FG Can’t Restrict Withdrawals from State Accounts

A Senior Advocate of Nigeria, Sebastine Hon, has said that Nigeria cannot be run like a unitary system of government as proposed by the Nigeria Financial Intelligence Unit.

He said this while explaining that the government does not have the constitutional powers to restrict withdrawals from the bank accounts of the states and local governments.

Asserting that Nigeria’s constitutional provisions did not make state and local governments appendages of the Federal Government, the lawyer explained that the constitution empowered the federating states with financial independence.

According to him, once the federal government allocates money from the federation purse to the state governments, it lacks the constitutional vires to issue orders on the receiving tiers of government on how the money should be spent.

He said this while reacting to a statement credited to the NFIU Director, Central Bank of Nigeria, Modibbo Tukur, that the apex government, through the CBN, is planning to stop cash payments from the accounts of all the three tiers of government – the federal, state and local governments.

Tukur reportedly said that the CBN will be acting pursuant to section 1 of the repealed Money Laundering (Prohibition) Act of 2011, which is re-enacted substantially and is now section 2(1) of the Money Laundering (Prevention and Prohibition) Act, 2022 in order to curb money laundering.

This, Turker reportedly said, occurs when state officials withdraw more than permissible from those accounts in the name of estacodes.

Tukur had also mentioned that the policy would support and supplement the 11th-hour economic policies being introduced by the Federal Government, targeting the recovery of the Naira from its free fall.

However, the senior lawyer in a statement released on Thursday in Abuja, explained that “As salutary as the proposal sounds, I hereby maintain that Nigeria as a federal as opposed to a unitary system of government, cannot be run this way.

The statement read in part “Our constitutional history, beginning with the 1979 Constitution, is intolerable of this. I will establish this with pronouncements of the Supreme Court – the highest of the land.

“In the locus classicus of Attorney-General of Bendel State vs. Attorney-General of the Federation (1982) 3 NCLR 1 at 190, Uwais, JSC (as he then was – later, CJN), held quite unassailably as follows:

“It seems to me therefore that once the Federal account is divided amongst the three tiers of government, the State Governments collectively become the absolute owners of the share that is allocated to them (i.e. 35 percent) so that it would normally be their prerogative to exercise full control over the share.

“Consequently, it will be inappropriate for the Federal Government to administer the share without the authorization of the State Governments. This appears to be logical and in keeping with the fundamental principle of Federation on the autonomy of the constituent States.

“This dictum was cited with approval by M.D. Muhammad, JSC, who delivered the lead judgment of the Supreme Court in the case of Attorney-General of Abia State vs. Attorney-General of the Federation (2022) 16 NWLR (Pt. 1856) 205 at 423. In, therefore, striking down President Muhammadu Buhari’s Executive Order 10 (in an originating suit

“I was also invited and I contributed my opinion in this direction as an amicus curiae), his lordship concluded on page 425 thus: My Lords, certainly this country is still a Federation and the 1999 Constitution it operates [is] a Federal one.

“The Constitution provides a clear division of powers between the Federal Government and the State Governments.

“The category of powers and roles either of the two enjoys is circumscribed. Neither of the two is at liberty to overstep the limits the Constitution prescribes for the other.

“The plaintiffs, by their second issue for determination of their claim, urge us to view the Executive Order No. 10 of 2020 issued by President Muhammadu Buhari as unconstitutional because in its issuance the President has overstepped the limits the Constitution sets for him.

“And the country is run on the basis of rule of law rather than the personal dictates of the President. I entirely agree with them. For all the reasons so far adumbrated, I find the Order so, declare it void, and nullify same.

“Also, in Attorney-General of Lagos State vs. Attorney-General of the Federation (2004) 18 NWLR (Pt. 904) 1, the executive powers of the President under the Nigerian Constitution were tested.

“In this case, President Olusegun Obasanjo had unilaterally ordered the withholding of allocations to Lagos State over the creation by the latter of additional Local Government Administrative units outside the ones recognised by the Constitution.

“I will here quote the respective views of the Justices of the Summit Court. Uwais, CJN held as follows: It has been argued that the President by virtue of the ‘Oath of Office,’ which he took in an assumption of office, he is bound “to protect and defend the Constitution”.

“In addition, the “executive powers of the Federation” is vested in the President by section 5 subsection (1)(a) of the Constitution and such powers extend to the execution and maintenance of the Constitution.

“This is certainly so, but the question is does such power extend to the President committing any illegality? Certainly the Constitution does not and could have intended that.

“Kutigi, JSC (as he then was – later CJN), in his concurring judgment, held that the President’s action in this case was aimed at “killing” the other tiers of government and that this was “brutal indeed.”

“This dictum by his lordship, Kutigi of blessed memory, applies with full force to the recent attempt to ban States and Local Governments from withdrawing cash from their public accounts – especially if viewed from the background of the fact that the same Central Bank of Nigeria has placed restrictions on the amounts to be withdrawn by individuals and corporate bodies.

“If individuals and corporate bodies who have less security and other public duties to perform are even granted opportunity to withdraw certain amounts of money, why totally place a ban on States and Local Governments that have enormous security and governmental responsibilities to tackle?

“Clearly, such a policy, if implemented as threatened, will be aimed at “killing” the other tiers of government; and this would be “brutal indeed.” The President qua the CBN lacks such powers!”