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TSA: FG operated illegal accounts for 48 years

By Marcel Mbamalu, News Editor   |   07 September 2015   |   4:12 am  

Buhari 16UNTIL August 11, 2015 when President Muhammadu Buhari ordered stoppage of multiple accounts, the Federal Government had, for at least 48 years, breached its own rules on collection and management of national revenues.

Beginning with the Oliver Lyttleton Constitution, the 1954 document that conferred the status of a federation on Nigeria, the central government has always been mandated to operate a single revenue account for the country.

Forty-five years after, Section 162, sub-section 1 of the 1999 Constitution of the Federal Republic of Nigeria (as amended) states: “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.”

As opposed to keeping common funds in multiple accounts in commercial banks, contrary to the provision of the constitution, Buhari recently ordered implementation of Treasury Single Account (TSA), into which all ministries, departments and agencies (MDSs) of government, which are funded from the Federation Account, will henceforth pay their earnings.

Specifically, the MDAs will henceforth pay all their revenues to a sub-account that is linked to the TSA at the CBN. To ensure quick compliance with the directive, the Head of Service of the Federation, Danladi Kifasi, gave the federal sub-treasury account name and number as Accountant General: 300002095.

Some of the MDAs affected by this directive include Nigerian National Petroleum Corporation (NNPC), Central Bank of Nigeria (CBN), Security and Exchange Commission (SEC), Nigerian Ports Authority, Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS) and Federal Inland Revenue Service (FIRS), among others.

The constitutional provision for single account — beginning from 1954 — notwithstanding, investigation revealed that since 1967, successive administrations have “been breaking the law” by operating multiple accounts. Apart from the Excess Crude Account (ECA), the latest in the list, the controversial Sovereign Wealth Account (SWA) is being challenged by state governors, though it has been legitimised by an Act of Parliament that birthed the Nigerian Sovereign Investment Authority (NSIA), the managing agency for the Sovereign Wealth Fund (SWF).

In an exclusive interview with The Guardian in Ibadan, Oyo State, a budget historian and lawyer, Dr. Tunji Ogunyemi, attributed operation of the ‘illegal accounts’ to “exigency and, sometimes, corruption.”

According to him, “Sections 82, 83, 84 and 162 sub 2 of the Constitution of the Federal Republic of Nigeria (as amended) are clear as to what should happen to monies earned. They say you shall deposit all monies — with no exceptions — earned by the federation within a fiscal year, into the Federation Account. No exception as to running cost is granted.

“The National Assembly can then allocate what one can take from the account. It is not like there won’t be some set off, that can happen, but it shouldn’t be in such a way that an agency earns N162 billion and spends N160 billion out of it.”

Ogunyemi, who lectures in the Department of Economics at the Obafemi Awolowo University (OAU), Ile-Ife, Osun State, had, in a scholarly article, The Trouble With Nigeria’s Fiscal Federalism: Non-Statutory Accounts And ‘Un-due’ Processes In Fiscal Matters, 1967 to 2004, virtually indicted many of the past administrations for allegedly bastardising the TSA, through arbitrary operation of illegal accounts in disregard to the federating units. The article was published in the journal, Transactions of the Historical Society of Ghana (New Series No. 14, 2012.

Ogunyemi’s position was corroborated by Dr. Emmanuel Egbogah, an oil expert and former adviser to the late President Umaru Musa Yar’Adua, who, re-iterated that the administration of former President Goodluck Jonathan had planned to implement the TSA in February but was handicapped by political issues.

Responding to the avalanche of reactions trailing the policy, Ogunyemi said the legitimacy and supremacy of the Federation Account is enshrined in the constitution, in which there is no room for illegal accounts or exceptions on remittances of funds accruing to the country.

He argued that some accounts established between 1967 to 2004 negated principles of revenue generation and allocation in federal states and that their continued operation “called to question the integrity of the Federal Government in keeping to the dictates of the rule of law and the due process of financial management as enshrined in extant legislations in Nigeria.”

