LG Autonomy: States Lose Suit On NFIU Guidelines Against FG

The 36 states governors of the federation have lost in their opposition to efforts by the Federal Government to monitor their handling of local governments’ funds.

Gatekeepers News reports that the Presiding Judge, justice Inyang Ekwo of a Federal High Court in Abuja dismissed a suit filed by the 36 states through their state Attorneys General and the Nigeria Governors’ Forum.

The states in the suit marked: FHC/ABJ/CS/563/2019 challenged the legality of the Nigerian Financial Intelligence Unit Guidelines which came into effect on June 1, 2019.

The NFIU 2019 guidelines required among others, that the states/local government joint accounts should be used only for receiving funds and subsequently transferring them to local government accounts only.

The NFIU claimed that the guidelines, which also limit daily cash withdrawal from the State/LG joint account to N500, 000 are intended to reduce “crime vulnerabilities created by cash withdrawal from LG funds throughout Nigeria effective from June 1, 2019.”

The Attorney-General of the Federation, Abubakar Malami, NFIU and the Nigeria Union of Local Government Employees, were listed as defendants in the suit.

They argued among others 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 and the penalties prescribed, were ultra vires the power of the NFIU under Sections 3 (1) and 23(2) (a) of the Nigerian Financial Intelligence Unit Act, 2018 and therefore, unconstitutional.

Justice Ekwo, in the judgment, held that he did not see where the guidelines contradict the provisions of sections 7(1), (6) (a) and (b) of the 1999 Constitution.

The judge added that the guidelines also did not conflict with the provision of Section 162(6) of the 1999 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 the state government are paid.

He said the guidelines did not contradict Section 162(8) of the 1999 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 added that the provisions of the NFIU guidelines did not contradict the provisions of the 4th schedule to the 1999 Constitution which prescribes the functions of a local government council.