The Renewed Spotlight on LG Funds

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The latest effort by the Nigerian Financial Intelligence Unit (NFIU) to enforce probity and accountability in the management of funds meant for the development of local government areas can eradicate the menace of financial embezzlement, writes James Emejo

Recently, the Nigeria Financial Intelligence Unit (NFIU) announced to the excitement of members of the public, its decision to probe revenue allocations to local government areas across the states of the federation.

It stated that the move was meant to check the widespread abuses and embezzlement of funds meant for the local government development, which are often seized or siphoned by state governors.

The unit noted that the State, Joint Local Government Accounts (SJLGA), which had been subject of controversy of the years, with a section of the public calling for its abolition, currently posed the biggest corruption, money laundering and security threats at the grassroots levels as well as the entire financial system.

The acting Chief Media Analyst for NFIU, Ahmed Dikko, had further stressed that the unit’s action became necessary in order to also avert a possible isolation of the entire Nigerian financial system by other international financial systems “because of deficiencies in our anti-money laundering and counter terrorism financing implementation.”

The unit also set a June 1, 2019 deadline for all financial institutions, other relevant stakeholders, public servants and the entire citizenry to ensure full compliance with the provisions of the guidelines already submitted to financial institutions and relevant enforcement agencies including full enforcement of corresponding sanctions against violations.

The NFIU specifically warned that effective from June 1, any bank that allows any transaction from any local government account without monies first reaching a particular local government account will be sanctioned 100 per cent, both locally and internationally.

A report by PTCIJ.org had alleged that about N15.5 trillion revenue allocation to local governments had been siphoned by state governments in the last 12 years.

The call for the abolition or probe of the joint account because of the irregularities associated with the account had been on for a long time.

The local government councils have severally protested to relevant quarters, including the National Assembly in order devise another means where such monies could get to them directly.

In November 2016, the Speaker of the House of Representatives, Hon. Yakubu Dogara, described the joint allocation account of states and local governments as one of the major evils hindering the country’s developmental aspirations.

Dogara added that the National Assembly was ready for a showdown with state governments as lawmakers were determined to expunge the provisions from the constitution.

Dogara had said: “We all know when funds are allocated to the councils. Instead of getting to the councils, they are hijacked at that level and appropriated according to the whims of the powers that be.”

“As a matter of fact, joint account is one of the biggest evils because it gives the authority to local government ministries in the state. In most states, especially in the North where we don’t have oil and gas, the ministry of local government in the state is regarded as the ministry of petroleum resources.”

Further expressing frustration over the mismanagement of joint account, the Nigeria Union of Local Government Employees (NULGE) in July 2018, urged President Muhammadu Buhari to institute a probe panel to scrutinise the states and local councils’ joint account in the last 10 years.

The National President of NULGE, Ibrahim Khaleel, said the joint state and local governments account had been subjected to massive abuses and called for autonomy of the third tier of government.

According to him, it is our belief in NULGE that President Muhammadu Buhari should use his administrative powers to appoint reputable auditors to carry out forensic auditing of the joint state and local governments account within the last 10 years.

“This is necessary since there is little or nothing on ground in the 774 local councils to show for the huge resources allocated to states over the years,” he added.

Nonetheless, in what could eventually lead to an eventual purge in the local government system as well as heeding public outcry to sanitise the corruption therein, Buhari, in July 2018, signed the Nigerian Financial Intelligence Unit (NFIU) bill into law.

Essentially, the NFIU is the Nigerian arm of the global Financial Intelligence Units (FIUs), which was hitherto domiciled in the Economic and Financial Crimes Commission (EFCC) as an autonomous unit operating in the African region.

But the unit has now been domiciled in the Central Bank of Nigeria (CBN) following the passage of the bill into law.

Among other things, the NFIU exists to ensure a country’s compliance with international standards on matters bordering on money laundering and terrorism financing and also mandated to check suspicious transactions.

It has the responsibility to receive, request, analyse, and disseminate financial intelligence to relevant agencies.

According to the Senior Special Assistant to the President on National Assembly Matters (Senate), Senator Ita Enang: “One of the key objectives of the Act is the creation of a legal, institutional and regulatory framework to ensure transparency, effective and efficient and management administration and operation of the Nigerian Financial Intelligence unit.

“Also the bill will institutionalise best practices in financial intelligence management in Nigeria and strengthen the existing system for combating money laundering and associated predicated offences, financing of terrorism and proliferation of weapons of mass destruction.”

He added: “The Act, which makes the unit an autonomous body, makes provision for the unit to exchange information with financial intelligence institutions or similar bodies in other countries in matters relating to money laundering, terrorist financing activities and other predicated offences.”

Notably, the fact that state governors launder some of the intervention aid towards empowering the local councils for development further justifies the need for NFIU to beam its searchlight to understand the movement of resources.

There is a general opinion that though the state joint local government accounts were meant for grassroots development, the original intention has been defeated as the funds are largely looted, leaving the councils in even more deplorable condition.

But there are also arguments that there is no guarantee that if the local government areas become autonomous, funds directly paid to their respective accounts will be well-utilised.

Initially, the NFIU circular to banks and other affected institutions appeared to have been misinterpreted by a section of the public.

However, in a bid to emphasise its earlier position, NFIU, reinforced the June 1, 2019 deadline to all financial institutions, other relevant stakeholders, public servants and the entire citizenry to ensure full compliance with the provisions of the guidelines already submitted to financial institutions and relevant enforcement agencies including full enforcement of corresponding sanctions against violations.

The unit observed that there had been isolated comments from a section of the public, which were in conflict with its initial pronouncement regarding the commencement of investigations into revenue allocations to local government areas across the states of the federation and the need for relevant stakeholders to abide by financial regulations as spelt out in the constitution.

It stated: “The Nigerian Financial Intelligence Unit (NFIU) is using this second press statement on the above subject to reiterate its position that the 1st June effective date of the guidelines to all financial institutions and public officials on the local government funds stands.

“The unit also maintains its understanding of the 1999 constitution that no debit is allowed on any local government funds unless and until the funds are credited to and reach the bank accounts of a local government in any state of the federation.”

No doubt, with the stage now set for probity and accountability in the management of local government resources, Nigerians await the outcome of the NFIU probe and if the National Assembly will live up to its promise to discontinue the joint account, which it said, is currently marred by corruption.