One of the cases of corruption instantiated by the operation of the illegal accounts, according to the budget historian, is the shoddy management of Nigeria’s external debts, particularly with the London club of creditors. He revealed that a debt servicing account was illegally established in 1982, and argued that the Federal Government failed to consult all stakeholders in the Federation Account and did not enact a law to give it legal backing. The account was discontinued after 2002, after the Supreme Court declared it illegal.

Prior to the interview, Ogunyemi had written thus: “During the period the account was operated, the sum equal five per cent of the accruals from exports and income derived from Nigeria’s investment abroad, which were public revenues that belonged to the Federation and not to the Federal Government alone, was paid into it. Despite the opening and maintenance, Nigeria’s debt management was still in a shambles.

“The debt increased from $4 billion in 1979 to $18 billion in 1985. Thus, the fact that a special account was created, the amortisation of the debt did nothing to arrest its growth, rather, the ‘anatomy’ of the Nigerian economy became, in the words of C.S.P Okongwu, even more ‘traumatised’ due to the debt and other factors induced by it. They later handed the template over to civilian rulers at the return to democracy in 1999.”

Ogunyemi told The Guardian that, though the legitimacy of the TSA was enshrined in the 1954 Oliver Lyttleton Constitution, the opening of other accounts started 48 years ago, during the civil war under the Gen. Yakubu Gowon regime, to prosecute the war.

“The origin for several accounts for the Nigerian Federation can be traced to the regime of Gen. Gowon, who was Head of State for about nine years, from 1966 to 1975. That regime was awash with petrol money, so it had to create several accounts in England and the United States, to receive the huge unexpected income, after the civil war, which ended in January 1970. These accounts were dedicated to certain things such as reconstruction of facilities that were destroyed during the war; amortising debts incurred during the war; and Joint Venture Cash Calls Account for financing joint-ventures between the Nigerian government and oil partners among others,” he said.

According to Ogunyemi, the bastardisation of these accounts, from dedicated to corruption-induced, and arbitrary operations began with the regime of then Gen. Ibrahim Babangida, and later Gen. Sani Abacha regime, when the country had stabilisation and dedicated accounts which, he said, were not really true to their purpose.

“The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) established by Section 162 sub 2 of the constitution, immediately there is an accrual to the Federation Account, will issue a statement to set aside 13 per cent which should go to the oil producing states, and one per cent to the Ecological Fund. The remainder is what ought to be shared in the percent of 52 and 48 for the federating units. This is the normal thing and no one should tilt it because there is a law backing it up.

“However, there are several accounts that the Federal Government has kept without deference to the other stakeholders. There are several of them. Some are called dedicated or stabilisation account. They are completely outside constitutional provision, as no section provides for them.

“The regimes that practiced this most are those of Generals Babangida and Abacha. What we have today is that politicians from 1999 continued with the illegality from the military. Some of the states were bold enough to challenge the Federal Government,” he said.

Stressing that it behoves on the account holder to close it since its objective has been defeated, Ogunyemi said the monies ought to have been returned to the treasury.

“The legal foundation for the opening of any account by the Nigerian government is codified in sections 80 to 84 and 162 of the 1999 Constitution. Section 162 is very clear about which account money should be domiciled.

“All monies earned, according to the constitution, must be kept in the Federation Account. It is also known as the Distributable Pool Account (DPA). It doesn’t matter what it is called; it is one single account. The proceeds and income accruable to the Federation are kept in this account, whether they are from tax efforts or petroleum receipts or donors or sales or income from courts and offices. Income from assets, too, especially Federal Government bonds or seignoraige, that is, the income made from producing currency, are paid into the account,” he said.

The expert noted that “there is the Consolidated Revenue Fund, which belongs exclusively to the Federal, which is provided for in the constitution from sections 80 to 84. It is from the account that the Federal Government budgets, not the Federation Account. The Federation Account is jointly owned by the federal, state and local governments. Abuja is not a beneficiary of the federation account. A judgment in the case between Attorney General of the federation government and Abia State government and 35 others, delivered in April in 2003, rules that Abuja is not a state and therefore cannot earn from the Federation Account.”

