Commission Sues Govt.

Commission sues govt over alleged illegal deduction of N700 billion
From Lemmy Ughegbe, AbujaA JUDICIAL resolution of some deductions made from the Federation Account by the Federal Government is being sought by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).

In a suit filed against the Attorney-General of the Federation and three agencies of the Federal Government yesterday in Abuja, the RMAFC alleged the illegal deduction of about N700 billion from the Federation Account was disobedience of President Olusegun Obasanjo’s clear directives.

The defendants are the Federal Ministry of Finance, the Nigerian Customs Services (NCS) and the Federal Inland Revenue Service (FIRS). According to the commission, the alleged illegal deductions have been going on since 2005 and have continued till date.

The RMAFC wants the agencies to not only stop the alleged deductions, but also refund the sums already paid out.

The commission also wants judicial interpretations on whether the first to the fourth defendants can withdraw from the Federation Account solely for federal projects, when the fund is jointly owned with the states and local councils.

The “huge sums”, according to RMAFC, were deducted by the second to the fourth defendants, with the alleged complicity of the first defendant, to fund several projects, which include the National Integrated Power Plants and the Nigerian Railway Corporation (NRC) Project.

In an originating summons, the commission also questioned the constitutionality of imposing the Value Added Tax (VAT) on the Federation Account, and urged the court to determine the following questions:

First, whether having regard to section 7(6), sections 80(3), 162(3) and 165-167 and Item A (1) (a) – (iv) of Part 11 of the Second Schedule of the Constitution of the Federal Republic of Nigeria 1999, the first and second defendants are entitled to deduct monies directly from the Federation Account running into billions of dollars and naira for any of the following:

• National Integrated Power Plants, for which over $ 3.4 billion is already deducted;

• Nigerian Railways Corporation Project, for which over $250 million is already deducted;

• Paris and London Club debt’s percentage commission and payments, for which over $13 billion is already deducted;

• N13.7 billion naira monthly direct deduction from the Federation Account under “ALGON-Assisted” health scheme;

• Seven per cent monthly deduction from the Federation Account as cost of collection of revenue in favour of the Nigerian Customs Service, with the sum of over N40 billion already deducted; and

• Four per cent monthly deduction from the Federation Account as cost of collection of revenue in favour of Federal Inland Revenue Service, with the sum of over N20 billion already deducted.Second, whether having regard to sections 80(3), 162(3) and 165-167 of the 1999 Constitution and having further regard to the decision of the Supreme Court in Attorney General of the Federation. vs. Attorney General of Abia State & 35 others (2002) 6 NWLR (764) 542, the monthly direct deductions from the Federation Account for the above named projects were not illegal;

  Third, whether having regard to section 80(3) and paragraph A of Part 11 of the Second Schedule of the nation’s constitution, the defendants can deduct funds directly from the Federation Account without an enabling Act of the National Assembly;

• whether having regard to section 7(6t section 163 (1) -’(6) of the Constitution, any tier of government or any government agency can take or receive a loan from the Federation Account or conversely direct or instruct that monies be deducted on its behalf directly from the Federation Account for any purpose whatsoever or charge its debt on the Federation Account;

• whether having regard to section 162(3) of the constitution, the third and fourth defendants can be direct beneficiaries from the Federation Account, not being federal, state or local governments;

• whether having further regard to section 162(2) of the constitution, the principle of derivation can apply to revenue collected by the third and fourth defendants, such not being natural resources;

• whether having regard to section 165 of the constitution, cost of collection of revenue ought not to be charged on the Consolidated Revenue Fund or other funds, such as the VAT Pool Account rather than on the Federation Account; andWhether it does not amount to double-charging for the fourth defendant to draw cost of collection both from the VAT Pool Account to which the Federal Government is entitled to 15 per cent, and then directly from the Federation Account?

  Arising from the questions above, the plaintiff claims against the defendants jointly and severally as follows:

• a declaration of the Honourable Court that having regard to section 7(6), sections 80(3), 162(3) and 165-167 and Item A (1) (a) – (iv) of Part 11 of the Second Schedule of the constitution, the first and second defendants are not entitled to deduct monies directly from the Federation Account running into billions of dollars and naira for the projects.

• a declaration of this Honourable Court that having regard to sections 80(3), 162(3) and 165-167 of the Nigerian constitution, and having further regard to the decision of the Supreme Court in Attorney-General of the Federation vs. Attorney General of Abia State & 35 Others (2002) 6 NWLR (764) 542, the monthly direct deductions from the Federation Account for the named projects.

