an unhealthy influence on its regulator in such a manner that the regulator could not in good conscience do all the things it should have done without overlooking certain things.

“Even when they (staff of the regulator) are determined to do their duty, they would be afraid that the upper reporting line might overrule them. It is unethical and not advisable. Note that we are talking from the viewpoint of ethics without considering the legality of the appointments,” Okpala said.

The Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Mr. Ayoola Olukanni, told THISDAY: “We think this is an issue the FRC itself will eventually look into and deal with as appropriate if necessary. We, therefore, await the decision of the council on the matter.”

However, the National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, said there was nothing wrong with the dual appointments Suliaman is holding simultaneously at the FRC and the Cadbury Nigeria.

Okezie stated that Sulaiman has been combining his appointments as the chairman of the FRC and a non-executive director of the Cadbury Nigeria concurrently without any issue until his recent elevation to the chairmanship position of the board of the Cadbury.

“He has been a director of Cadbury for years before he was recently elevated after the exit of Mr. Atedo Peterside as chairman. Since he has been a director there all along, conferring on him the chairman will not bring any conflict of interest. Otherwise, he would have resigned his board appointment as a director of Cadbury.

“It is just like the case of the former Minister of National Planning, Mr. Udo Udoma, who was the Chairman of UAC of Nigeria Plc when he was appointed the Chairman of Securities Exchange Commission.

“But it didn’t matter because the government knew that he was at those boards before appointing him. He only resigned from the UACN when he was appointed a minister. So, Sulaiman’s appointment should be cleared based on the enabling Act that established the FRC. There is no conflict whatsoever,” Okezie stated.