The problem, he said, is that the Federal Government has been dealing with the Federation Account, particularly since the regimes of Babaginda and Abacha, in such a way as to completely discountenance the other stakeholders as if they knew nothing. “Instead of depositing one per cent of earnings into the amelioration of ecological troubles known as the Eco Account or Ecological Fund before sharing, the Federal Government has been appropriating the fraction to itself.

“Immediately the fund is set aside, it ought to go to the fund from the federation account and not remain there. But the Federal Government appropriates the one per cent into its own and then determines when to release it. Nothing can be more un-procedural. It should ordinarily go from source,” he added.

Egbogah, an oil and gas expert, said the new directive would clearly enshrine transparency and discipline in management of finances. Egbogah has had over 40 years of diversified geological and petroleum engineering experience in consulting, teaching, research/ development, project planning, implementation and management in Canada, United States, Middle East and Asia Pacific region. According to him, payment of government revenues into multiple bank accounts operated by MDAs in commercial banks, “as obtained under the older order, was clearly against the Nigerian constitution, which, in sections 80 and 162, directs that all federally collected revenue should be paid into the Federation Account.”

“This (implementation of the TSA policy) is something very good, because, for the first time, it will give the government what you may call helicopter view — one single look at what the financial situation is at any point.”



  • Mercy

    This is really no big deal.parliament amended the law which make the actions of government legitimate. The BAHARI GOVERNMENT HAVE BROKEN MORE LAWS. For instance, sacking all heads of parastatals and agencies as if they are some ccommittee is uncivilised and undemocratic.

  • Gumel

    The way they used to run different accounts sometimes with dubious intentions is no longer acceptable to this transparent Government of the incorruptible No Nonsense Buhari. That is what is called transparency leadership by example.

    • Boma

      The issue of TSA was started by GEJ. Every Banker knows that the directive was already 15months old.

      • Gumel

        Good why didn’t they continue?

  • agbobu

    YET THIS MAN GOODLUCK JONATHAN IS VERY SHAMELESS, YOU TALK OF A GOOD TEAM WHEN YOU AT THE HEAD IS VERY ROTTEN AND EXTREMELY AND OBSCENELY VERY CORRUPT. GOODLUCK JONATHAN YOU ARE THE MOST CORRUPT LEADER NIGERIA HAS EVER HAD. SHAME ON YOU AND YOU MUST BE PREPARED TO PAY THE PRICE FOR YOUR MASSIVE LOOTING AND STEALING. GOODLUCK JONATHAN IF YOU CAN NOT DO THE TIME, THEN DO NOT DO THE CRIME. GOODLUCK JONATHAN SEE YOU WHEN YOU HAVE YOUR DAY IN COURT. END OF STORY

    • Abu Lasisi

      HI there,

      Personally, I wouldn’t blame Pres. Jonathan to some extent as some of the blames lies on Nigerians and the so call king makers like president Obasanjo. Many Nigerians voted for Mr. Jonathan because of his tribe, some because of his age, some because of the meaning his name implies but no single person voted for the first position in the country because of experience.

      This issue of experience have been bases of discussion of the day here in the US.

      Comparing President Jonathan and Muhammadu will be one of the biggest stupid comparative I have even seen because they don’t just fit. Pres. GMD was once in government as a lead, a subordinate and served in other capacities. He knew what worked that made Nigeria worked before, he knows what is lacking and dragging Nigeria currently in terms of people, leaders and policies, He understand what needs to be done to put Nigeria back to her rightful position. This needs he had dreamed over the years and strive and tried to be the president over the years.

      In conclusion, Pres. Jonathan did his best but lack one leadership principle. A leader can’t know all but need to get the best minds and experience to work for him in order to achieve his objectives. This is what works for the west, America, UK, Canada and others.

      • Pastor Elias Osaghae

        This is a rational and lucid thinker. Nigerians need to read from such online contributor in order to rid ourselves of inordinate bias. Kudo Abu.

