Approval of US$1 Billion Excess Crude Fund for Purchase of Military Hardware: The Legality
NSecurity and the State of the Nation igeria, over the years, has experienced several security challenges, both in the South and North. The rampaging destruction of lives and properties caused by terrorists, particularly in the North, is a cause for concern for the Government and all Nigerians.
The damage done by the Boko Haram insurgents on the Nigerian State, and the pains and anguish inflicted on her citizenry, are unquantifiable. More exasperating is the fact that the insurgents have consistently outwitted our security operatives, and all attempts made to apprehend their leaders have met a brick wall. Hence, one would have thought that the Presidency’s announcement that it proposes to expend the sum of US$1,000,000,000 in exterminating these deadly foes of the Nigerian State, would have elicited raucous joy and jubilation, amongst the populace. However, this was greeted with distrust, and has resulted in several arguments and counter-arguments with respect to the legality of the decision of the Presidency, and its powers to so disburse funds from the National treasury, without the prior approval of the National Assembly.
At the 83rd National Economic Council (NEC) meeting held in December, 2017, the Council approved the withdrawal of the sum of US$1 billion from the US$2.3 billion funds in the Excess Crude Account, for the purpose of combating the extremist Boko Haram insurgents. The announcement of the Council’s decision, elicited swift responses from the citizenry, wherein elites and nonelites took sides in the great debate on the wisdom and justification, in making such an approval.
Some persons have opined that, such a huge amount of funds, should be channelled into developing the State, and funding capital projects that will improve the standard of living of the citizens. This is important, given that majority of the populace, live in squalor and abject poverty. Some others have argued that the decision, is a ploy to fund the Government’s profligacies and ravenous political spending, especially since elections are around the corner.
In the midst of all these, the argument that seems to have taken the centre stage, is that on the constitutionality/legality of the NEC’s decision. The questions then to be asked are: Does the NEC have the power to make such approval? Is the Excess Crude Account, within the control and powers of the National Assembly? Is the account being operated illegally? Should recourse be made to the National Assembly, before withdrawals are made from the account? To what extent, has the NEC followed the due process with respect to drawing out the funds from the account? These questions have been considered below.
An Examination of the Powers of the National Economic Council
The National Economic Council (NEC) was established by Section 153 of the Constitution of the Federal Republic of Nigeria, 1999, as amended (the Constitution). Its composition and powers are accordingly set out in Part 1 of the Third Schedule to the Constitution. The National Economic Council comprises the following members: the Vice-President who doubles as the Chairman, the Governor of each State of the Federation; and the Governor of the Central Bank of Nigeria. The Council was given one clear function, to wit “to advice the President concerning the economic affairs of the Federation, and in particular, on measures necessary for the co-ordination of the economic planning efforts or economic programmes of the various Governments of the Federation”. The duty assigned to the NEC is clear, and it is only advisory in nature. Its powers do not extend to making orders for the disbursement of public funds, and in what manner they should be disbursed. Perhaps, if the NEC had merely made a recommendation for such money to be withdrawn, it would not have raised much dust, and same would have been a different issue all together.
Again, its advisory duty, only relates to the economic planning efforts or economic programmes of the various governments. Its advisory duties do not extend to security. It may be argued that, security issues have huge impacts on the economy, and as such, the NEC has power to make such recommendation. However, recommendations on measures that should be taken to curb security threats, should at best be left to the National Defence Council. No doubt, the NEC could render advice on security, albeit, as an oversight function, if at all, but such cannot translate into giving approval for the disbursement and use of funds, from the Excess Crude Account.
Thus, the NEC lacks the powers, to approve the withdrawal of such a huge amount of money or any amount at all, from the Excess Crude Account. To do so, would clearly be illegal and ultra vires its duties and the provisions of the Constitution.
The Powers of the National Assembly in Relation to Public Funds
The National Assembly, is the highest law-making body in Nigeria. It combines this duty with its oversight functions, on the activities of the other arms of Government.
The National Assembly, being the chief law-making body in the Federation, is the sole body empowered by law, to create such funds/accounts like the Excess Crude Account. See Section 4 of the Constitution. The Excess Crude Account created under the leadership of the former President, Chief Olusegun Obasanjo in 2004, apparently with laudable intentions, to protect Nigeria’s budget from shortfalls and increase Nigeria’s external reserves, is not without its shortcomings. The account was created by an “executive order”, without going through the chambers of the National Assembly. This could have been properly done, if the Executive had liaised with or lobbied the National Assembly to pass a law not only establishing the funds, but also setting up a body to manage it within the confines of the law, and under the scrutiny of the Nigerian legislators and the general populace. If this had been done, controversies surrounding mismanagement and illegality of the account, would have been nipped in the bud before they surfaced. It should be noted that, several funds and accounts created in the past, were done by the National Assembly passing the relevant Acts to that effect. Take for instance, the Petroleum Trust Fund; the National Housing Fund; the National Social Insurance Trust Fund, amongst others. The creation of the Trust Fund through an executive order without recourse to the National Assembly, though with good intentions, is an aberration.
Section 80 of the Constitution, which deals with controls over public funds, makes provisions for the mode and manner public funds should be managed and disbursed. Of course, profits made from the sales of petroleum products are public funds and within the control of the Legislature, and as such, fall within the mandate of the National Assembly.
The section provides that all revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under the Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose), shall be paid into and form one Consolidated Revenue Fund of the Federation. The Section goes on to prescribe that no moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly or in a manner prescribed by the National Assembly.
Similarly, Section 162 of the Constitution makes provision for a special account 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.
Conclusion Suffice to say that, the creation and operation of the Excess Crude Account for about 14 years now, has been outside the purview of and contrary to the provisions of the Constitution. Such revenue ought to have been paid into the Consolidated Revenue Fund or into any other account properly created under an Act of the National Assembly, as required by the Constitution.
Following the controversies that arose as a result of the NEC’s approval of the withdrawal, the National Assembly has swung into action to scrap the Excess Crude Account. This move is coming, 14 years after the account came into existence!
It is therefore, imperative to state that, there is need for the Legislature to be more proactive in carrying out its supervisory functions over the Executive. It is hoped that, the National Assembly would take the appropriate steps in passing a law that would accommodate the Excess Crude Account, so as to save its ultimate objective and give it a blessing of legality. Thus, it is opined that, this position would help prevent any future distortion to the Nigeria polity.
Richmond Ekhosuehi Idaeho, ACIArb., ABR, & Pascal Ekeh, Legal Practitioners, Jackson, Etti and Edu, Lagos
“SOME OTHERS HAVE ARGUED THAT THE DECISION, IS A PLOY TO FUND THE GOVERNMENT’S PROFLIGACIES AND RAVENOUS POLITICAL SPENDING, ESPECIALLY SINCE ELECTIONS ARE AROUND THE CORNER”