A Federal High Court sitting in Abuja on Monday, May 23, 2022 quashed the Local Government Joint Account System in favour of the Federal Government and the Nigerian Financial Intelligence Unit (NFIU).
The Court presided over by Hon. Justice Inyang Ekwo ruled that governors of the 36 States of the Federation are barred from controlling and disbursing Local Government funds in the country.
In June 2019, the NFIU issued guidelines aimed at curbing crime vulnerabilities created by cash withdrawals from local government accounts by various state governments.
However, the Nigerian Governors Forum took the Federal Government and NFIU to court over what they considered as “interfering with state government powers to initiate transactions” on Local Government Joint accounts, backing up their claims with provisions of the 1999 Constitution.
The NFIU guideline on money laundering risk and vulnerabilities, advised all banks not to honour transactions from joint accounts and directed that the States/Local Governments Joint Accounts should be used only for receiving funds and subsequently transferring same to Local Government accounts only.
The NFIU guidelines reduced cash withdrawal from Local Government accounts to N500,000 daily.
However, since the NFIU guidelines came into effect, most Local Governments across the country stopped facing challenges in payment of staff salaries.
Reacting to the judgment, the Director/CEO of NFIU, Mr Modibbo Tukur, described it as a good development, saying that the Federal Government is always ready to protect both states and local governments by making funds available to discharge their responsibilities.
Tukur, in a statement by his media analyst, Mr Ahmed Dikko, noted that by the ruling, the Local Government Councils can now decide on how their funds spent which can be channelled to improving local security.
According to Tukur; “From this judgment and from today, all transactions on Local Government funds will be disclosed to ICPC and EFCC 100% and will be reported