      • New Nigerian

        I’d argue that Jonathan had great minds and experience to work for him. However, he allowed them to free run, leading to 5 presidents – as Obasanjo said – his wife, Diezani, Okonjo Iweala, Obua and himself…and get this, Obasanjo in his memoir said Jonathan was the weakest of the 5 presidents…the man simply cannot make lead..to your points, get best minds to work with you…but the final decision should be yours….Buhari always had this and still does, even in his advanced age …that is why as rambunctious as APC is he is still in charge (for a peak at what he is managing under his own political house…loo at the senate, and yet he is still very effective)

        • yinka ola

          these are great minds who used their intellect for personal aggrandisement. Nigeria has always had the benefit of the best brains, and no regime had better minds assembled together like IBB did, yet he destroyed nigeria. Its about the quality of the leader not followership. A strong chain is as weak as its weakest point. Weak leadership makes nonsense of best minds like GEJ did.

          • New Nigerian

            True. The fish starts to rot from the head.

    • Pastor Elias Osaghae

      A Buharist indeed!

      • agbobu

        PASTOR INDEED!!!!!!!

    • Olaolu Oke

      You must have been part of the corruption, massive looting and stealing of GEJ for you to make above assertion. And it will be a shame on you if you are not armed with your various evidences in court to nail GEJ. A bigger shame on you and Buhari if GEJ gets away with all these allegations.

  • Joseph

    The change has come, let us hope we shall get it right soon

    • Pastor Elias Osaghae

      The change started 15 months ago and is not just coming!

  • EdBaz

    I don’t support any political party and neither do I have a bias for/or against Jonathan and Buhari – The headlines says: the illegal account was operated for 48 years. Is 1983 when Buhari was governing Nigeria within the 48 years? How can we be so blind as to heap all that has gone wrong on someone who ruled Nigeria for 6 years. I am not saying all that happened during Jonathan’s era was okay, but pointing the blame finger at Jonathan alone all the time reflects how easily we Nigerians can be fooled!!!

  • EdBaz

    Which change? I don’t support any political party and neither do I have a bias for/or
    against Jonathan and Buhari – The headlines says: the illegal account
    was operated for 48 years. Is 1983 when Buhari was governing Nigeria not
    within the 48 years? Why didn’t he closed the accounts then? How can we be so blind as to heap all that has gone
    wrong on someone who ruled Nigeria for 6 years only? I am not saying all
    that happened during Jonathan’s era was okay, but pointing the blame
    finger at Jonathan alone all the time for all the things that has gone wrong in Nigeria reflects how easily we Nigerians
    can be fooled!!!

    • bobo

      Is 1983 when Buhari was governing Nigeria not within the 48 years?

      You beat me to it! Illiteracy is the biggest problem in Naija. Most people can’t think properly.

      • Nazerine

        You stole my mind.

    • New Nigerian

      Buhari was a military leader for 20 months (called to confer credibility on a coup planned by others because of the stature) who was unseat by the coup planners of his administration – who then put him in jail for 27 months for trying to make too many changes…put that in perspective…

      • Olaolu Oke

        You should go back to the records to know the past history and not be tossed around by propaganda.

        In July 1966 Lieutenant Muhammadu Buhari was one of the participants in a coup led by Lt-Col Murtala Muhammed. Then Lieutenant Colonel Buhari was among a group of officers who overthrew the Head of State, General Yakubu Gowon in July 30, 1975 coup.

        Major-General Buhari was alleged to be one of the leaders of the military coup of December 1983, he was the General Officer Commanding (GOC), Third Armored Division of Jos. Buhari’s complicity in the December 1983 coup was betrayed at a Special Military Tribunal.

        How then did he confer credibility to a coup planned by others? Can credibility ever be associated with a coup he lied that he was not part of?

  • Boma

    The TSA directive to Banks is already 15months old. My fear is how we plan to handle corporate entities owned by the Federal Government e.g. NNPC. Will the revenue to the Federal Government be shareholder profit? This is the challenge of our revenue formula and the rent seeking Federal Government. The rise of the super permanent secretaries are here.

