By Mike OZEKHOME, SAN, PhD.
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.
It will be recalled that 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 amongst member states. It operates in 131 jurisdictions.
The units primarily combat money laundering, terrorism financing and serious financial crime. The NASS, 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 recommendation 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 & Financial Crimes Commission (EFCC) (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 LGA’s within such states.
Our humble submission is that under its enabling Act, the NFIU has no such powers to monitor allocation of Local Government funds to states from the Federation Account. It is quite true that there has 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 Local Government Councils’ 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…”
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.