Tuesday, 09 March, 2021

Exclusive: How Osun State Flouts NFIU Law, Diverts Local Government Funds

The state of Osun has been discovered to have disbursed local government funds it received from the Federation Account only three times in the last 14 months.

This discovery shows that the state government has been fleecing the system and flouting the Nigeria Finance Intelligence Unit law binding on all states of the federation.

A source close to the government, revealed that the state held Joint Account Allocation Committee meetings, which is meant to disburse all local government funds three times between March 2018 and June 2019.

This implies that both the preceding governments of Rauf Aregbesola and the incumbent, disbursed funds to local governments only three times in 14 months.

Asides this, the Gboyega Oyetola-led administration pays workers between the end of the second week and the beginning of the third week of the subsequent month, because it transfers federal allocation meant for both the state and local governments from the Wema Bank account where it is wired into to a Zenith Bank account.

The source went on to add that the present regime continued with the habit of paying the salaries of local government workers in June, despite a directive from the Nigeria Finance Intelligence Unit instructing all states to desist from doing so.

The source said, “June salary was paid on July 15.

“You know why they pay salaries every other month? Once the money hits JAAC account, they prepare the template and give it to the governor to approve.

“They then use the template to divert the money into a Zenith Bank account for two weeks.”

The source further estimated that the sum of money lodged in the special purpose account monthly to be in excess of N3bn on the average — this being the total wage bill of Osun in a month.

Sahara Reporters observed that from the last Federation Account Allocation disbursement update on the National Bureau of Statistics website as at press time, the Federation Account Allocation Committee, allocated N53.67bn to the 20 local governments in the state between March 2019 – being the month when allocation for February was shared in Abuja – and May 2019.

The median payment each state would have been expected to receive is N132, 994, 016.30. However, what the local governments are said to have gotten is less than 10 per cent of the actual allocation that should have come into their coffers.

“Since February last year, we have been able to properly sit for Joint Account Allocation Committee meeting only three times,” the source said.

“The first allocation given to my local government was N17m, the second was N8m now the last one was over N13m.”

The source noted that the local governments have been unable to embark on capital projects as the monies received cannot fully cover the running cost of the administrative areas.

As has been the norm before the NFIU guidelines came into force on June 1, 2019, the Osun State Government paid the salaries of local government employees and only made discretionary payments to the LG authorities after several deductions.

He further revealed that the state government pays the salaries of all local government staffs which is not supposed to be done.  

“The state government helps the local government carry out our duty by paying the primary school teachers, the health workers, in-fact, the political functionaries’ salaries,” he said.

He went on to reveal that the state had shown intent to bypass the NFIU guidelines by making payments to the local governments in bits, so that the JAAC account stays liquid, keeping the state immune to sanctions from the financial investigative body.

In one instance, the source said his local government was paid N2m and instructed to return N1.7m.

He accused the government of funding state projects such as the Youth Empowerment Scheme with local government funds.

What the NFIU guideline says

The NFIU regulation titled, ‘NFIU enforcement and guidelines to reduce crime vulnerabilities created by cash withdrawal from local government funds throughout Nigeria,’ imposes a N500,000 daily withdrawal cap on the statutory accounts of local governments. It bars the governor and banks hosting JAAC accounts from making any form of deduction from LG funds.

It further stated that defaulters are liable to face local and international sanctions such as, “likely blacklist of erring governors and the Chief Executive Officers of the affected banks; shutdown of any erring bank; and watch-list of violators in 160 countries where they cannot transact business or pay bills.”

The source said the guideline was ineffective, as it failed to mandate banks to ensure each local government receives its statutory allocation within 24 hours.

What the Osun State government said

The Osun State government has however, denied any wrongdoing, saying it is not in violation of any of the claims made by the source.

Jare Adebisi, who was appointed in January 2019 by Oyetola to head the ministry in charge of local governments, said the state was not owing monies to any local government. He however alluded to the fact that the state still pays the salaries of the LG’s. Adebisi also confirmed that the state government has an account with Zenith bank.

He said, “Zenith Bank is our official bank that is keeping local government allocation fund,’ but the source insists the Osun state JAAC account is domiciled with Wema Bank.”

Reacting to the claim of intentional salary delays, Adebisi said, “We do normally pay first week of subsequent month, maximum of second week.

“There is no time that we have had one month gap before paying salaries.”

Responding to the conduct of JAAC meetings, he said, “We send allocation every month to local governments.

“We that we are saying we are paying salary every month, salary is part of allocation now. We are not manufacturing salary from another source.”

When the reporter reminded him the question was on allocations from the Federal Government to the local governments and not salaries, he said the government has not been sending only salaries but has consistently sent “other monies that have been accruable to them”.

Some civil servants in Osun State confirmed to Sahara Reporters that they receive their monthly salary payments in the middle of the subsequent month.

They said this has been the pattern since July 2018.

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