The Executive Director, Initiative for Grassroot Advancement In Nigeria, (INGRA), Hamza Aliyu has said that the Kogi state government lacked the powers to unilaterally freeze the accounts of the local governments, being a different tier of government.
The ED who was reacting to the directive by the state government freezing all accounts belonging to the Kogi state government and Local councils said, the order on the face of it does not seem to be out of place considering the fact that a new government will be sworn in on the 27th January 2024.
He added that it would seem a proactive move to prevent any “unforeseen tampering with Government funds” before the new administration takes over. A rather protective and preemptive move.
On Thursday November 23rd 2023, The Kogi State Government through a circular signed by the Honourable Commissioner of Finance, Budget and Planning, ordered all financial institutions to Freeze all State Government run accounts.
The order further went on to also order for the Freezing of “All Local Government Accounts” including “Cancellation Of All Standing Orders And Instructions”.
“This order on the face of it does not seem to be out of place considering the fact that a new government will be sworn in on the 27th January 2024. It would seem a proactive move to prevent any “unforeseen tampering with Government funds” before the new administration takes over. A rather protective and preemptive move.
“However, the question to be asked is does the State Government have the powers to FREEZE accounts belong to other tiers of government or other arms of government? And what does this FREEZING mean for the Kogi Workers, Kogi State House of Assembly and the Judiciary? Will their salaries be affected?
“There are different government agencies empowered by law to freeze bank accounts, such as the Central Bank of Nigeria, Economic and Financial Crimes Commission (EFCC) and other anti-graft agencies, however due legal process must be followed for the act to be lawfully done.
Order of Court
The Court of Appeal has in the recent case of Polaris Bank Ltd V. Yayamu Global Services Ltd & Anor (2022) held that it is settled and sacrosanct that for a bank to freeze, place a caution or any form of restraints on its customer’s account, there must be a Court order.
Doing otherwise will amount to the bank taking the laws into its own hands. See the case of GTB v. Registered Trustees of Network of People Living with HIV AIDS in Nigeria (NEPWHAN) (2021)
Duty of the Bank
The bank is estopped from feigning ignorance or claiming that it had no duty to confirm if the directive to freeze an account is made pursuant to a courts order.
“In Guaranty Trust Bank PLC v. Odeyemi Oluyinka Joshua (2021), the Court of Appeal held that the bank must ensure that there is an order of Court before it proceeds to freeze the account of any person.
The State can give an order freezing its own accounts, that is its rights. But freezing the accounts of the Local Governments which under Section 7 of the Nigeria Constitution As Amended, is clearly not within the powers of the State Government.
We call on the Kogi State House of Assembly to immediately look into this order with a view to assessing its worthyness and constitutionality so as not to put the State into a constitutional crisis.