• a declaration of this Honourable Court that having regard to section 80(3) and paragraph A of Part 11 of the Second Schedule of the constitution, the defendants cannot deduct funds directly from the Federation Account without an enabling Act of the National Assembly;

• a declaration of this Honourable Court that having regard to section 7(6), section 163 (1) – (6) of the constitution, no tier of government or an agency can take or receive a loan from the Federation Account or conversely direct or instruct that monies be deducted on its behalf directly from the Federation Account for any purpose whatsoever or charge its debt on the Federation Account;

• a declaration of this Honourable Court that having regard to section 162(3) of the constitution, the third and fourth defendants cannot be direct beneficiaries from the Federation Account, not being federal, state or local governments;

• a declaration of this Honourable Court that having further regard to section 162(2) of the Constitution of the Federal Republic of Nigeria 1999, the principle of derivation cannot apply to revenue collected by the third and fourth defendants, such not being natural resources;

• a declaration of this Honourable Court that having regard to section 165 of the Constitution of the Federal Republic of Nigeria, 1999, cost of collection of revenue may be charged on the Consolidated Revenue Fund or other funds, such as the VAT Pool Account but not on the Federation Account;

• a declaration that it amounts to double-charging for the 4th Defendant to draw cost of collection both from the VAT Pool Account to which the Federal Government is entitled to 15 per cent and then directly from the Federation Account;

• an order of injunction by this Honourable Court restraining the Defendants from any such further direct deductions from or charges on the Federation Account;

• an order of this Honourable Court commanding the Defendants to refund and return all such unconstitutionally deducted funds or charges running into several Billions of Dollars and Billions of Naira back to the Federation Account.”A 20-paragraph affidavit was filed in support of the originating summons and was deposed to by the RMAFC’s Head of Legal Department, Alhaji M. A. Garbati. It states, among others:

• “that the plaintiff is the monitor and umpire of the Federation Account, and has responsibilities assigned to it by the nation’s constitution and by the Revenue Mobilisation Allocation and Fiscal Commission Act No. 49 of 1989;

• “that the second defendant has been making direct deductions from the Federation Account in respect of National Integrated Power Plants, Nigerian Railways Corporation Project, Paris and London Club Debt Commission, and huge monthly deductions in the name of cost of collection of revenue in favour of the Nigerian Customs Service and the Federal Inland Revenue Service;

• “that from October 2005 to November 2006, more than $13 billion had exited from the Federation Account for the Paris and London Club payments, and annexed herewith as Exhibit “C” is a certified true copy of the extract of the breakdown of the said payments;

• “that the sum of $250 million has already been withdrawn from the Federation Account as part-payment for the Nigerian Railways Corporation Project, and annexed herewith as Exhibit “D” is a certified true copy of the extract of the payment.

• “that the sum of N 13.7 billion is directly deducted monthly from the Federation Account under a project known as the ” ALGON-Assisted” Health Scheme, and a certified true copy of the extract for the payments for February 2007 and March 2007 are annexed herewith as Exhibit “E”;

• “that huge sums running into billions of naira are directly deducted from the Federation Account monthly as seven per cent and four per cent cost of collection of revenue in favour of the Nigerian Customs Service (herein the third defendant) and the Federal Inland Revenue Service (herein the fourth defendant) respectively;

• “that from January 2005 to April 2006, the sum of N18,873,836,463.20 was deducted in favour of the third defendant;

• “that from January 2005 to April 2006, the sum of N8,787,512,769.30 was deducted in favour of the fourth defendant. That apart from the above, the fourth defendant for the same period, was the beneficiary of the sum of N17,568,245,683.62 from the Value Added Tax (VAT), bringing to a total of N26,355, 758,443.92 received by the 4th Defendant within the said period;

• “that by a letter dated May 3, 2007, the fourth defendant provided information on the funds collected by it as cost of collection from January 2005 to March 2007, which it put as the sum of N19,391,008,459.87 and further the sum of N19 billion as Value Added Tax (VAT) for the same period. The said letter is annexed herewith as Exhibit “F”;

• “that consequently, the President set up a committee headed by the first defendant to examine the matter, and the said committee met on August 1, 2005, and the certified true copy of the minutes of the said meeting is annexed herewith as Exhibit “N”.

• that on August 12, 2005, the President wrote to the plaintiff, confirming that the second defendant has been directed to uphold the provisions of the constitution on the matter, and a certified true copy of the letter is annexed herewith as Exhibit “P”.

• the plaintiff further by a letter dated August 18, 2005 drew the attention of the Chief of Staff to the President to the continued deductions from the Federation Account, and the reasons for its opposition to same, and the said letter is annexed herewith as Exhibit “Q”

• that the plaintiff further by a letter dated November 17, 2005 and addressed to the second defendant drew its attention to the continued unconstitutional deductions, urging it, to stop the deductions and to arrange with the National Assembly for incorporation into the budget; the said letter is annexed herewith as Exhibit “R”; and

• “that the above notwithstanding, the defendants have continued to deduct the said seven per cent and four per cent monthly from the Federation Account as cost of collection.”