Governors lose as court quashes LG joint account system, upholds financial autonomy

The Federal High Court in Abuja, on Monday, dismissed a suit filed by 36 governors against the Nigerian Financial Intelligence Unit (NFIU) for implementing its guidelines on the administration of local government funds.

The guidelines limited the cumulative amount that can be withdrawn from a local government account to not more than N500,000 daily.

Justice Inyang Ekwo, on Monday, delivered a judgment in favour of the Federal government and Nigerian Financial Intelligence Unit (NFIU), on Local government joint accounts nationwide.

In the NFIU had in June 2019 issued guidelines aimed at curbing crime vulnerabilities created by cash withdrawals from local government accounts by various state governments.

The Nigerian Governors Forum sued the FG and NFIU for interfering with state government powers to initiate transactions on Local Government’s Joint accounts, citing provisions of the 1999 constitution.

The NFIU issued a guideline on money laundering risk and vulnerabilities, advising all banks not to honour transactions from joint accounts.

The court directed that the States/Local Governments’ Joint Accounts should be used only for receiving funds and for subsequently transferring them to Local government accounts only.

The guidelines also reduced cash withdrawal from local government accounts to five hundred thousand Naira daily.

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Immediately after the guidelines came into place, most local governments across the country stopped facing challenges in payment of staff members’ salaries.

While reacting to the judgment, the Director/CEO of NFIU, Mr Modibbo Tukur, said the judgment was good because the Federal government was always ready to protect both states and local governments by making funds available for their governance responsibility.

He stressed further that funds could now be decided on by local councils which could be channelled to improving local security.

The CEO NFIU stressed that “from this judgment and from today, all transactions on Local Government funds will be disclosed to ICPC and EFCC 100% and will be reported continuously.”

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