FG lacks power to restrict withdrawals from state accounts, says Constitutional lawyer

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A renowned Constitutional lawyer and Senior Advocate of Nigeria (SAN), Chief Sebastine Hon, has clarified that the federal government lacks constitutional powers to restrict withdrawals from the bank accounts of the state and local governments as proposed by the Nigeria Financial Intelligence Unit (NFIU).

The senior lawyer explained that Nigeria with a federal system of government cannot be run in the way of unitary system as being proposed by the NFIU.

According to him, the federal constitution has imbued the federating states with such financial independence that once the federal government allocates money from the federation purse to the state governments, the former lacks the constitutional vires to breath down orders on the states and the local governments on how such money should be spent.

In a statement released on Thursday in Abuja, Hon, explained that the Nigerian federal constitution has imbued the federating states with such financial independence that, once the federal government allocates money from the federation purse to the state governments, the formal lacks the constitutional vires to breath down orders on the states and the local governments on how such money should be spent – as if these latter two are appendages of the former.

The senior lawyer maintained that constitutioal provisions did not make state and local governments appendages of the federal government.

His position was provoked by a statement credited to the Director of the NFIU of the Central Bank of Nigeria (CBN), Modibbo Hamman Tukur that the federal government, through the Central Bank of Nigeria (CBN), is planning to stop cash payments from the accounts of all the three tiers of government – the federal, state and local governments.

Tukur was reported to have said that the CBN will be acting pursuant to section 1 of the repealed Money Laundering (Prohibition) Act of 2011, which is re-enacted substantially and is now section 2(1) of the Money Laundering (Prevention and Prohibition) Act, 2022.

According to the NFIU Director, the reason is the need to curb money laundering, which occurs when state officials withdraw more than permissible from those accounts in the name of estacodes.

Tukur had also hinted that the policy is meant to support and supplement the 11th-hour economic policies being introduced by the federal government, targeting the recovery of the naira from its free fall.

However, the senior lawyer in a reaction said: “As salutary as the proposal sounds, I hereby maintain that Nigeria as a federal as opposed to a unitary system of government, cannot be run this way.

The statement read in part: “Our constitutional history, beginning with the 1979 Constitution, is intolerable of this. I will establish this with pronouncements of the Supreme Court – the highest of the land.

“In the locus classicus of Attorney-General of Bendel State vs. Attorney-General of the Federation (1982) 3 NCLR 1 at 190, Uwais, JSC (as he then was – later, CJN), held quite unassailably as follows:
“It seems to me therefore that once the Federal account is divided amongst the three tiers of government, the State Governments collectively become the absolute owners of the share that is allocated to them (i.e. 35 percent) so that it would normally be their prerogative to exercise full control over the share.

“Consequently, it will be inappropriate for the Federal Government to administer the share without the authorization of the State Governments. This appears to be logical and in keeping with the fundamental principle of federation on the autonomy of the constituent States.

“This dictum was cited with approval by M.D. Muhammad, JSC, who delivered the lead judgment of the Supreme Court in the case of Attorney-General of Abia State vs. Attorney-General of the Federation (2022) 16 NWLR (Pt. 1856) 205 at 423. In, therefore, striking down President Muhammadu Buhari’s Executive Order 10 (in an originating suit

“I was also invited and I contributed my opinion in this direction as an amicus curiae), his lordship concluded on page 425 thus: My Lords, certainly this country is still a Federation and the 1999 Constitution it operates [is] a Federal one.

“The Constitution provides a clear division of powers between the Federal Government and the State Governments.

“The category of powers and roles either of the two enjoys is circumscribed. Neither of the two is at liberty to overstep the limits the Constitution prescribes for the other.

“The plaintiffs, by their second issue for determination of their claim, urge us to view the Executive Order No. 10 of 2020 issued by President Muhammadu Buhari unconstitutional because it in its issuance the President has overstepped the limits the Constitution sets for him.

“And the country is run on the basis of rule of law rather than the personal dictates of the President. I entirely agree with them. For all the reasons so far adumbrated, I find the Order so, declare it void, and nullify same.

“Also, in Attorney-General of Lagos State vs. Attorney-General of the Federation (2004) 18 NWLR (Pt. 904) 1, the executive powers of the President under the Nigerian Constitution were tested.

