By  Akpo Mudiaga Odje
The activities of government in any civilized nation that upholds the principles of the rule of law, must conform with the due process before getting legitimacy or the force of law. Otherwise, its activities will become unenforceable and illegal.

It is against this background, that this discourse seeks to examine the constitutionality or otherwise of the proposed Sovereign Wealth Fund (SWF) in juxtaposition with the germane Sections of the 1999 Constitution as amended.

Fiscal Provisions Of The 1999 Constitution As Amended And Revenue Allocation

Ppecifically, under Section 162 (1) of the 1999 Constitution, it is pungently provided that:

“The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the Armed Forces of the Federation, the Nigeria Police Force, the Ministry or Department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.”

Determining the formula

Subsection (2) further provides that: “ The President, upon the receipt of advise from the Revenue Mobilization Allocation and Fiscal Commission, shall table before the National Assembly proposals for revenue allocation from the Federal Account, and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of states, internal revenue generation, land mass, terrain as well as population density.”

And Subsection (10) defines revenue for our purpose thus: “ for the purpose of subsection (1) of this section, “revenue” means any income or return accruing to or derived by the Government of the Federation from any source…..”

Indeed, applying the literal canon of interpretation to the above provisions, it is manifestly lucid that there shall be a Federation Account into which “all revenues” must be paid into. The exceptions as stated above are:

(a) Proceeds from the personal income tax of the personnel of the Armed Forces of the Federation; (b) The Nigeria Police Force;

(c)The Ministry or department of government charged with responsibility for Foreign Affairs; and (d) The residents of the Federal Capital Territory, Abuja. It must be pointed out straightaway that the exceptions do not include proceeds for Sovereign Wealth Fund and/or Excess Crude Oil revenue! If the lawmakers had intended to include them, they would have expressly said so in Section 162(1) above.

With the above provisions in mind, it is axiomatic that the Federal Government must pay into the Federation Account, all revenues including any proceeds to the so-called Sovereign Wealth Fund and/or from excess crude oil sales. This view has been crystallized and highlighted in the case of AG Fed V AG, Abia and 35ors (2002) (No2) 6NWLR (pt 764) 542.

In that case which upheld the counter-claim of Delta State i.e. 10th Defendant, of which I was by the grace of God, the secretary of the State legal team at the apex court, the prolific Ogundare J S C of blessed memory at pages 689-670 held that: “Consequent upon all I have said above, I grant claim (f) and hereby declare that “the under listed policies and/or practices of the plaintiff are unconstitutional being in conflict with the 1999 Constitution, that is to say:

“(i) Exclusion of natural gas as constituent of derivation for the purposes of the proviso to section 162(2) of the 1999 Constitution. (ii) Non payment of the shares of the 10th defendant in respect of proceeds from capital gains taxation and stamp duties. (iii) Funding of the judiciary as a first line charge on the Federation Account. (iv) Servicing of external debts via first line charge on the Federation Account.

(v) Funding of Joint Venture Contracts and the Nigerian National Petroleum Corporation (NNPC) Priority Projects as first line charge on the Federation Account.

(vi) Unilateral allocation of 1% of the revenue accruing to the Federation Account to the Federal Capital Territory. I also grant an injunction as claimed in claim (h) restraining the plaintiff from further violating the Constitution in the manner declared in claim (f) above.”

It is in that same spirit and upon the above authorities both statutory and judicial that we contend with all due respect, that the Excess Crude Oil Account opened by the erstwhile President, Chief Olusegun Obasanjo and operated by Late President Alhaji Umaru Musa Yar’Adua, which is now been transformed into a Sovereign Wealth Fund is an act of constitutional tyranny as well as an unprovoked onslaught on the Rule of Law and Constitutional Order.

Consequently, all revenues in concord with the above judgment should be paid into the Federation Account, Subject to Section 162(1) thereof.

The fascist excess crude account was set up by the erstwhile President, Chief Olusegun Obasanjo in September 2004. In that contraption, he channeled the excess revenue above the budget benchmark crude oil price into a separate account. Thus, in 2006 when a barrel of crude oil sold for as much as 70 US dollars at a time, he benchmarked the oil price in the budget at 35 US dollars x 2.45 million bpd.

Accordingly, he only paid 35 US dollars x 2.45bpd into the Federation Account and thereafter he paid the excess 35 US dollars x 2.45 million bpd into an excess crude oil account. Thus, he paid to the people Niger Delta 13% of 35 US dollars, instead of 13% of 70 US dollars which is the actual price of crude oil in the international market.

Reduction of derivation

This was another form of financial terrorism unleashed on the people the Niger Delta in particular and Nigeria in general by the Federal Government.

Sovereign Wealth Fund Will Reduce 13% Derivation to the Niger Delta

Instructively and as adumbrated above, once the dubious dichotomy is implemented between budget benchmark price and international market price, then the 13% derivation provided for under the proviso to Section 162(2) of the 1999 Constitution as amended will be reduced to less than 8%.

This is because the Constitution envisages 13% of the international market price of crude oil i.e. 106 US dollars as at now and not 13% of 75 US dollars benchmark being proposed in the 2012 budget.

For the avoidance of doubt, the proviso to Section 162(2) of the Constitution provides emphatically and guarantees the 13% derivation as the lowest percentage the National Assembly can adopt for derivation in any Revenue Formula it enacts. This provision directs that: “Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.”

Not less than 13% percent! Those are the operative words of the Constitution. So any act or omission of the government whether directly or indirectly that purports to reduce the derivation percentage below 13% percent is therefore unconstitutional as in the case of the Sovereign Wealth Fund (SWF).

Nigerian Sovereign Investment Authority Act and the Constitution

The consequence of the Nigerian Sovereign investment Authority Act of May 2011 is to reduce the 13% derivation. That Act, permits for some percentage of all money accruing from crude oil sales to the Nigerian state, to be invested through three special funds to wit: (i) Nigeria Infrastructure Fund, (ii) Future Generation Fund and (iii) Stabilization Fund

It is sad to note that it is always the oil resources of the impoverished people of the Niger Delta that is usually feasted upon any time the Nigerian State is in need of money.

Consequently, the above Act as it stands, is clearly an infringement on Section 162 of the 1999 Constitution as highlighted in sundry paragraphs.

Indeed, no reasonable or patriotic Nigerian will raise any objection towards genuine arrangements to save for the rainy day. However such an arrangement must conform with the due process of the law and must not rob Peter to pay Paul as in this instance.

Conclusion

Until the Constitution, particularly Sections 162(1), 162(2) (the proviso) and 162(10) are further amended, the proposed Sovereign Wealth Fund (SWF) like its counterpart the Excess Crude Oil Account is unconstitutional. The Federal Government is hereby advised to look aliunde away from the meagre 13% derivation of the battered people of the Niger Delta for the funding of its Sovereign Wealth Fund. At the same time we urge the National Assembly to enact a new Revenue Formula with 25% derivation for the people of the Niger Delta to make them have a sense of belonging in the Nigerian project.