The reported restriction of an Osun State Government account by the Economic and Financial Crimes Commission, EFCC, has raised questions over the extent of the anti-graft agency’s powers to freeze bank accounts and whether such action requires prior judicial authorisation.
The development followed an earlier allegation by Osun State Governor, Ademola Adeleke, that the EFCC planned to freeze the state government’s accounts ahead of the August 15 governorship election.
The EFCC has reportedly placed one of the state government’s accounts domiciled with First Bank on “Post No Debit” status, restricting withdrawals and other debit transactions.
The state government has since announced plans to challenge the directive at the Federal High Court.
But what does Nigerian law say about the EFCC’s power to freeze bank accounts?
What does the EFCC Act say?
Section 34(1) of the Economic and Financial Crimes Commission (Establishment) Act provides a procedure for freezing an account suspected to contain proceeds of crime.
The provision states that where the EFCC Chairman or an authorised officer is satisfied that money in an account was obtained through an offence covered by the law, the Commission may apply to a court, ex parte, for an order empowering it to freeze the account.
The same section provides that an order obtained from the court can direct the bank or other financial institution to stop outward payments, operations or transactions on the account.
This means the law does not simply confer an unrestricted power on the EFCC to freeze any account it chooses.
Rather, Section 34 establishes a process involving an application to the court before the freezing directive is issued under that provision.
What have the courts said?
The courts have previously considered disputes over the EFCC’s power to restrict bank accounts without court orders.
In Guaranty Trust Bank Plc v Joshua, the Court of Appeal considered the extent of the EFCC’s power under Section 34 of its enabling law.
The court held that the provision did not give the Commission unilateral power to direct a bank to freeze an account without complying with the statutory procedure requiring a court order.
In another case, Bose Olagunju v EFCC, the Court of Appeal held that obtaining a court order was a condition precedent to the exercise of the EFCC’s power to freeze an account suspected to contain proceeds of crime.
The court consequently held that the freezing of the appellant’s accounts without a court order was unlawful.
The position was also reflected in a 2020 Court of Appeal decision involving Savannah & Chemical Industries Limited, where the court found that the EFCC could not rely on a directive described as a “caution” to restrict an account without complying with the statutory requirements.
Does that mean the EFCC cannot investigate Osun accounts?
Not necessarily.
The power to investigate suspected financial crimes is distinct from the power to freeze an account.
The EFCC Act gives the Commission investigative powers in relation to suspected economic and financial crimes. The controversy in the Osun case is therefore not simply whether the agency can investigate the state’s finances, but whether it followed the legally prescribed procedure in restricting the account.
The courts have previously recognised that the EFCC can investigate state government finances, while disputes have arisen over the extent to which such investigations can affect the constitutional and financial operations of a state government. (The Guardian Nigeria)
What about state government accounts?
This is where the Osun dispute becomes more complicated.
The EFCC Act refers to “the account of a person” and does not expressly set out a separate procedure specifically for state government accounts.
However, courts have previously dealt with attempts by the EFCC to investigate or restrict state government accounts.
In 2019, for instance, the Federal High Court in Lagos ordered the freezing of three Lagos State Government accounts after the EFCC approached the court over an alleged N9.9 billion fraud investigation. The freezing order was therefore issued by the court following an application by the anti-graft agency.
The history of litigation involving Benue State also shows that the question of the EFCC’s powers over state finances has been contested in court.
In the Benue case, the state government challenged the EFCC’s investigation of its accounts and raised constitutional questions concerning the management and oversight of state finances.
So, can EFCC freeze Osun’s account?
On the face of Section 34 of the EFCC Act and the appellate decisions cited above, the critical issue is whether the Commission obtained the required court order before directing the restriction of the account.
If a valid court order exists, the legal position is materially different from a situation where the EFCC unilaterally instructs a bank to restrict an account without judicial authorisation.
That distinction is likely to be central to the legal challenge announced by the Osun State Government.
The state Attorney General and Commissioner for Justice, Oluwole Jimi-Bada, has already said the government will approach the Federal High Court, arguing that the EFCC can investigate the accounts but cannot freeze them without a court order.
The EFCC, as of the time of filing this report, had not publicly explained the legal basis for the reported “Post No Debit” restriction or disclosed whether it obtained a court order authorising the action.
Ultimately, the Federal High Court may have to determine whether the restriction complied with Section 34 of the EFCC Act and whether the circumstances of the Osun account justify the action taken by the anti-graft agency.
Osun Defender
