Can NFIU Control State Govts On Matters Concerning Local Govt Allocations? By Mike Ozekhome SAN

Introduction

This is the most topical issue in
Nigeria today. It follows the decision of the Nigeria Financial
Intelligence Unit (NFIU) to monitor states and local governments on
the use of their allocations from the Federation Account.

Due to lack of autonomous status for the NFIU and the
interferences with its operations by the EFCC, the Egmont Group had
suspended Nigeria’s membership of the body in February 2017.

The Egmont Group, founded in 1995, is a global body
of 155 financial intelligence units across the world, which sets
standards on best practices for FIUs and facilitates the exchange
of financial intelligence, expertise and capability among member
states. It operates in 131 jurisdictions.

The units primarily combat money laundering,
terrorism financing and serious financial crime. The National
Assembly, to save the day and name of Nigeria, hurriedly passed a
new law in 2018, which provides that the NFIU should be headed by a
director, while the agency would now be domiciled in the Central
Bank of Nigeria, rather than the EFCC.

Subsequently, the Egmont Group, at its 25th plenary
held in Sidney, Australia, in September 2018, lifted the suspension
of Nigeria, after visiting Nigeria and being satisfied with the
NFIU facilities.

The NFIU was thus created specifically out of the
EFCC after profuse public outcry and international reprimands to
safeguard the Nigerian financial system and contribute to the
global fight against money laundering, terrorism financing and
related crimes through the provision of credible financial
intelligence. It is headed by Hamman Tukur from Adamawa State.

The NFIU is the Nigerian arm of the global Financial
Intelligence Units (FIUs) domiciled within the EFCC, but now serves
as an autonomous unit and operating in the African region.

The establishment of the NFIU is based on the
requirements of Recommendations 29 and 40 of the Financial Action
Task Force (FATF) Standards and Article 14 of United Nations
Convention Against Corruption (UNCAC). The NFIU had been admitted
into the Egmont Group of FIUs in 2007.

Establishment and powers of the NFIU

In response to the FATF recommendations and
fulfillment of the UNCAC requirements, the NFIU was formally
established in 2004 and became fully operational in 2005. The unit
has since then sought to develop standards and procedures for the
receipt, analysis and dissemination of financial intelligence to
law enforcement agencies, perform onsite and off-site examination
of financial institutions, enhance compliance with the legal and
regulatory regimes on Anti-Money Laundering and Combat the
Financing of Terrorism (AML/CFT) in Nigeria, as well as respond to
the global trends by collaborating with other FIUs worldwide.

The NFIU largely draws its powers from the Money
Laundering (Prohibition) Act, 2011 (as amended in 2012), and the
Economic and Financial Crimes Commission (Establishment) Act, 2004.
The core mandate of the NFIU as required by international standard
is to serve as the “national centre for the receipt and analysis
of: (a) suspicious transaction reports; and (b) other information
relevant to money laundering, associated predicate offences and
terrorist financing, and for the dissemination of the results of
the analysis to law enforcement and anti-corruption agencies.”

The NFIU also has the responsibility to receive
currency transactions reports, suspicious transactions reports;
receive reports on cross-border movement of currency and monetary
instruments. It also maintains a comprehensive financial
intelligence database for information collection, analysis and
exchange with counterpart FIUs and law enforcement agencies around
the world; provide information relating to the commission of an
offence by entities and subjects linked to another jurisdiction to
foreign financial intelligence unit based on the membership of
Egmont Group or on the basis of bilateral cooperation and advise
governments and regulatory authorities. It also promotes public
awareness on economic and financial matters.

The NFIU has different departments, such as Legal,
Compliance, Monitoring and Analysis, Strategic Analysis, General
Administration and ICT units.

NFIU vs states/local government funds

The question that begs for answer is whether the
above awesome powers donated to the NFIU by the enabling Act are
wide enough to include powers to check local government accounts,
or dictate to states as to how they share money with LGAs within
such states.

Our humble submission is that, under its enabling
Act, the NFIU has no such powers to monitor allocation of LG funds
to states from the Federation Account. It is quite true that there
have been unwholesome sharp practices by states, which ingloriously
waylay allocations made to LGAs and yank out sundry deductions at
source. This has invariably left most states gasping for financial
and existential oxygen to stay afloat. This unconscionable practice
has always left LGAs with barely enough resources to meet recurrent
expenditure, let alone carrying out capital projects. They are
stripped bare of funds.

The constitutional aberration

This gross anomaly that allows states to act as
unruly sentinels at the treasury doors of LGAs is traceable to the
suffocating provisions of Section 162 of the 1999 Constitution.
Section 161(3) of the said Constitution provides that “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 on such manner
as may be prescribed by the National Assembly”.

As if that was not enough, Section 162(5) inflicts
maximum damage by providing that “the amount standing to the credit
of the 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 on such manner as may be
prescribed by the National Assembly.”

