How Federal Government robbed the states by Dele Sobowale

“Subsidy: FG withdraws N395bn from Excess Crude Account.” Everest Amaefule, PUNCH, May 24, 2015, p 6.

Somebody should hang for this if it occurred in China or Yew’ Singapore. But, since this is Nigeria, somebody should at least change their boutique designer outfits for “prison designer collections”. The report revealed as follows: “The Federal Government withdrew the sum of N395bn in 2013 to fund subsidy on petroleum products, the Fiscal Responsibility Commission has said.

FG-okFurthermore the Commission said: “Funds have been deployed towards payment for petroleum products subsidy and PEF (Petroleum Equalisation Fund). It is difficult to find justification for this in the Fiscal Responsibility Act 2007.” That the Federal Government of Nigeria, under President Jonathan and Dr Ngozi Okonjo-Iweala, had been robbing the states of funds had been suspected for some time.

What was lacking was the proof beyond reasonable doubt – or what crime writers will call “the smoking gun”. The search has come to an end with the release, last week, of the 2013 Annual Report and Audited Accounts of the Fiscal Responsibility Commission, FRC. Governor Amaechi of Rivers State had been the most vocal among governors with accusations of robbery against the Federal Government. The allegations have always been dismissed by the Minister of Finance as “baseless”.

With the revelation by the FRC, regarding these illegal transactions, Mrs Okonjo-Iweala now stands revealed as an individual who is also engaged in illegal activities. Amaechi has been vindicated. In fact, right now, the question is no longer whether the Federal government had been robbing and impoverishing the states; it is “how much had been stolen under Jonathan and the Minister”? Could it have been more than N395bn? There are reasons to think so – as we shall demonstrate later.

The Excess Crude Account, ECA, created by President Obasanjo and the Minister in 2004, was an illegal account from the start. But, acting with impunity and the delusion of superior knowledge, and, without consulting the National Assembly, NASS, the two opened the account. At the time, when the PDP regarded itself as invincible (we will rule for 60 years), neither the PDP-dominated NASS, nor the governors, majority of whom were PDP raised any objections.

Even ACN, Labour and APGA governors ignored this affront to their states’ interests. With sufficient funds coming in to run their states nobody foresaw the downturn in revenue which had occurred since 2014. So, what we now have is a situation where an illegal account, established by the Minister, ostensibly for the benefit of the three tiers of government is being raided by the same Minister to the detriment of the states.

If ever there is an argument for true federalism, this example had provided it. Obasanjo, with his “Father-knows best attitude” had agreed to establish that account because he felt that state governors could not be trusted to save for the rainy day. So, the Federal Government forcefully seized the funds and saved on their behalf. Apart from the self-righteousness underlying that thinking, Obasanjo forgot that he would not rule for ever.

A crooked Federal Government, with the states’ funds in its grip would do more damage than individual governors acting irresponsibly. We apparently had such a government for five years from 2010 to 2015. Now, the FRC audited account, apart from being a little late had confirmed the fears of those of us who were against the ECA from the start.

Actually, we need not have waited for the FRC report to suspect that the operation of the ECA by the Federal Government was fraudulent. Last year, when the announced balance in the account ran low, and Governor Amaechi, the lone complainant, started asking questions, $1bn additional funds suddenly showed up in the account without explanation from the Federal Government.

But, the Finance Commissioners attending the monthly allocation meeting were too intimidated to press the issue. With the FRC report, it would appear that the Federal Ministry of Finance maintains two sets of ECA books – one for the states (the false one) and another for itself (the true one). And the FG only reveals to the states what it wants to disclose. not the truth to which they are entitled.