More Knocks Trail FG’s Bailout To Governors

President Muhammadu Buhari

President Muhammadu Buhari

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.

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  • Tony Awusaku

    I am still worrying about Nigeria and the deceit of our hypocritical
    leaders. They tell us Okonjo-Iweala and GEJ were spending without
    appropriation. Now, I’ve been waiting to hear from them, as a positive
    change, which National Assembly appropriated the LNG money Buhari is
    sharing amongst them. Or, have the laws changed that ‘when states
    become financially reckless, the president can authorise use of
    federation money without appropriation by the national assembly’?

    • Uchegbu

      President Buhari made me thinking about his ability to rule this country. The governors just stamped him into doing the wrong thing; giving them free money. The worst is that he shared fund without approval. So, he is not better than Okonjo Iweala his is criticizing of spending money without approval. So he can make mistakes after all.

  • Akhere

    I am worried by these unbridled exercise of our right to freedom of speech. In the views expressed so far by these critics of the FGN bailout what we see is cosmetic rather wholistic approach to the issue at hand. What the President did commends itself to all men of sound reasoning.

    • Mickey

      Commends what. Governors used funds for election then go to FG for bailout and you sit there and tell me commends.
      Please check yourself again. I’m not sure you were thinking properly when you put those words together.
      Moreover if any part of the constitution was contravened, then Buhari needs to simply retrace and do the right thing

  • vic




    • umungwume

      Please try and think positive, so all the 36 states are been governed by pdp? anyway, that shows how shalow your reasoning are. To the matter on ground, these governors were broke on the account of reckless spending to win election by hook or crook otherwise were they not given there monthly allocation?. Dr Okonjo Iweala warned all of them concerning their election spending and workers salaries but they wouldnt listen, now Buhari is bailing them out without questions.

      • Mazi JO

        You’ll not be surprised he may be one of the praise singers that cheered the looters on. No one is angry with the President for thinking about the workers. The critics are concerned about process, for it is this spending of money designated to buy oranges for apples is the pattern of our past wasteful budgets.

    • emmanuel kalu

      you don’t have to yell. nobody is against paying the workers. people are against giving them money to this governor who just loot it and waste it. i personally would have liked for CBN to directly pay each worker. the president need to set up a commission, that would verify and catalog every govt work using by number and biometric

  • Osanebi Osakuni

    These same idiots have been lampooning Okonjo Iwuala over spending non appropriated funds on subsidy. Now funds have been distributed to known thrives who diverted workers wages and the same supporters that yearned for change are clapping. Big shame!

  • Mazi JO

    Mistakes are made but it is not late to correct them. The administration is well meaning in its concerns but have forgotten the significance of process. No one knows it all but that’s not enough reason to embark on bruising litigation. What the President has to do having committed himself is to take note of the meaningful objections and thread wisely with the objecting counsels. The Gubernatorial tiers of our governance is the worst offending category of our institutions of government for the fact that the officials are closer to the people but appear inaccessible. The center doled out these sums of money for the betterment of every one but the States prodigally misappropriate them. When you don’t pay the workers from the funds designated, you are double-dipping when you pay them from a Federal accommodation like now, call it loan, grant or bailout.
    We should not get excited yet the ship has not taken off.

  • Iheonunekwu Joseph Nwabueze

    This is the first time somebody, The President came to power, rules alone and start distributing money to without forming cabinets or saving a dime. Absolute Recklessness

  • lam

    You guys in the Biafra are still yet to wake up to face the new reality. The days of looting are gone and we can never have any of such again in this may choose to seccede if you like but we will never allow robbers to rule us again.

    • aerekosima

      Your president just put a rubber stamp on corruption, So what are you talking about?.

    • ubong

      what has nigerians being treated like animals by these elected thieves from partiers got to do with what you called biafra. what relationship has this article to do with you exposing your acceptance of gullibility-meaning you accept and support elected governors wickedly and deliberately owing workers months of salary, thereby subjecting the families of these workers to deliberate suffering and poverty. I keep saying that Buhari,might be assumed to b non corrupt, but changing nigeria attitude to governance is the duty f all sane nigerians and not unguarded comments like the one you have made.

    • emmanuel kalu

      you are an ignorant fool with no idea of what your commenting on.

  • Lateef

    Whoever this chap is just want attention. It is poor journalism that gives space to mediocre in our body polity. Guardian, of all papers serving as a vehicle to propagate thrash like this is unfair to us. When has it become the practice to approach the National Assembly to disburse funds from the Federation Accout? When a lawyer wants to be popular, he just pick one stupid topic, get a pliant newspaper to work it, and there goes a needless controversy quoting copiously from the Constitution. Where was this guy when the bailout issue was been muted? If we can bail out our banks, why can’t we bail out the biggest employment market in Nigeria, and with what is due to them in the first instance?

  • emmanuel kalu

    it is a good idea to help those workers, but i fear we might just have made it worst, by bailing out the governors. whether you call it bail out or sharing, it is still the same thing, because they governor were in trouble and they just got bailed out without much condition. never allow a good crisis go to waste.