“In this case, President Olusegun Obasanjo had unilaterally ordered the withholding of allocations to Lagos State over the creation by the latter of additional Local Government Administrative units outside the ones recognised by the Constitution.

“I will here quote the respective views of the Justices of the Summit Court. Uwais, CJN held as follows: It has been argued that the President by virtue of the ‘Oath of Office,’ which he took in assumption of office, he is bound “to protect and defend the Constitution”.

“In addition, the “executive powers of the Federation” is vested in the President by section 5 subsection (1)(a) of the Constitution and such powers extend to the execution and maintenance of the Constitution.

“This is certainly so, but the question is does such power extend to the President committing any illegality? Certainly the Constitution does not and could have intended that.

“Kutigi, JSC (as he then was – later CJN), in his concurring judgment, held that the President’s action in this case was aimed at “killing” the other tiers of government and that this was “brutal indeed.”

“This dictum by his lordship, Kutigi of blessed memory, applies with full force to the recent attempt to ban States and Local Governments from withdrawing cash from their public accounts – especially if viewed from the background of the fact that the same Central Bank of Nigeria has placed restrictions on the amounts to be withdrawn by individuals and corporate bodies.

“If individuals and corporate bodies who have less security and other public duties to perform are even granted opportunity to withdraw certain amounts of money, why totally place a ban on States and Local Governments that have enormous security and governmental responsibilities to tackle?

“Clearly, such a policy, if implemented as threatened, will be aimed at “killing” the other tiers of government; and this would be “brutal indeed.”

“The President qua the CBN lacks such powers!

“Upon assumption of independence in 1960, the Nigerian Government adopted the British Parliamentary system of Government, which persisted and was retained in the 1963 Republican Constitution.

“Successive coups and counter-coups, however, truncated parliamentarism until 1979, when the US Presidential system was adopted, hinged on a federal superstructure.

“Consequently, US constitutional principles like “mutual non-interference,” “implied prohibition” and “undue burden” developed over time to structure the relationship between the Federal Government and the federating States.

“These principles are to the effect that, as between these two tiers of government, there exists an imaginary principle of “mutual non-interference,” whereby neither will interfere in the affairs of the other – meaning each is “implied prohibited” from doing so.

“Even though the doctrine or principle of prohibition against “undue burden” also evolved and was applied in the recent US Supreme Court decision of Debbs, State Health Officer of the Mississippi Department of Health et al vs. Jackson Women’s Health Organization et al, Appeal No. 19-1392, decided on 24/6/2022, the twin doctrines of “mutual non-interference” and “implied prohibition” are the ones regularly applied by Nigerian Courts.

“Before discussing a few of such Nigerian decisions, however, I submit that the recent action by the NFIU, acting ostensibly under the directives of the President of Nigeria, amount to a breach of this constitutional theory of undue burden– in that the Federal Government is, by this action, seeking to place an undue burden on the various States of the Federation. This is clearly unconstitutional.

“On the twin doctrines of mutual non-interference and “implied prohibition” the Supreme Court held in Attorney-General of Ondo State vs. Attorney-General of the Federation (2002) 9 NWLR (Pt. 772) 222 at 393 as follows:

“I may at this stage reiterate that some of those propositions are classified as the doctrines of “implied prohibition” and “mutual non-interference” which are said to be erected on the basis that the Federal Authority is prohibited from infringing on State residual powers (and vice versa) but must respect State Authority so that both Authorities are acknowledged to be endowed with governmental instrumentalities on either side.

“Also, in Attorney-General of the Federation vs. Lagos State (2013) LPELR-20974(SC), I.T. Muhammad, JSC (as he then was – later CJN) held firmly thus:

“The doctrine, thus, postulates the mutual non-interference such that in a country operated by rule of law hinged on a Federal Constitution, such as ours, there should be that unsigned agreement among the federating States on one hand and the Federal (Central) government on the other hand, for non-interference, especially legislative action, in the affairs of the other with a view to achieving a very strong and effective working of the Federal superstructure.

“From the above, the Federal Government of Nigeria is impliedly ‘prohibited’ from ‘interfering’ in the way and manner State and Local Governments run their finances.

“True, the Federal Government wants to, quite commendably, extinguish corruption and money laundering; but this must be done within constitutional limits.

“It, indeed, amounts to “killing” the federating States for there to be a blanket prohibition against cash withdrawals by them. It is unheard of! It is intolerable! It is unconstitutional! It should never happen!”, the statement said.

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