FG stops govs from seizing LG allocations

Federal Government, yesterday, drew the battle line with state governments over financial autonomy for local councils.

Alarmed by the continuous misuse of cash allocated to local councils across the country by state governments through the State Joint Local Government Accounts, SJLGA, federal government outlawed the meddling of states in council allocations via the newly inaugurated Financial Intelligence Unit, NFIU, excised from Economic and Financial Crimes Commission, EFCC, recently.

The government set June 1, 2019, as take-off date for the new order, making it compulsory for all LGA allocations to go straight to their respective bank accounts. However, the Federal Government’s move has a legal hurdle to surmount as Section 162 (8) of the 1999 Constitution (as amended) empowers the states to distribute allocation to councils “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 decisions to stop local government allocations from going to state accounts are contained in the guidelines released yesterday by the NFIU after a lengthy meeting with officials of commercial banks in Abuja. The guidelines would make the joint account system currently in use only exist for the receipt of allocations from the federation account but not for disbursement. This comes less than a year after President Muhammadu Buhari signed the NFIU bill into law, thus separating the agency from EFCC.

The notice entitled, “Guidelines To Reduce Vulnerabilities Created by Cash Withdrawals from LG Funds throughout Nigeria, Effective 1st June, 2019,” is said to have been prompted by threats by international financial watchdogs to sanction Nigeria because of financial abuse.

NFIU warned banks to comply with immediate effect, threatening to sanction any bank that flouts the order. The agency said: “NFIU requests all financial institutions, other relevant stakeholders, public servants and the entire citizenry to ensure full compliance with the provisions of the guidelines already submitted to financial institutions and relevant enforcement agencies, including full enforcement of corresponding sanctions against violations from June 1, 2019.

“Having realized through analysis that cash withdrawal and transactions of the State, Joint Local Government Accounts (SJLGA), poses biggest corruption, money laundering and security threats at the grassroots levels and to the entire financial system and the country as a whole, NFIU decided to uphold the full provisions of Section 162 (6) (8)of the 1999 Nigerian Constitution as amended, which designated “ State Joint Local Government Account into which shall be paid allocations to the local government councils of the state from the federation account and from the government of the state.

“The amount standing to the credit of local government councils of a state shall be distributed among the local government councils of that state” and not for other purposes.

“As far as NFIU is concerned, the responsibility of the account as a collection account is fully reinstated.

“In addition, taking such measures was necessitated by prompting reasons on NFIU to respond to threats of isolating the entire Nigerian financial system by other international financial systems because of deficiencies in our anti-money laundering and counter-terrorism financing implementation.

“Therefore, it is no longer possible to allow the entire system suffer the deliberate and expensive infractions or violations by public officials and/or private business interests.

“Henceforth, all erring individuals and companies will be allowed to face direct international and local sanctions, in order not to allow any negative consequences to fall on the entire country.

“To be precise, with effect from 1st June, any bank that allows any transaction from any local government account without monies first reaching a particular local government account will be sanctioned.

“In addition, a provision is also made to the effect that there shall be no cash withdrawal from any local government for a cumulative amount exceeding N500,000 per day. Any other transaction must be done through valid cheques or electronic funds transfer.

“The complete guidelines have been released to governor of Central Bank of Nigeria, Chairman, Economic and Financial Crimes Commission (EFCC), Chairman, Independent Corrupt Practices Commission (ICPC) and Chief Executive Officers of all banks and other financial institutions. “Any state government that is willing to seek any expert economic advice in the unlikely event of these guidelines constituting an inconvenience to the management of the state can work with NFIU and/or CBN.” Similarly, NFIU acting Spokesman, Mr Ahmed Dikko, said the agency was committed to fighting money laundering, terrorism financing and proliferation of weapons. He said: “Significant measures to be implemented by NFIU in the near future will include full implementation of the national sanctions regime to all detected areas of vulnerabilities within our systems. ‘’Other areas include issuing guidelines, advisories etc. that will affect cash transactions processes of local, state, federal governments and bureaux de change etc.

“The Unit will also release new reporting requirements on suspicious transactions for terrorism prone areas and suspects taken into custody in violent and flashpoint communities to check vices of terrorism, proliferation of small arms, kidnapping, ethnic violence, cattle rustlings etc, with a view to providing credible intelligence for law enforcement and national security.

“Finally, efforts of the Federal Government to set up the beneficial ownership data base for politically exposed persons and public servants will be completed and expanded to capture additional necessary areas.”  

I can’t speak on it now – NGF Spokesperson Contacted on the issue, Head, Media and Public Affairs of Nigeria Governors’ Forum, NGF, Mr Abdulrazaque Barkindo, yesterday declined comments. Asked to comment on the federal government’s decision to outlaw the meddling of states into council allocations, Barkindo said that he will only speak on issues that have been presented by the forum which must have been discussed by NGF and a position taken.

“I cannot comment on the matter, especially as it has not been discussed by NGF. I can only comment on what has been discussed by the governors and by extension, NGF.”

Efforts to reach NGF Director- General, Asishana Okauru to speak on the matter proved abortive.

Laws guaranteeing financial autonomy for LGAs Section 3 of Allocation of Revenue ( Federation Accounts, etc) Act, passed into law in 1982, which deals with the Formula for distribution between Local Government Councils, states “Subject to the provisions of this Act, the amount standing to the credit of local government councils in the Federation Account shall be distributed among the States of the Federation for the benefit of their local government councils using the same factors specified in this Act.”

Also, Section 162 of Nigeria constitution provides: (1) The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, Nigeria Police Force, Ministry or department of government charged with responsibility for Foreign Affairs and residents of the Federal Capital Territory, Abuja.

(2) The President, upon the receipt of advice from Revenue Mobilisation Allocation and Fiscal Commission, shall table before the National Assembly proposals for revenue allocation from the Federation Account, and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of States, internal revenue generation, land mass, terrain as well as population density; Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources. (3)Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly. (4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly. (5) The amount standing to the credit of Local Government Councils in the Federation Account shall also be allocated to the State for the benefit of their Local Government Councils on such terms and in such manner as may be prescribed by the National Assembly. (6) Each State shall maintain a special account to be called “State Joint Local Government Account” into which shall be paid all allocations to the Local Government Councils of the State from the Federation Account and from the Government of the State. (7) Each State shall pay to Local Government Councils in its area of jurisdiction such proportion of its total revenue on such terms and in such manner as may be prescribed by the National Assembly. (8) The amount standing to the credit of Local Government Councils of a 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.

Lagos council chairmen barred from making individual comment At press time, efforts to speak with the Chairman of Lagos State Conference 57, a group comprising chairmen of the 20 Local Government Areas and 37 Local Council Development Areas, LCDAs, Mrs. Omolola Essien, was unsuccessful as her phone line rang out without response. Also, most of the council chairmen, when contacted, declined comments, saying they had been cautioned and barred from making any hasty comment on the matter by the officers of Conference 57 via Whatsapp messages in order not to cause any disaffection in the rank and file of the ruling All Progressives Congress, APC. “I can’t make any categorical statement for now. We have been cautioned on the platform of all council chairmen not to make any official comment on the issue until the matter must have been studied very well by party leaders. “So, it’s better to keep mum for now until a common position is arrived at,” one of them said. However, some of the council chairmen who spoke to Vanguard under anonymity, described it as a “Welcome development that will afford the councils to perform optimally in the interest of the general public.”

 

Vanguard

 

 

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