The Minority Whip in the House of Representatives, Honourable Femi Gbajabiamila (AC Lagos) has dragged the Governor, Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi before a Federal High Court over the insistence of the apex bank that it had powers to inject funds into ailing commercial banks without due authorisation and appropriation of the said funds by the National Assembly.
This comes barely one week after the Senate endorsed virtually all the actions of the Central Bank of Nigeria on the crisis rocking the banking sector. Also joined in the suit is the Attorney General of the Federation and Minister of Justice, Chief Michael Aondoakaa. The Central Bank had in the wake of the crisis sacked the management of Union Bank, Oceanic Bank, Afribank, Intercontinental Bank and Finbank and infused the sum of N420billion into the five banks that the apex bank said lacked adequate liquidity ratios compared to their obligations.
In the second batch the apex bank similarly sacked the management of three more banks which it said were financially impaired and infused the sum of N200billion into the three banks.
Gbajabiamila, a constitutional lawyer representing Surulere 1 Federal Constituency had openly criticised the CBN for alleged breaches of due process and sidelining of the parliament on the actions.
According to him, he has initiated this civil proceedings in his private capacity because of the need for a judicial interpretation of the powers and limitations of the apex bank in the issue of bailout funds.
In specific terms, Gbajabiamila is seeking the courts determination of the following questions:
“Whether the Constitution of the Federal Republic of Nigeria 1999authorises or otherwise empowers the 1st and 2nd
Defendants/Respondents (CBN and Sanusi) or any of their privies including the 3rd Defendant/Respondent (Aondoakaa) to raise money by printing and unilaterally spending the money so raised in their exclusive discretion without submitting the same to the National Assembly for Appropriation or otherwise obtaining the approval of the National Assembly.
“Whether the Central Bank of Nigeria Act authorizes or otherwise empowers the 1st and 2nd Defendant/Respondent or any of their privies , incluing the 3rd Defendant/Responent to raise money by printing and unilaterally spending the money so raised in their exclusive discretion without submitting the same to the National assembly for Appropriation or otherwise obtaining the approval of the National Assembly.
“Whether the Banks and Other Financial Institutions Act authorizes or otherwise empowers the 1st and/or 2nd Defendant /Respondent or any of their privies , including the 3rd Defendant /Respondent to raise money by printing and unilaterally spending the money so raised in their discretion without submitting the same to he National assembly for Appropriation or otherwise obtaining the approval of the National Assembly.”
The plaintiff is seeking a declaratory order of the Federal High Court on the actions of the Central Bank of Nigeria if the answers to the questions raised in the originating summons are in the negative.
Gbajabiamila had in the heat of the controversy accused the Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi of misinterpreting the laws when he argued that the CBN Act empowered him (Sanusi) to raise the funds and inject them into the banks without legislative approval.
Gbajabiamila acknowledged that while the CBN had taken some key steps to address the rot in the banking sector, he should have borrowed a leaf from the recent experiences of bank regulators in the United Kingdom and the United States of America . He described the argument of Sanusi that the money was printed by the Central Bank of Nigeria and was not withdrawn from the Consolidated Revenue Fund of the Federation and therefore did not need to seek approval from the National Assembly as esoteric and untenable. He also dismissed the argument of the CBN that the fund was a loan and not a bailout, stating that the approval of the National Assembly was a sine qua non no matter the nomenclature, shape or form of such a fund being injected into the banks to save them from collapsing.
Gbajabiamila said the constitution does not make a distinction between a bailout or a loan, neither does it restrict the withdrawal stipulated to a particular type.
“It is not a mistake or error of judgment that two of the most advanced democracies in the world, the United States and the United Kingdom which bailed out their ailing banking industry with 700 billion dollars and 500billion pounds respectively did so only with legislative and constitutional imprimatur. Let it be clear however that in both countries and others around the world, the bail out was for a specific purpose , that is, the extension of credit facility so as to stimulate and jump start the economy.
“In the US , the resulting bailout was effected by an Act of Congress known as the Emergency Economic Stabilisation Act 2008 . The Act even established a separate congressional oversight committee to monitor how the money given was spent. In the UK , Parliament authorized the bailout through the creation of the Bank Recapitalisation Fund. It is important to note that both central banks, the Federal Reserve Bank (US) and the Bank of England (UK) enjoy a degree of autonomy and independence the Central Bank of Nigeria does not enjoy. This point only serves to underscore the recognition by the US and UK Central Banks of the importance of securing legislative approval in money matters despite their autonomy,” he said.
The 1999 Constitution, Chapter 5 Section E titled “Powers and Control over Public Funds” stipulates that: “No monies shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorized by an Act of the National Assembly” while Section 80 (4) states that : “No moneys shall be withdrawn from the Consolidated Revenue Fund or ANY OTHER PUBLIC FUND of the Federation except in a manner prescribed by the National Assembly.” Gbajabiamila also argued that democracies around the world recognise, the absolute and long standing doctrine of checks and balances in the running of a democratic government, adding that though the CBN Governor has awesome powers under the CBN Act, they stop short at spending unilaterally and without legislative approval. The CBN Governor, he said, has the right to print money under the CBN Act but the money once printed automatically and by operation of law becomes public funds held in trust for Nigerians and subject to the provisions of the constitution as they relate to public funds.
Gbajabiamila maintained that there was no inconsistency between the Constitution and the CBN Act. According to him, while the CBN Act gives the Governor the power to disburse funds , the Act presupposes that the disbursement of those monies must have been preceded by legislative or parliamentary approval as stipulated in the Constitution.