Court Dismisses Governors’ Suit Against Regulation of Local Govt Spending


A Federal High Court (FHC) in Abuja yesterday threw out a suit by the 36 governors challenging the  Nigerian Financial Intelligence Unit (NFIU)  guidelines on the spending of the local governments’ funds.

The governors had in the suit marked: FHC/ABJ/CS/563/2019 asked the court to stop NFIU from implementing the guidelines.

Named as defendants in the case filed by state Attorney-.Generals are the NFIU,  the Nigeria Union of Local Government Employees (NULGE) and the . Attorney-General of the Federation.

In the suit, the governors argued among others that the NFIU guidelines, particularly provisions 1 to 6  and the penalties prescribed are ultra vires (outside or beyond) the power of the NFIU under Sections 3 (1) and 23(2) (a) of the Nigerian Financial Intelligent Unit Act, 2018 and therefore unconstitutional.

A part of the guidelines limits daily cash withdrawal by each council area from the state/LG joint account to N500,000.

The NFIU explained that the decision to peg daily withdrawals by the councils was   to reduce “crime vulnerabilities created by cash withdrawal from local government funds throughout Nigeria effective from June 1, 2019.”

The guidelines is known as the  “NFIU Enforcement and Guidelines to Reduce Crime Vulnerabilities Crafted by Cash Withdrawal From Local Government Funds Throughout Nigeria.”,

After listening to the final addresses by parties to the matter, presiding Justice Inyang Ekwo  dismissed the case  for lacking in merit.

Earlier, he struck out the Nigerian Governors’ Forum, the umbrella body of the 36 governors, as a co-plaintiff in the suit on the grounds that it lacked the locus standi to file the suit.

Ekwo  said  that  he could not  see where the  guidelines contradict  Sections 7(1), (6) (a) and (b) of the 1999 Constitution.

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The judge added that the guidelines also did not conflict with the provision of Section 162(6) of the Constitution, which creates the State Joint Local Government Account,  into which allocations to the Local Government Councils from the Federation Account and state governments are paid.

According to him, the guidelines also did not contradict Section 162(8) of the Constitution which prescribes that the amount standing to the credit of a  council shall be distributed in such manner as may be prescribed by a House of Assembly..

Ekwo also said that the guidelines also did not contradict the provisions of the 4th Schedule of the  Constitution which prescribes the functions of a Local Government.

The judge pointed out that the  “ duty of the court is limited to expounding the law and not expanding it.”

He added: “On the whole, I see the provisions of the guidelines of the 2nd defendant as seeking to direct the monitoring of accounts, transfers and any other means of payment or transfer of funds of local government councils as provided for in Section 3 (1) (r) of the Act of the NFIU.

“It only limits cash withdrawal made from any Local Government Account anywhere in the country to an amount not exceeding N500,000. per day.

“Any amount higher than that can be done using other methods of banking transaction save cash.

“Unless it can be shown that there is any provision of the 1999 Constitution (as amended) which these provisions of the 2nd defendant’s guidelines have contradicted or conflicted directly and practically, then the issue of unconstitutionality cannot be said to arise.

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“I also find that the case of the plaintiffs has not been established and I so hold.

“I find, in the end, that the case of the plaintiffs lacks merit and ought to be dismissed and it is hereby dismissed.”



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