SENIOR lawyers have offered divergent view on the Economic and Financial Crimes Commission (EFCC) freezing of Osun State Government bank account, saying the anti-graft agency lacks the constitutional power to impose a blanket restriction on a state’s finances without due legal process.
Recall that the EFCC, on Wednesday, August 5, directed that no money be withdrawn from the Osun State Government’s statutory allocation account as part of an ongoing investigation.
In a letter dated August 5, signed by an Assistant Commander, Adenike Babalola, for the Director of Investigation, EFCC instructed First Bank Plc to place a post-no-debit restriction on the account, pending the conclusion of the probe.
The letter, with reference, 3000/EFCC/ABJ/HQ/PFS/TA/OSUN/VOL.17/666, addressed to the managing director of the bank, with attention to the Chief Compliance Officer, identified the affected account as “Osun State Government Statutory Allocation,” with account number 2017170947.
The EFCC explained that its action followed suspicious movement of funds amid an ongoing investigation into alleged fraudulent handling of about N11billion in Ecology Funds, Intervention Funds and Federal Account Allocation Committee allocations.
In a statement signed by its Head of Media and Publicity, Dele Oyewale, the anti-graft agency said it was “compelled to publicly address issues pertaining to its preventive moves in freezing the bank account of the Osun State government, without prejudice to the imminent governorship election in the state.”
EFCC said it had been investigating the state government since March this year over the alleged mismanagement of the funds, adding that some officials, particularly the state’s accountant general, had been interviewed by its investigators, adding that the decision to place a Post No Debit order on the account was triggered by unusual funds movements detected from August 2.
It added: “The Commission noticed huge transfers of funds into different corporate entities and had to swiftly halt the trend by freezing the accounts from which such heavy funds are being moved.”
EFCC insisted that its action was not politically-motivated, despite coming ahead of the state governorship election, saying it could not overlook financial infractions on account of the poll.
The Commission said while it was fully aware of the impending governorship election in the state, it has a responsibility to act in defence of the sanctity of the funds of the state, adding: “It will be uncharitable for the Commission to allow an excuse of an upcoming election to fold its arms to perform its legally-assigned functions.”
It stressed that Osun is not the only state under its watch, as several others remained under investigation, saying: “The Commission has always pointed out that it is non-partisan and non-sectarian, but always working in the overall interests of Nigerians.”
EFCC, therefore, urged the public to disregard claims that its action was politically-motivated, adding: “The public is enjoined to ignore false narratives and deliberate demonisation of the works of the EFCC.
“The interests of all Nigerians are greater and will always be protected by the commission.”
However, President of the Nigeria Bar Association (NBA), Afam Osigwe (SAN), cautioned that any directive restricting withdrawals from accounts belonging to a state government would effectively cripple governance and amount to an abuse of power.
Osigwe, while acknowledging that the anti-graft agency could seek court orders against specific accounts suspected to be linked to fraud, insisted that the Commission could not lawfully freeze accounts belonging to a state government.
“No government agency or any person has the right or the power to restrict withdrawals from the account of any state, because, first of all, the order has the effect of grounding the activities of a government.
“If the EFCC knows that any particular account is being used for the purpose of fraud, it may be able to obtain a court order, but it cannot make a blanket order freezing the accounts of any state.
“Such an order would be unconstitutional and also violate the powers of the EFCC and may actually amount to an abuse of power. We should not have such a situation.”
Osigwe stated that any decision to freeze the account of an individual or government institution must be supported by sufficient legal grounds and a valid court order, noting: “If there is a need to freeze the account of a person or government, there is a need to provide a proper basis for it and get a proper order.”
The NBA president advised banks not to comply with any instruction seeking to halt transactions across all state government accounts, saying: “I don’t think it would be proper if indeed the EFCC made such an order.
“I’m not aware of it, but if they made such an order, I would advise that no bank should obey such an order.”
He charged EFCC to avoid actions capable of creating the impression that it intended to financially cripple a state government.
In the same vein, Adeyinka Olumide-Fusika (SAN), according to Punch report, also questioned the legality of the alleged no-debit restriction, insisting the EFCC must first obtain a court order before freezing any account.
Olumide-Fusika recalled that Nigerian courts had consistently ruled that anti-graft agencies could not freeze accounts without judicial authorization, adding: “There is a no-debit order on Osun State’s account.
“My question is: Does the EFCC have the power to do that? I don’t think they got any order from the court.”
While noting that while the EFCC regularly imposed restrictions on individual accounts, he said the action against a state government had attracted wider public attention because of its constitutional implications, stating: “The courts have been consistent on that: don’t do it without a court order.
“Anybody can go to court to seek an order, but the decision belongs to the court.”
He said even though the action could be linked to possible use of public funds for electioneering in the forthcoming governorship election, any preventive action must comply with the law.
Similarly, Isiaka Olagunju (SAN) described the EFCC action as a serious violation of the 1999 Constitution (as amended) and contrary to the principles of federalism, saying: “The EFCC’s action is a serious infraction of the Constitution of the Federal Republic of Nigeria, 1999, as amended.
“If at all there is an allegation of embezzlement against any official of a state, the EFCC needs to be specific, instead of obtaining a blanket order freezing the funds of the state.”
Olagunju contended that restricting access to state funds could adversely affect governance and undermine the government’s ability to discharge its constitutional responsibilities.
Another Senior Advocate of Nigeria (SAN), Mike Ahamba, said he was no aware of any legal provision empowering the Federal Government or the EFCC to freeze a state’s account, noting: “I don’t think there’s such an authority. I don’t know on what grounds they did it.
“Let us go to court and see what the court says. If they don’t have that power, then people will naturally describe it as harassment.”
Another senior lawyer, Damilola Olawuyi (SAN), a professor, however, defended the action as a recognised preventive tool in tackling economic and financial crimes, provided it is exercised within the limits of the law, stating: “The EFCC has inherent statutory powers to take anticipatory measures to prevent and eradicate the commission of economic and financial crimes.”
Olawuyi explained that temporary restrictions on accounts had become an internationally recognised mechanism for disrupting illicit financial flows, money laundering and terrorist financing, cautioning, however, that such powers “should not be used as a cudgel to settle political scores, neither should they be used as a substitute for proper investigations or a tool to block legitimate transactions.”
Another senior lawyer, Wolemi Esan (SAN), agreed, saying the EFCC could place a temporary stop order on a suspected account for up to 72 hours without first obtaining a court order under Section 7(6) of the Money Laundering (Prevention and Prohibition) Act.
He explained that any restriction beyond the statutory period must be backed by judicial authorization, noting: “If the directive was intended to operate as a stop order for a period not exceeding 72 hours under Section 7(6) of the Money Laundering Act, a prior court order was not required.
“However, if the EFCC intended the restriction to continue beyond the statutory 72-hour period, it ought to obtain an interim freezing order under Section 34 of the EFCC Act.”
