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FG admits illegal diversion of public funds

By Ise-Oluwa Ige
ABUJA—The Federal Government yesterday admitted, afresh, before the Supreme Court, that its operation of the Federation Account between 2004 and 2007 was largely illegal, being not in conformity with the provisions of the 1999 constitution.

The Office of the Attorney-General of the Federation owned up to the illegality yesterday at the resumed hearing of a consolidated constitutional suit filed by 27 states of the Federation challenging the illegal operation of the Federation Account during the period.

Chief Chris Alege (SAN), who represented the Office of the Attorney-General of the Federation, yesterday confirmed to a panel of the Supreme Court sitting on the case yesterday that arrangements for an out of court settlement on fundamental issues raised in the case were in top gear.

He also confirmed yesterday that the only area which the aggrieved state governments and the Federal Government were yet to reach consensus had to do with the legality of the Education Tax Fund.

In fact, Alege (SAN) who expressed hope yesterday that the only area of disagreement in the suit would be resolved in no time said that all that was remaining to seal the terms of settlement was for the new Attorney-General of the Federation to get the approval of the Acting President before signing it.

He said that he was hopeful that at the next adjourned date fixed for May 28, this year, the report of out of court settlement might have been ready to present to the court for adoption as its judgment.

Chief Adegboyega Awomolo (SAN) is the spokesperson for majority of the states of the Federation involved in the lawsuit.

He said that between the last adjourned date and yesterday, he said the Federal Government had shown enough commitment to the on-going out of court settlement.

He said there was no need to push for the prosecution of the case on its merit, the Federal Government having owned up to its illegal operation of the Federation Account during the period.

The Federal Government, had, for instance, diverted certain revenues, in excess of N4trillion, which ought to accrue to the Federation Account for sharing amongst the three tiers of government during the period.

The central government had labeled such monies as independent revenues of the Federal Government which a total 27 states of the Federation, as at yesterday, kicked against.

Some of the revenues allegedly diverted illegally by the Federal Government include proceeds from signature bonus, dividends from the Nigerian Liquefied Natural Gas Company Limited (NLNG), sale of government properties, privatization proceeds, education tax proceeds, dividends and other internally generated revenues (IGR) of Federal ministries, parastatals and agencies.

Besides, the government, had, since 2004, also diverted whopping sums of monies which ought to accrue to the Federation Account to maintain excess crude savings account  and had unilaterally used the account to fund federal projects.
The Federal Government had also unilaterally ceded 4% of the revenue accruing to the Federation Account from non oil taxes since 2005 to the FIRS and 7% from customs and excise collection to the Nigerian Customs Service (NCS).

The percentages so ceded are annually deducted upfront and paid monthly to the FIRS and NCS contrary to provisions of section 162 of the 1999 constitution.

From 2005-2007, a total N99billion was withheld from the Federation Account for this purpose.

The 27 state governments who are presently before the Supreme Court to seek its order compelling the Federal Government to refund them their fair share of all the monies illegally diverted are also contending that the tax waivers and exceptions granted by the Federal Government amounted to expending revenues which ought to accrue to the Federation Account.

But the Office of the Attorney-General of the Federation which admitted yesterday that the Federation Account was largely operated in breach of the 1999 constitution said there was no need wasting the precious time of the court to litigate on such issues, having consented that it was illegal.

But it pleaded with the apex court to give it till May 28, this year, to finalise with the aggrieved state governments on how it intended to refund their shares of the illegally diverted public funds.

Chief Chris Alege (SAN) was the lead counsel who represented the Attorney-General of the Federation in the case yesterday.

Although both Alege representing the Federal Government and Chief Awomolo (SAN) did not give details of the consensus they had reached on the issue in the open court yesterday, Vanguard however was able to get the details of the terms of settlement.

According to Awomolo (SAN), he said they had reached agreement on almost all of the constitutional issues tabled by the states for the pronouncement of the court.

He said that there was only one issue pending which he claimed had to do with the legality of the education tax.
Chief Adegboyega Awomolo (SAN) told Vanguard that series of meetings were held before yesterday.

He said that at the meeting, the report of the Harmonisation Committee was considered with far reaching recommendations made by the technical committee.

He said that presently, “consensus has been reached on six issues namely excess crude account, signature bonus (subject to treatment of backlog and the Federal Government concern on future funding of PTDF), cost of collections, waivers and concessions, other dividends and internally generated revenue (subject to treatment of backlog) and the Cental Bank of Nigeria charges.

He said conditional consensus (subject to the ascertainment of sources of funding for acquisition and treatment of backlog) has been reached on three issues including NLNg dividends, proceeds from sale of government properties and privatization proceeds.

He concluded by saying that there is yet no consensus on Education Tax.

He said the initial agreement was to refer this issue to the Supreme Court for interpretation of the Education Tax Act in the light of section 162 of the 1999 constitution.

Explaining further, Chief Awomolo (SAN) gave part of the recommendations agreed upon by both parties .


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