Excess crude account and its controversies

Treat money laundering, others with zero tolerance, Osinbajo advises W/AfricaDeputy Editor, LEON USIGBE, writes on the controversial approval by state governors for the Federal Government to withdraw $1billion from the Excess Crude Account (ECA) for the fight against Boko Haram.

Once again, the Excess Crude Account (ECA) has become a major controversial issue in government. Just as it was under the previous dispensation when state governors dragged the Federal Government to court over its constitutionality, litigation on it has resurfaced except that now, it is over the withdrawal of the sum of $1billion share belonging to states and local governments.

The ECA,  a government account used to save oil revenues above a base amount derived from a defined oil benchmark price, was established in 2004 with the primary objective to protect planned budgets against shortfalls due to volatility in crude oil prices. Governors of the 36 states agreed to concede the $1 billion from the account to the Federal Government to enable it to prosecute the ongoing war against Boko Haram insurgency in the northeast. The decision to allow the Federal Government to withdraw the sum was reached at the last meeting of the National Economic Council (NEC) presided over by Vice President Yemi Osinbajo. It was Governor Godwin Obaseki of Edo State who disclosed after the meeting that the Nigeria Governors Forum (NGF) granted the concession to the Federal Government to support its effort at tackling the insurgency.

Obaseki has said: “The NEC also resolved through the chairman of the governors’ forum to support the effort of the Federal Government in the area of security. Pleased with the achievement that has been made till date in the fight against insurgency particularly in the North East, the governors of Nigeria through their chairman announced at the NEC meeting that the governors have given permission to the Federal Government to spend the sum of $1billion US dollars in the fight of the insurgency. This money is supposed to be taken from the Excess Crude Account.”

The leading opposition party, the Peoples Democratic Party (PDP), immediately sensed that there was something fishy about the unusual approval and wasted no time in expressing its concern over what it observed as curious and alarming approval. The party found it curious and alarming because the Boko Haram terrorists which the government aimed to fight with the funds had already been defeated going by government’s own proclamation.

According to PDP’s spokesman, Kola Ologbodiyan, the party was alarmed by the manipulative plot of the All Progressives Congress (APC) administration to secure approvals without recourse to due process, and for purposes of fighting the same insurgents, it claimed to have since defeated. The PDP also wondered why the APC-led Federal Government had to recourse to the NEC while “avoiding the direct constitutional appropriation channel of the National Assembly for funding of items already provided for in the federal budget if it actually has nothing to hide.

The leading opposition party argued: “The PDP supports the fight against the insurgency. We hold our officers and men confronting the terrorists and securing our territorial integrity in high esteem, but we are concerned about the manipulative tendencies connected with the approvals as well as the veracity of claimed purpose of the fund.

“Nigerians would recall that the APC-led Federal Government had claimed that it has since defeated the insurgents. If it would take a billion dollar from a nation’s savings to kill what they long claimed dead, then we challenge APC government come clean and tell Nigerians the whole truth. The era of lies and propaganda is long gone and Nigerians now know the truth. The Federal Government must be held accountable and stopped from any move to fritter away our national savings.  We, therefore, call on the National Assembly to interrogate this proposed disbursement and subject it to a thorough, but the rapid interrogation.”

The PDP also noted that the development had rubbished the integrity of the current administration and demanded that it apologises to Nigerians for lying to them about the actual state of the fight against insurgency in Nigeria. “By accepting the $1billion for the fighting insurgency,  the APC-led Federal Government has admitted that it lied when it announced that it has defeated the insurgents. They should, therefore, apologize to Nigerians for giving them a false sense of security, resulting in their vulnerability to attacks by terrorists,” the party said while it recalled that the three planks upon which APC hinged their promises were security, corruption and economy where it had apparently failed to deliver. The PDP, therefore, vowed to ensure the APC does not continue to play with the intelligence of Nigerians, who it believes are now only waiting for 2019 to consign the ruling party into the dustbin of history.”

But the APC would not take the opposition’s scathing criticism lying low as it fired back almost immediately. Also speaking through its spokesman, Bolaji Abdulahi, the ruling party noted what it called the preposterous allegation by the PDP that the real purpose of the said $1 billion was to fund our party’s presidential activities, ahead of 2019. While finding this allegation “baseless and ridiculous to say the least,” the APC was of the view that NGF that granted the approval has 11 PDP governors as its members. “This means that more than one-third of NGF is made up of members of other parties other than the APC,” it said, wondering how the governors who are not members of the APC would support the decision to approve funds that were ostensibly meant to fund another party. The APC posited: “In essence, the PDP is by this allegation accusing their governors of disloyalty or suggesting that they were bewitched into supporting the decision. It is that ridiculous!”

