LG Autonomy: NFIU commends court ruling, vows to report LG finances to EFCC, ICPC

LG Autonomy: NFIU commends court ruling, vows to report LG finances to EFCC, ICPC

The Nigerian Financial Intelligence Unit (NFIU) has commended the court judgement that ruled in its favour on the management of local government accounts. The agency also vowed to provide details of transactions involving local government funds to the anti-corruption agencies: EFCC and ICPC.

This is in reaction to the judgement in a suit filed by the Attorney-Generals of the 36 states seeking to prohibit the NFIU from enforcing its rules on local government accounts nationwide.

In the suit, the Attorney-General of the Federation (AGF), the NFIU and the Nigeria Union of Local Government Employees were defendants.

The NFIU issued the guidelines in May 2019 to guard against the overbearing influence of state governments in the administration of local governments’ monthly allocations.

The guidelines also reduced cash withdrawal from local government accounts to N500,000 daily.

But the plaintiffs (state governments) had argued that the guidelines were in breach of the financial autonomy of the various states as enshrined in the Nigerian constitution.

It was reported how, in his judgement on Monday, Justice Inyang Ekwo of the Federal High Court in Abuja ruled in favour of the NFIU.

Mr Ekwo held that the case lacked merit. He noted that the essence of the NFIU guidelines is to entrench financial transparency in government transactions at the local level.

Mr Ekwo agreed with the AGF that going by Section 23 (2) (a), Section 28 (2) and Section 31 of the NFIU Act, the “unit has the power to make the guidelines.”

Court ruling a good move

In his reaction to Monday’s court ruling, the Director/CEO of the NFIU, Modibbo Tukur, described the judge’s decision as “excellent.”

In a statement released by the NFIU’s chief media analyst, Ahmed Dikko, Mr Tukur declared that all transactions on local government monies would be disclosed to the anti-corruption agencies: ICPC and EFCC.

He added that the federal government is always prepared to protect states and local governments by providing cash for their governance responsibilities.

He also stated that local governments can now decide on funding that can be used to improve local security.

“All transactions on Local Government monies would be revealed to the ICPC and the EFCC 100 per cent and will be reported continually,” the NFIU chief stated.

Background

It was reported that in 2019, the Nigerian Governors Forum (NGF) approached another Federal High Court judge, John Tsoho, who is the current Chief Judge of the court, to stop the NFIU’s guidelines from being implemented, but Mr Tsoho declined the request.

After another suit by the governors, another federal judge in Uyo, Akwa Ibom State, refused to restrain the NFIU from pushing through with its guidelines.

The guideline mandates that state and local government joint accounts be operated solely as transit accounts from which funds will be distributed directly to the accounts of the local governments.

Financial institutions were directed to ensure the full implementation of the guidelines with effect from June 1, 2019.

In March this year, the National Assembly passed a bill abolishing the state joint local government account and providing for a special account where all allocations due to the local government councils, from the federation account and state government, shall be paid.

In the bill, each local government council is to create and maintain its own special account to be called the Local Government Allocation Account into which all the allocations will be paid.

The legislation also mandates each state to pay to local government councils in its area of jurisdiction such proportion of its internally generated revenue on such terms and in such manner as may be prescribed by the House of Assembly.

However, since the bill seeks to amend a constitutional provision, it has to receive the approval of at least 24 State Houses of Assembly.