It is like giving a dog a bone to keep in safe
custody for the pussy cat. This damage continues in Section 162(6),
which empowers each state to 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.”

By creating a “State Joint Local Government Account,”
the Constitution completely subjects the LGAs to the mercy of
greedy and rampaging states. To underscore state’s suzerainty and
sovereignty over LGAs’ finances, Section 162(7) sounds the death
knell on LGAs by providing that “each state shall pay to the Local
Government Councils in it’s area of jurisdiction such proportion of
it’s total revenue on such terms and in such manner as may be
prescribed by the National Assembly”. Oh, “such proportion”?

Even when the amount finally groggily and tortuously
wangles its way into the state, with LGAs hungrily awaiting them,
the House of Assembly of that state again ambushes the miserly
remnants of such funds, as Section 162(8) of the same Constitution
laconically and imperiously admonishes that ‘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.”

Can NFIU intervene?

No. The above sorry state of affairs is such that one
might be tempted to swallow the attractive pill of the NFIU to take
up the self-assumed role of monitoring LGAs’ allocations. No matter
how laudable such a policy directive may be, the truth is that it
is patently illegal and unconstitutional. Section 1(1) and 1(3)
jointly make such a step null and void and of no effect whatsoever,
since it is a direct affront to the above clear provisions of the
Constitution. The answer is an immediate amendment of section 162
of the Constitution to grant to the LGAs the much needed autonomy
of having direct access to federal allocations as a first line
charge like the judiciary. This will surely break their
asphyxiating umbilical cord tie from the apron strings of
strangulating states. For now, the NFIU will be acting illegally
and unconstitutionally to tamper with the mode and manner money is
allocated to states from the Federation Account and how the states
distribute them. We operate a constitutional democracy where every
step taken by government must enjoy constitutional imprimatur.

In Engr. Charles Ugwu & Anor V. Senator Ifeanyi
Ararume & Anor (2007) LPELR – 3329 (SC), the apex court while
considering the nature of democracy operated in Nigeria,
dilated:

“Nigeria operates a constitutional democracy with
powers constitutionally assigned to three recognised arms of
government, namely the Executive, Legislature and the Judiciary. It
is the duty of the legislature to make laws which are to be
interpreted by the judiciary and executed by the executive arms of
the government.”

A public body such as the NFIU must keep within the
bounds of its enabling Act. In Amasike v. the Registrar General,
CAC & Anor (2010) LPELR-456(SC), the apex court considered
whether a public body or authority can exceed the limits of the
authority given to it, held thus:

“A public body or authority vested with statutory
powers must act within the law and take care not to exceed or abuse
its powers. It must keep within the limits of the authority given
to it. It must act in good faith and reasonably. Where a person or
public body or authority claims to have acted pursuant to a power
granted by a statute, such person, body or authority must justify
the act, if challenged, by showing that the statute applied in the
circumstances and that he or it was empowered to act under it”

See also the case of Psychiatric Hospital Management
Board v. Ejitapha (2000) 11 NWLR pt.677 pg. 154.

The Constitution, it must be emphasized, is supreme.
In Wabara & Ors. v. F.R.N. CA/A/7/C/2006, the intermediate
court held:

“The Constitution is supreme; it is the organic or
fundamental law and it is the grundnorm of Nigeria. The
Constitution is the fons et origo and foundation of all laws… Any
act which infringes or runs contrary to those organic principles or
systems or provisions must be declared to be inconsistent. The
court has the jurisdiction to declare any other law or Act
inconsistent with the provisions of the Constitution, invalid and
therefore null and void.”

Conclusion

Our humble submission, therefore, is that the words
used in the NFIU Act are clear enough not to overstretch them as
permitting intrusion into States and Local Government funds.

In Knight Frank & Rutley (Nigeria) & Anor. v.
AG Kano State (1998) LPELR-1694(SC), the apex court held thus:

“I think whether one interprets literally, widely,
narrowly, liberally, conservatively or in any other way, as a
cardinal principle of interpretation, you can never escape giving
words their ordinary and natural meaning once they are clear and
unambiguous as in this case.”

Furthermore, the Supreme Court, in the case of Chief
S.O. Agbareh & Anor v. Dr. Anthony Mimra & Ors (2008)
LPELR-235(SC), also held:

“Where the words of a statute are plain, precise and
unambiguous, then it should be given the ordinary and natural
meaning.”

See also Wike v. Federal Republic of Nigeria (2009)
LPELR-8077(CA).

Finally, it is submitted that the NFIU should keep
very far away from states/LGAs allocations. It is not within their
powers or jurisdiction to probe or oversee such allocations. The
government may decide to activate amendment to section 162 of the
Constitution.

Thought for the week

“It is certain, in any case, that
ignorance, allied with power, is the most ferocious enemy justice
can have.”

             
       (James Baldwin)

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