Preamble: It was somewhat difficult for me to do a thread on the governance code because I share the sentiments of the community of faith concerning some of their grievances on the subject of the governance code for Non-For-Profit Organisations (NFPO). However, I have learnt that in the public square, facts/objectivity matters more than sentiments.
I had the premonition that a controversy will be stirred once we had that famous breaking news on the 7th of Jan that our favorite “Daddy” had “stepped aside” and appointed a “National Overseer” (GO) while still retaining the global leadership of the church as the GO. The news headlines and chatter on social media that followed within the next 24 – 48 hours confirmed my fears. Allow me to start by listing some of what was being said and implied.
That President Buhari’s FG is “dabbling” into Church leadership.
That the Governance Code had been suspended therefore there was no need to comply with it.
That the “law” is targeted at weakening the church and make it vulnerable to attack
That certain provisions of the code conflicts with provisions of the FRC Act and CAMA
First, let’s go to the origin of the controversy. In 2011 the Senate passed the Financial Reporting Council of Nigeria Bill which created the Financial Reporting Council replacing the defunct Nigeria Accounting Standard Board. The then Executive Secretary of the NASB (Jim Osayande Obazee) subsequently became the Executive Secretary of the FRCN. Under the Act, the FRC among its other objectives was expected to – “ensure good corporate governance practices in the public and private sectors of the Nigerian economy”. It was in this light that it set out in 2013 to put together a governance code for Public, Private and NFGO. It subsequently published a draft in 2015 after much consultation with major stakeholders. As expected, many stakeholders had issues with some provisions within the code and they (including churches) were given the opportunity to make submissions on their reservations with the code. The FRC was consequently sued by some Pastors and Lawyers purportedly representing Pentecostal churches in July of 2015. They sought 6 reliefs among which were:
a declaration that the purported Not-for-Profit Sections Codes 2015 is illegal and unconstitutional because it amounts to duplication of the functions of the CAC saddled with the responsibility of registration and monitoring of compliance of charitable organizations/groups;
that the term of reference in section 1.1 of the 2015 Code as well as sections 8,9,10 and 37 are illegal and unconstitutional being inconsistent with section 7 and 8 of the Financial Reporting Council of Nigeria Act Cap F42
As things turned out, the plaintiffs who claimed to be representing Pentecostals lost the case as the court ruled in favor of FRC. In light of the court order, the FRC went ahead to release the codes effective from 17 Oct 2016 with mandatory compliance for Private Sector and “Comply or Justify non compliance” for NFPO. The Public Sector codes were put on hold. Not long after the release, the Minister of Trade and investment was reported to have written or issued a query (depending on who you believe) to the FRC to suspend the code until all issues it had raised concerning it were resolved. The Minister’s main queries were:
Was the Governance Code in line with the FRC 2011 Act?: Section 2(1) and 10(d) of the FRCN Act suggests that the Board will be responsible for the overall control of the Council. The Executive Secretary of the FRCN was therefore asked to explain how the Code passes the compliance test given that the FRCN Board is yet to be constituted.
Does the Code supersede any legislation or any other Code?: It is a well known fact that a subsidiary legislation cannot supersede a principal enactment. The Minister then requested that the Executive Secretary explains the clear conflict(s) between the Code and various legislation inclusive of the FRCN Act as well as any other legislation. A case in point is that of the Central Bank of Nigeria where it was implied that it will have to take on the burden of implementing the Code in the financial sector while the Code itself take’s precedence over the CBN’s Code.
I know that many have tried to link the fact that the Minister of Trade and Investment is also a Pastor in RCCG to this whole suspension issue, but to be fair to him there was nothing in his letter to the Executive Secretary of the FRCN that suggested he was pushing the church or RCCG agenda. In fact his letter was more in line with concerns of the private sector than it was about concerns of leadership and succession in the church.
The expectation within the financial sector was that based on the Ministers’ letter to the Executive Secretary, the code was indeed suspended. Wrong! It turns out that the Exe Sec disagreed. The FRC refused to honor the suspension request on the basis that there is no gazette to back it up. We certainly would not have known of this had Pastor Adeboye’s not made that announcement.
With this evidence alone, we can perish the notion of “PMB admin is “Dabbling in Church Leadership to weaken it”. It is clearly not true. If anything, the evidence available to us points to the PMB admin trying to ensure that the code in its present form is not implemented. In fact, it appears that the FG might be under intense pressure to sack Jim Obazee because of his many excesses and some “EFCC troubles of his own”.