  • The Federal Government of Nigeria had, for at least 48 years, breached its own rules on collection and management of national revenues. If this is not enough to make want hit your bare fists on a brick wall, then you are from another
    hemisphere. THE Economic and Financial Crimes Commission has said about $20 trillion had been stolen from the treasury by leaders who had access to the nation’s money between 1960 and 2005. It is also estimated that estimated that about $20 billion oil revenue from the Excess Crude Account (ECA) from June 2013 to April 2015 has disappeared into thin air. There is no basis for the demand and the stated amount. It is a surprising that the Nigeria nation is still standing or just standing! Do you want to tell me that none of these previous governments – Abacha, Babangida, Obasanjo, Jonathan and their bent lieutenants have noticed this anomaly in the Federation Account until today? Our oil revenues have been
    paid into their private bank accounts and from there, they can dish it out as they liked. You can see why they want to stampede the President into forming his cabinet. We know that Nigerians are not easily shocked, but what this
    administration is going to unearth is going to be like a volcano – Abacha United Account of Nigeria, Babangida Trust Account of Nigeria, OBJ Chicken Federated Account of Nigeria. You can’t make this up! Let’s continue our prayers for
    President Buhari.

    • Pastor Elias Osaghae

      Mr. Osuagwu, why have you omitted Buhari from the list of past leaders that committed the blunders? Even before he became head of state in 1983, $2.8 million of Nigeria’s oil money got missing under his watch as the nation’s oil minister. Buhari was quite in the picture within the 48 years that oil money was paid in private accounts (according to you), vis-a-vis: oil minister, head of state and executive chairman of the notorious petroleum trust fund. Now, the blame of 48 years of blunder is on Jonathan 6 years administration, there’s God o o o!

      • New Nigerian

        Did you read that Buhari has declared his asset 4 times in the past 40 years? he never had a foreign account, never. So the urban legend that he put $2.8b in his London account has been fact-checked several times to be false…in case you don’t know

        • Olaolu Oke

          Nobody said he put the money in his account – the money got missing under his watch. That someone does declare his assets public does not mean he is not corrupt or a thief.

          • yinka ola

            No money ever missed as the information was found to be misleading. Am sure you were not born then. we remember when tai solarin was asked where he got the information from, he said he heard it in a bus. we should stop behaving like illiterates and base our assertions on facts.

          • New Nigerian

            So whose account did he put the money, yours? you spin logic on it’s head my friend.

          • Olaolu Oke

            What logic is that?

            First, a US accountancy firm claimed that some 2.8 billion Naira (roughly US $4 billion) had not been accounted for by the bank records of the NNPC.

            Shagari administration then inaugurated the Crude Oil Sales Tribunal of Inquiry, headed by Justice Ayo Irikefe, to investigate allegations of the N2.8 billion misappropriations from the NNPC account.

            The Irikife Tribunal, which investigated the matter did not find the allegations to be true even though it noticed some lapses in the NNPC accounts.

            Are the above not simple enough?

  • Mazi JO

    Scholarly! Everyone would start claiming they know so now but the reality is why the deafening silence all these years. In all my postings in this forum, I have continually maintained that our structures are not failing us, we are failing our structures. The way the moneybags ran our National revenue Accounting, who would have in their wildest imaginations thought that there were any semblance of Constitutional stipulations on the subject matter? Did he say since 1967, “FG has operated illegal accounts for 48 years”? Amazing and interesting! Don’t single out Gowon please for some people handled the Chancellery and the Exchequer for him at the time. Now on the resounding nationalistic reason Dr. Tunji Ogunyemi offered in your exclusive interview; attributing the operation of the ‘illegal accounts’ to “exigency and, sometimes corruption”, refers. We all agree that running of any government sometimes needed secrecy in exigencies which makes record-keeping even more imperative. At times it is not surprising money was spent from an account but it is criminal to make such spending without records. Something went wrong in our National affairs in this period. Mr. Mbamalu has pointed when it started. I think it is wise we visit on that initial period if peripherally, to infuse traction in the on going probes. When you break the initial headwinds, navigation seems to be easygoing. Long live the Republic of Nigeria.

  • PolyGon2013

    CHANGE has come indeed.

  • Ataiwrehe Chojakeme

    Nigeria is obviously not in a good state, and it’s never too late to take actions, and return the country to where she ought to be. Let’s stop the blame game, it will do us no good.

  • Chuks1972

    president Buhari knew he messed up during his 1983 to 1985 regime by operating several federal accounts and this time he is putting things right,remember if not for our senate Obasanjo wanted third tenure and from there to life president

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