The ruling party pointed out that it was easy for PDP to arrive at “its ludicrous allegation” because a similar approval in excess of $2 billion was granted to the PDP government when it was in power. According to the ruling party, “they knew what they did with the money. It is a classic case of a serial killer who sees even a table knife as a murder weapon. The PDP presided over a government that made it possible for money meant for weapons to be diverted into paying marabouts and all manner of political jobbers ahead of the 2015 election. Therefore, the PDP thinks the same thing is about to happen. They have not realised that it is a new day and President Muhammadu Buhari will not play politics with money meant to protect the lives of innocent Nigerians or allow anyone to engage in such brigandage that Nigerians suffered under the PDP.

“Another reason that PDP has given for opposing the approval was that the Federal Government has claimed that Boko Haram has been technically defeated. The military authorities have done enough to explain the need for the money. We, therefore, find no need to repeat the arguments. It appears however that the PDP does not understand that winning the peace is as important as winning the war. There is, therefore, no contradiction in saying that Boko Haram is technically defeated and saying that more weapons and training are needed for our military and the military of neighbouring countries whose co-operation is necessary to finally rid our countries of the menace of Boko Haram.”

From their utterances, some PDP governors are not completely comfortable with the approval. Chairman of the PDP Governors Forum and Governor of Ekiti State, Ayo Fayose and his Rivers State counterpart, Nyesom Wike were not at the NEC meeting where the decision to cede the $1billion to the Federal Government was reached. They have expressed reservation about the authorisation. Fayose has insisted on Ekiti having its share of the money.

Hear him: “I’m not in support of $1 billion and will never be in support. In my state, we have agreed to go to court to contest this. It is our legitimate right, all accruals to the federation must be shared by the three tiers of government and for me to get justice I have to go to court.” He reiterated: “I did not attend the meeting, even if I was part of the meeting I would have made it expressly clear, but I will not support it. Every state has its own peculiarities in terms of security, Ekiti State has Hunger Ram (from Boko Haram) where hunger is catching people everywhere.

A lot of people are being kidnapped daily, whatever is in that money for me we should share it, let everybody go and solve his own problem. I have challenges and they should give me my money. It is Ekiti money.”

But the Chairman of the NGF and governor of Zamfara State, Abdulaziz Yari, has since weighed in, defending the decision to cede the $1billion to the Federal Government. He recalled that similar withdrawals were made under the administrations of late Presidents Umaru Musa Yar’Adua and Goodluck Jonathan’s administration. Yari explained: “This is the democracy and each an every person has its own way to want to look at things and you cannot stop him from agitation.

“One, Nigeria Governors Forum discussed this issue at our November meeting and we agreed across party lines that this thing has been done in 2014 where $2 billion was taken in agreement with the governors at that meeting. And former Governor Godswill Akpabio was the one that moved the motion. This time, we realised that there was a need to purchase equipment for the military. So, we felt we should not compromise the issue of security for the entire country. We said as governors, we agreed to forfeit $1billion of our own share of excess crude which we are going to back up with state assembly resolution at a later time. This is not the first time a decision like this is being taken. it happened during Jonathan’s era when they took $2 billion.

“We all agreed at that time collectively in the same chamber to withdraw $2 billion to procure equipment for the military and also for logistics for the military because they were telling us whether it was true or false that our soldiers were being killed. Some came on the social media saying that they were being killed like rats because they didn’t have the training and the equipment.  That was what generated discussions in the same Chamber and there was no controversy, there was no opposition to the decision at that time.

“Secondly, there was this decision also under Yar’Adua’s time when they were sourcing funds for Niger Delta Power Holdings. They also took over N5 billion for power generation. We followed the same process to withdraw the money from the same account and our respective houses of assembly confirmed the resolution. The $2 billion taken under Jonathan’s time was not backed up by any resolution from the state assemblies. We shouldn’t play politics with the issue of national security.

“By the way, we at the governors’ forum 12 members form the quorum. At the time we took this decision, we had 32 members in attendance and there was no single opposition to the decision. If anybody has his own way that he wants things to go, we had the majority and there was no even minority opinion at that meeting. We look at the country Nigeria first before any other issue. It is only when you have the country that you can have the politics.”

But the 16 Local Government Chairmen in Ekiti State have now asked the Federal High Court in Abuja to void the approval given for the Federal Government to withdraw the money from the ECA. Their request is contained in a suit they filed, listing the Attorney General of the Federation (AGF), the 36 state governors and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) as defendants. They want the court to restrain the Federal Government, the 36 state governors and their agents from giving effect to the appropriation and/or approval of the appropriation of  $1billion or any other sum, from the ECA of the Federation unless and by means of statutory allocation by the RMAFC.