Now, let’s go to the corporate governance codes itself. By and large what the code tries to do is to first enforce the minimum requirements of Part C of the CAC registration under which religious organizations are registered. For instance, religious bodies are supposed to make Annual Returns of its Financial Statements to CAC after the audit of its books by external auditors. It is also expected to organize yearly Annual General Meetings (AGMs) where it would present the financial statement to its members. The code reinforces the legal fact that any entity that collects money must “render accounts”, whether you are a bank, a business owner or a religious body. There seem to be no dispute about this requirement even among religious organisations. However, there is the small issue of Tax. Should religious organisations be taxed when they engage in “For Profit” activities even if those activities is for the benefit of the organization? Jim Obazee and his team says Yes! – They must be taxed if they engaged in any activities designed to extract financial benefit. He put it this way “if they pursue non-charitable activities like running schools, hospitals etc, they are to account for them separately as profit-making entities”. This is one of the areas of conflict as many Churches have subsidiaries under them that have blurred the lines between charity and profitability.
The second and obviously most contentious issue has to do with Tenure of the Founder or Leader. Now this is exactly what the section 9 of the code says.
- Position of the Founder or Leader
9.1. The Founder or Leader of a NFPO occupies a special position in the Organisation and is committed to the success and longevity of the NFPO. Accordingly, a Founder or Leader should not take on too many responsibilities in the organisation or have an indefinite term in the running of the organisation.
9.2. Where for any reason, a Founder or Leader of NFPO also occupies any of the three governance positions of Chairmanship of the Board of Trustees, the Governing Board or Council, and the Headship of the Executive Management (or their governance equivalents), the following provisions shall apply before the end of the organization’s financial year in which this Code takes effect.
9.2.1. The Founder or Leader shall cease to occupy these three governance positions simultaneously. This is to ensure the separation of powers and avoid possible concentration of powers in one individual.
9.2.2. The Founder or Leader may however choose – subject to the agreement of the organization’s apex authority as expressed in the Annual General Assembly, Annual Meeting, Annual Stakeholder Engagement, Annual Conference, Annual Synod, Annual Fellowship Assembly or their equivalents – only one of these three governance positions subject to his current tenure. This is to ensure a clear division of responsibilities at the head of the organization between the running of the governing body and the executive responsibility for the management and fulfilment of the organization’s mission.
9.3. Where the Founder or Leader has occupied all or any of these three governance positions for more than twenty years, or is aged seventy years or above, the choice in section 9.2.2 above should only relate to the Board of Trustees as in section 9.4(c) below, except the constitution of the organization otherwise provides.
In the case of religious or cultural organizations, nothing in this code is intended to change the spiritual leadership and responsibilities of Founders, General Overseers, Pastors, Imams and Muslim Clerics, Presidents, Bishops, Apostles, Prophets, etc. which are distinguishable from purely corporate governance and management responsibilities and accountabilities of the entities.
It is important to understand that for an NGO, there are 3 governance bodies: The Board of Trustees, The Governing Board and The Management Committee. Now typically, the founder/leader usually occupies the position of the head of these 3 bodies at the same time. So what the code prescribe is that 1. The founder can only occupy only one of these position as head. 2. If he already heads all of them, he needs to relinquish two and 3. If he has served as head for more than 20 years in any of those organs and is more than 70 year of age, he must resign his position and his choice limited to the board of trustees. Even with these provisions, the code recognize the unique position of founders as the “Spiritual Leader” of the organization. Meaning the code does not in any way invalidate the spiritual authority which these organizations subscribe to and to which they derive their relevance.
The notion that these codes should not be applicable to churches as their matters are ecclesiastical, celestial and not terrestrial as said by a SAN as utterly ridiculous. If they are celestial, then why seek registration under Part C of the CAC laws? Why not just go to heaven and get registered. These organizations are legal entities known to law. They can sue and be sued. They can exist or cease to exist. They are very terrestrial. They are charitable organizations that survive on gifts and donations. They need to be transparent and accountable. This must be emphasized.
Let me conclude by saying that one issue that should concern us is whether or not a minister has the power to suspend the activities of an agency known to law in the exercise of its functions. My take is that there are legal grounds to challenge the powers the FRC seems to be flexing. Recall that this was the same agency used to illegally suspend a sitting CBN Governor. So the FRC as presently constituted is not without freckles.
My final take is that these codes are in the interest of the church and we should embrace it rather than fight it. It will help to separate the wheat from the chaff. It will also help bring transparency to the church and make them accountable not only to God but to the people they serve.
Economist and Author writes from Lagos, Nigeria
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