36 Governors lose suit to FG on Local Govt financial autonomy
NFIU to report all transactions on LG’s joint accounts to ICPC, EFCC — Tukur
Abimbola Abatta
The suit filed by the Governors of the 36 states in the country against the constitutionality of regulations issued by the Nigerian Financial Intelligence Unit (NFIU) to guarantee financial autonomy for local governments has been dismissed.
The Federal High Court sitting in Abuja dismissed the suit yesterday. In his ruling, Justice Inyang Ekwo held that the suit lacked merit.
Recall that NFIU had in June 2019 issued guidelines aimed at curbing crime vulnerabilities created by cash withdrawals from local government accounts by various state governments.
The NFIU had issued a guideline on money laundering risk and vulnerabilities while advising all banks not to honour transactions from joint accounts.
It directed that the States/Local Governments Joint Accounts should be used only for receiving funds and subsequently transferring them to Local government accounts only.
The regulations also set the daily limit for cash withdrawal from local government accounts to five hundred thousand Naira.
Consequently, the Nigerian Governors Forum, citing provisions of the 1999 constitution, sued the FG and NFIU for interfering with state government powers to initiate transactions on Local Government Joint accounts.
In their suit marked FHC/ABJ/CS/593/2019, the plaintiffs, through their lawyer, Prince Lateef Fagbemi, SAN, prayed the court to nullify the regulations for being unconstitutional, null and void.
They urged the court to declare that by virtue of sections 4(7), 7(6)(a) and (b), 162(6) and 162(7) and (8) of the Nigerian Constitution, the state governments, “are not subject to control or directive of the Nigerian Financial Intelligence Unit or body on the terms and manner of operation of State Joint Local Government Account other than by a law passed by the states’ House of Assembly.”
However, while dismissing the suit, Justice Ekwo, held that the regulations which came to effect on June 1, 2019, was aimed to ensure that funds meant for local governments are paid directly to them, rather than through a joint account controlled by governors.
Maintaining that the regulation was to guarantee transparency in the spending of funds accrued to local governments, Justice Ekwo stressed that provisions of the NFIU’s guidelines were not in conflict with 1999 Constitution, as amended.
“I am unable to see how the provisions of the 2nd defendant’s (NFIU) guidelines contradict or conflict with the provisions of Section 162(6) of the constitution which creates the ‘State Joint Local Government Account’ into which allocations to the local government councils of the state from the Federation Account and from the government of the state shall be paid,” Justice Ekwo held.
“The guidelines did not contradict Section 162(8) of the Constitution which prescribed that the amount standing to the credit of the local government council of the state, shall be distributed among the local government councils of that state, on such terms, and in such manner as may be prescribed by the House of Assembly of the state.
“The duty of the court is limited to expounding the law and not expanding it.
“On the whole, I see the provisions of the guidelines of the 2nd defendant as seeking to direct the monitoring of accounts, transfers and any other means of payment or transfer of funds of local government councils as provided for in Section 3 (1) (r) of the Act of the NFIU.
“It only limits cash withdrawal made from any Local Government Account anywhere in the country to amount not exceeding N500,000.00 (Five Hundred Thousand Naira) per day.
“Any amount higher than that can be done using other methods of banking transaction save cash.
“Unless it can be shown that there is any provision of the 1999 Constitution (as amended) which these provisions of the 2nd defendant’s guidelines have contradicted or conflicted directly and practically, then the issue of unconstitutionality cannot be said to arise.
“I find that the case of the plaintiffs has not been established and I so hold.
“I find in the end, that the case of the plaintiffs lacks merit and ought to be dismissed and it is hereby dismissed. This is the order of this Court,” Justice Ekwo held.
Reacting to the judgement, the Director/CEO of NFIU, Mr Modibbo Tukur, said “from this judgement and from today all transactions on Local Government funds will be disclosed to ICPC and EFCC 100% and will be reported continuously.”
The NFIU CEO stressed that the judgment is good because the Federal government is always ready to protect states and local governments by making funds available for their governance responsibility.
He added that funds can now be decided on by local councils which can be channelled to improve local security.
Reacting to the development, the Managing Partner, BBH Consulting, Barr. Ameh Madaki, said the judgment will strengthen democracy.
According to him, “The judgment will strengthen democracy. Local Government Autonomy is vital to true democracy, federalism as the case may be. All this while it is unfair for State Governments to have continued to suppress the idea of Local Government Autonomy for selfish reasons.
“This is not a victory for the Federal Government alone but for the Nigerian people at all levels,” he said.
