Nigeria Governors Lose Suit Against Financial Autonomy for Local Governments

The Federal High Court sitting in Abuja, on Monday, dismissed a suit filed by the State governors to challenge the constitutionality of regulations the Nigerian Financial Intelligence Unit (NFIU) had issued to guarantee financial autonomy for local governments.

The governors failed to get the Federal High Court, Abuja, to stop the monitoring of spendings of the Local Government Councils by the NFIU.

Their failure followed the dismissal of the suit they filed alongside their Attorneys-General (AGs) seeking to stop the NFIU from implementing its guidelines on local government spending for allegedly breaching the constitution.

Meanwhile, the organised labour has applauded the ruling. While hailing the ruling, the President of the Nigeria Labour Congress (NLC), Ayuba Wabba described it as a landmark judgement.

Wabba who responded to THISDAY’s request for reaction through a text message said:

“It’s a welcome development, we congratulate salute the courage of the judiciary for the landmark decision.

“NLC has always campaign for the strengthening of local government system and allowing them to function effectively through financial autonomy.”

The NFIU had on May 6, 2019, issued guidelines to stimulate the reduction of crime vulnerabilities created by cash withdrawals from local government funds across the country, beginning from June 1, 2019.

Displeased by the guidelines, the 36 AGs and the Nigerian Governors’ Forum (NGF) had dragged the Attorney-General of the Federation (AGF), the NFIU and the Nigeria Union of Local Government Employees (NULGE) to court to declare the action of the NFIU unconstitutional.

Among the reliefs sought included a declaration that by the combined effect of Section 4(7), 7(6) (a) and (b) and Section 162(6), (7) and (8) of the constitution, “the State Governments of the Federation are not subject to control or directive of the Nigerian Financial Intelligence Unit or any other person or body on the terms and manner of the operation of State Joint Local Government Account other than by a law passed by the House of Assembly of the state.”

 However, delivering judgment in the suit marked: FHC/ABJ/CS/563/2019, Justice Inyang Ekwo, held that the case of the plaintiffs lacked merit and subsequently dismissed it.

According to the judge, plaintiffs did not show how the NFIU’s guidelines contradict or conflict with the provision of Sections 7(1), (6) (a) and (b) of the constitution.

“I am also unable to see how the provisions of the 2nd defendant (NFIU)’s 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,” he said.

The court further held that 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.

Justice Ekwo in addition said the guidelines did not contradict or conflict with the provisions of the 4th Schedule to the 1999 Constitution which prescribes the functions of a local government council.

“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,” he said.

“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,” the judge added.

The plaintiffs had in the suit urged the court to declare that the NFIU, “does not have the statutory powers, by its establishment Act, to make guidelines for the regulation, monitoring and operation of the State Joint Local Government Accounts or any other account into which funds from the Joint Account are paid into.”

The states also sought a declaration that the NFIU Guidelines: known as “the  NFIU Enforcement and Guidelines to Reduce Crime Vulnerabilities Crafted by Cash Withdrawal From Local Government Funds Throughout Nigeria,” particularly Provisions 1 to 6 thereof and the penalties prescribed thereabout are ultra vires the power of the Unit under Sections 3 (1) and 23(2) (a) of the Nigerian Financial Intelligent Unit Act, 2018 and is therefore unconstitutional.

 Alex Enumah and Onyebuchi Ezigbo in Abuja

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