More Knocks Trail FG’s Bailout To Governors
THE recent bailout by the Federal Government to governors of the 36 states of the federation has continued to draw condemnation, with some analysts describing the over N713bn gesture as bad precedence and a condoning of fiscal rascality.
The denunciations come as a rights activist, Ifeanyichukwu Okonkwo, has given President Muhammadu Buhari 14 days, beginning Friday July 10, 2015, to return all the money he released to the governors or face court action.
According to Okonkwo, handing out the fund without recourse to the National Assembly, contravened section 164 (1) of the 1999 Constitution, as amended.
In a statement, Okonkwo, who is the convener of Movement of Voice of Democracy (MOVERS), regretted that state governors had been illegally taking loans from commercial banks with resolutions from State Houses of Assembly, stressing that only public limited companies are entitled to obtain loans with resolutions.
He said that by ordering the disbursement of N713.7 billion from the Federation Account, whether or not it is from the Extra Crude Account, the President has given tacit approval to the squander-mania of the governors.
The statement reads in part: “I, Mr. Ifeanyichukwu Okonkwo, as a citizen of Nigeria, hereby, serves notice to the President of the Federal Republic of Nigeria, Muhammadu Buhari; the National Assembly, President of the Senate and Speaker of the House of Representatives in the matter of flagrant breach of section 164 (1) of the Constitution by the President and the negligence of the 2nd, 3rd and 4th defendants to protect the funds of Nigerians under the consolidated revenue of the Federal Government.”
While stressing that section 164 (1) provides that “the federation may make grants to a state to supplement the revenue of that state in such sum and subject to such terms and conditions as may be prescribed by the National Assembly,” Okonkwo said the President observed the constitutional provision in the breach.
Consequently, he added: “After 14 days from today (July 10, 2015), if the entire funds disbursed and paid out to governors of the 36 states are not returned to the treasury in the Central Bank of Nigeria, I shall commence legal proceedings against you.”
Reacting to the bailout, the Centre for Social Justice (CSJ) described it as disturbing and a wrong precedence, advising Buhari to withdraw the money and allow the governors deploy their management expertise, rather than getting spoon-fed.
Speaking to The Guardian, head of the Centre, Barrister Eze Onyekpere, said: “On the surface, these are welcome developments but a proper analysis of the legal and policy implications of these developments sends wrong signals for the improvement of fiscal governance, particularly at the state level.
“In all the discussions between the President and the governors that preceded this bailout package, there was no mention or acknowledgement of the contributions of governors to the inability of states to pay workers and the parlous state of their finances. Rather, they heaped the blame on the out-gone Federal Government. The truth, however, remains that the poor state of finances at the state level is a product of the fiscal irresponsibility of governors.”
Onyekpere noted: “First, sharing the proceeds of profits accruing from investments in the Bonny LNG at a time Nigeria is looking for resources for further trains of the Bonny LNG Plant and for new LNG projects at Brass and Olokola is not a good practice worthy of replication. If the profits accruing to the Federation Account from Bonny LNG had been properly managed and invested, Nigerian would have gone beyond the present six LNG trains and would have been in the tenth to thirteenth train and thereby laid a solid foundation for diversified earnings to the country.
“The second is that virtually sharing the remaining proceeds of the ECA leaves Nigerian totally vulnerable to the continuing oil price shock. Yes, the vulnerability has started manifesting as reduced oil resource inflows into the Federation Account. But this development of sharing all in the ECA leaves Nigeria at a total rock bottom with no elbowroom at all.
“We note that governors have been clamouring for the closure of the ECA and find this a good opportunity to do so, since the founding fathers and mothers of ECA appear to have left government. Pray, by the time the ECA is closed, where will the next funds to share come from?
“For the CBN to raise a bailout fund of N250bn – N300bn for states to access without conditionality is nothing short of licensing fiscal rascality. Moreover, Section 41 of Fiscal Responsibility Act applicable to all states of the Federation (vide items 7 and 50 of the Exclusive Legislative List) prohibits borrowing for recurrent expenditure and payment of salaries. The minimum that is expected is that strict conditions of fiscal reform should be attached to accessing the loan. It will be unconscionable for CBN to give public funds to be managed by a governor who has tens of Special Advisers and Assistants; maintains a long convoy of cars in his entourage or maintains an aircraft at state expense; or draws hundreds of millions monthly on unaccounted security votes.
“It will also be a fiscal crime to allow states to have access to this bailout fund where budgets are not public documents; accounts have not been audited for the past couple of years and there have been no follow-ups on audit queries and findings; and no biometric verification of the workforce to remove ghost workers. So many states lack basic procurement procedures and all contracts are still centred in the governor’s office with clear evidence of abuse of process. Also, many states have failed, neglected and refused to pass the Fiscal Responsibility and Public Procurement laws. And where they have been passed, most states have refused to make them operational. Allowing such states to access the funds will only strengthen existing perverse incentives, which encourage fiscal rascality.”
Also faulting failure by the Federal Government to seek the approval of the National Assembly before releasing the money, the Peoples Democratic Party (PDP) said the constitution is very categorical on how money could be taken from any public fund.
Addressing journalists in Abuja, yesterday, the PDP Vice Chairman in charge of the South-South zone, Cairo Ojougboh, said the desire to assist some state governments pay the backlog of salary arrears owed workers has sadly led the Presidency into breach of a vital constitutional procedure in the appropriation and management of funds.
The Federal Government has, however, warned the beneficiaries of bailout, saying they had better ensured sound financial probity or face serious consequences.
It also vowed that it would not discriminate between governors of the All Progressives Congress (APC) and their Peoples Democratic Party (PDP) counterparts in discouraging financial recklessness.
Speaking yesterday to The Guardian, a top Presidency source said the governors would be making a mistake if they interpret the financial intervention as another party time.
He said: “As far as the government is concerned, that a governor is corrupt or financially reckless is totally a different matter. We can now see what is happening to those who left office years back. Nnamani left office eight years ago. Nyako, Lamido, and the rest, are now answering questions; this is a new era.
“We are going to recover all looted money and this would be more so in the case of those presently in government. They would be made to account for every kobo. To us, there is not going to be any difference between APC and PDP governors, as far as financial probity is concerned. In fact, the APC governors, in particular, had better watch it.
“The era of financial recklessness on the part of governors is over and done with. To this administration, if you are reckless, whether you are an APC or PDP governor would be immaterial. It is completely irrelevant to this administration.
“It is scandalous and irresponsible for governors not to pay salaries. The rescheduling of loans is not to encourage them to be reckless, but allow them meet their obligations as at when due. Let everybody take note. This is not an era for recklessness and impunity. Any governor who thinks in the past will be courting serious trouble.”
According to the source, the government is not, looking in the direction of fresh anti-graft regulations. “There are a number of checks and balances in our system. Anybody that crosses that border would be punished. What killed the last administration was impunity and not only corruption. There are enough rules and regulations in the system,” he concluded.
On why President Buhari ought to have done a more thorough homework before releasing the money, Development Economist and public commentator, Mr. Odilim Enwegbara, in a chat with The Guardian, expressed reservations on the debt restructure directive to the Debt Management Office (DMO), pointing out that it was unethical and an aberration.
He noted: “The only intervention fund which could be called ‘bailout fund’, if you like, is the N250bn-N300bn the President directed CBN to make available to those states that are badly in need to pay backlog of salaries and pensions. The money in question should be only made available based on CBN’s terms, yet to be made public. This means it is only for states that can meet CBN’s conditions.