They also want the court to declare that the approval of $1billion by the 36 state governors to purportedly execute the constitutional duty of the Federal Government, which has been sufficiently funded from the Federation Account, without their consent is ultra vires, unlawful, null and void. They equally want an order of court declaring that in the discharge of its constitutional duty to safeguard the security and territorial integrity of Nigeria, the Federal Government of Nigeria, being the first defendant’s principal (AGF), must be funded in accordance with its Appropriation Act and by means of due accruals from the Federation account only.

The plaintiffs want the court to declare that the 1st -37 defendants’ appropriation and/or approval of appropriation of the sum of $1billion from the Excess Crude Account of the federation made at the National Economic Council meeting of December 12, 2017 without regard to the consent of the 38th defendant (the Revenue Mobilization Allocation and Fiscal Commission), the plaintiffs; and the due appropriation of the various states’ Houses of Assembly, is unconstitutional, unlawful and of no effect whatsoever.

Similarly, they want a declaration that they are entitled to full share of all revenue accrued and accruable to the Federation Account and the Federation Excess Crude Account or any other Account whatsoever operated by and for the Federation of Nigeria, including the sum of $1,000,000,000 (which was purportedly approved for the expenditure of the Federal Government by the 1st-37th defendants at the 83rd, National Economic Council meeting of December 15, 2017, in accordance with section 162 of the 1999 constitution and the provisions of Allocation of Revenue (Federation Account) Act.

The plaintiffs want the court to determine the following:

*Whether by the provisions of sections 153 (1) (h), 162 and paragraph 18, part 1 of the third schedule to the 1999 constitution, the 1st -37th defendants can lawfully appropriate and or approve the appropriation of funds in the excess crude account of the Federation of Nigeria, without affecting, reducing or obliterating the plaintiffs’ lawful share of proceeds from the federation accounts.

*Whether the 2nd defendant can lawfully appropriate and /or approve the appropriation of funds in the excess crude account of the Federation of Nigeria, without the consent and /or consultation of the plaintiffs.

*Whether in the discharge of the federal government’s constitutional duty of safeguarding the security and territorial integrity of Nigeria, (as mandated by section 217 of the 1999 constitution, the Federal Government can lawfully resort to funding other than by means of its Appropriation Act.”

While not directly against the withdrawal of the fund by the Federal Government, the Bayelsa State government, however, wants a slice of the money through the 13 percent derivation. The governor of the state, Henry Seriake Dickson, wants the Federal Government to exclude the 13 percent derivation funds accruable to oil producing states from the $1billion to be withdrawn by the Federal Government from the ECA. He wants the 13 percent to be withdrawn and sent to the various oil-producing states in order not to subject them to making double contributions to the security funds. Dickson is of the view that the implication of the withdrawal inclusive of the 13 percent is that the oil producing states would be making double contributions to the security funds as they would not only be contributing their statutory allocations like other states, but also their 13 percent derivation fund constitutionally designed to address special circumstances including security, occasioned by the hazards of oil production.

According to Dickson, “as it has been done before, Bayelsa has no opposition to the withdrawal of money for national security expenditure targeted at improving the capacity of our military and security agencies to protect the territorial integrity of the country and all Nigerians. Our position is that the 13 percent derivation element be deducted and sent to the states. Not to do so means that the oil-producing states would be contributing from both ends: we will be contributing our statutory allocations like every other state, and then the 13 % derivation which is meant to address special circumstances as oil-producing states, including security challenges.”

Observers believe that it is the growing criticism over the move to withdraw the money that has caused the Federal Government to modify the purpose of the initiative. Vice-President Yemi Osinbajo who is the chairman of NEC has now said that it was a fallout of the security summit recently organised by the NEC. He said the money is not just for the  North East as had been previously reported, but for the security architecture of the entire country as agreed on by governors across party lines “It was after a national security summit of the National Economic Council that Governors at their forum decided to approve some money for national security,” he said, adding that the summit in which the idea was conceived was “crucial in understanding and dimensioning the security problems of the country and the weaknesses of our security architecture.”

The Vice President recalled that the security summit examined issues of kidnapping, small arms trafficking, terrorist activities of Boko Haram in the North East, clashes between herdsmen and farmers and cattle rustling, adding: “It was on account of the security summit that the governors at the Governors’ Forum subsequently decided that they would vote a certain sum of money, which has become somewhat controversial, the $1billion, to assist the security architecture of the country. It was to assist all of the issues in the states, including policing in the states, community policing, all of the different security challenges that we have. It was after the security summit that the Governors’ Forum met across party lines, again, I must add, in order to approve and to accept that this is what needed to be done to shore up our security architecture.”

Even though the NGF might have formed a quorum at the meeting where it resolved to give the money to the Federal Government, the ongoing controversy, observers believe, puts the move in a conundrum as it would be appeared that some states may insist on their right to the money rather than giving it up to the central government to the detriment of their local needs.

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