The Supreme Court has unanimously dismissed a legal challenge brought by Nigeria’s 36 state governments and the Nigeria Governors’ Forum (NGF) against the federal government’s management of recovered looted funds, dealing a significant blow to the states’ efforts to gain access to billions of naira in recovered assets.
A seven-member panel of the apex court ruled that the case was improperly instituted, effectively ending the governors’ attempt to compel the federal government to share recovered loot through the constitutionally established Federation Account. The lead judgment, prepared by Justice Chidiebere Uwa and delivered by Justice Mohammed Idris, held that the plaintiffs had wrongly invoked the court’s jurisdiction in their constitutional challenge.
The governors had initiated the legal action to challenge what they described as the federal government’s systematic diversion of recovered stolen assets from the Federation Account, which is designed to distribute national revenue among all tiers of government. Their complaint centered on the alleged misappropriation of massive amounts of recovered wealth spanning a six-year period from 2015 to 2021.
According to the plaintiffs’ claims, the federal government failed to remit over N1.8 trillion in recovered cash into the Federation Account during the specified period. Beyond the cash component, the states alleged that 167 properties, 450 vehicles, 300 trucks with their cargoes, and 20 million barrels of crude oil collectively valued at over N450 billion were also diverted from the constitutionally mandated distribution mechanism.
The state governments argued that instead of depositing these recovered assets into the Federation Account for equitable distribution among federal, state, and local governments, the funds were channeled into alternative accounts including the Consolidated Revenue Accounts (CRA) and other accounts not recognized by the Nigerian Constitution.
Central to the governors’ legal argument was their contention that the federal government’s use of specialized accounts for managing recovered assets violated constitutional provisions. They specifically challenged the Asset Recovery Account and Interim Forfeiture Recovery Account, describing these mechanisms as illegal instruments that allowed the federal government to bypass constitutional requirements for revenue sharing.
The plaintiffs maintained that the Asset Recovery Regulation itself was unconstitutional, arguing that it provided a framework for the federal government to unilaterally control and apply recovered funds without regard for the rights of other tiers of government. They contended that this arrangement undermined the federal structure of governance and deprived states and local governments of their constitutional entitlements.
Drawing on multiple constitutional provisions, the governors cited sections 162(1), 162(10), and 80 of the Constitution, alongside Section 2 of the Finance (Control and Management) Act of 1958, to support their argument that all proceeds from forfeited and recovered assets constitute national revenue. They insisted that such funds must be paid into the Federation Account for distribution according to established formulas.
The state governments sought comprehensive relief from the Supreme Court, including an order compelling the federal government to remit all allegedly diverted funds and assets to the Federation Account. They also requested that the court direct the federal government to produce a detailed accounting of all recovered assets that had not been deposited in the constitutionally mandated account.
Additionally, the governors sought an order directing the Revenue Mobilisation Allocation and Fiscal Commission (RMFAC) to develop a framework for the equitable distribution of recovered assets among the three tiers of government, ensuring that future recoveries would be shared in accordance with constitutional principles.
However, the Supreme Court’s decision to dismiss the case on jurisdictional grounds means that the substantive issues raised by the governors regarding the management of recovered looted funds will not receive judicial examination. The court’s refusal to entertain the suit effectively validates the federal government’s current approach to managing recovered assets and halts the governors’ push for judicial oversight of asset recovery operations.
The ruling represents a significant victory for the federal government, which has maintained that its asset recovery mechanisms are legally sound and necessary for effective management of recovered stolen wealth. The decision allows the federal government to continue utilizing its existing frameworks for handling recovered assets without interference from the judiciary.
For the state governments, the Supreme Court’s decision closes a potentially lucrative avenue for accessing billions of naira in recovered funds that they argued rightfully belonged to all tiers of government. The dismissal of their case means that states will continue to rely on existing revenue allocation formulas without benefiting from the substantial assets recovered through anti-corruption efforts.
The judgment also has broader implications for Nigeria’s federal structure and the ongoing debate over revenue sharing arrangements between different levels of government. The Supreme Court’s decision effectively settles, at least for now, questions about how recovered stolen assets should be managed and distributed within Nigeria’s federal system.
