1st November, 2011
Former Governor of Lagos State and leader of Action Congress of Nigeria, ACN, Asiwaju Bola Ahmed Tinubu has joined the growing number of prominent Nigerians kicking against the establishment of Sovereign Wealth Fund (SWF) by President Goodluck Jonathan.
Tinubu in a statement today said that the SWF as structured by President Jonathan is illegal because it violates the constitutional provisions concerning the allocation of revenue to the three tiers of government and improperly confiscates funds meant for state and local government.
According to Tinubu, SWF as envisioned by President Jonathan is a further attemp to change the balance of federalism in the country by giving the Federal Government practical ownership and control of funds intended for the states and local governments.
“The SWF is illegal because it violates the constitutional provisions concerning the allocation of revenue to the three tiers of government. In effect, the SWF improperly confiscates funds meant for state and local government to use these funds for purposes determined solely by bureaucrats hired by the Federal Government. It gives too much latitude to the ‘Authority’ established to administer it. The structure lacks transparency and this lack of openness will encourage malfeasance and the misuse of the funds,” he said.
Condemning the structure of SWF, Tinubu said: “Aside from its constitutional flaws, the operational anatomy of the SWF reveals a scandal in waiting. The law gives too much power and latitude to the SWF ‘Authority’ to invest funds and to borrow. There is too little transparency and oversight. The SWF will become a den of corrupt practice.
” Regarding the Infrastructure Fund, the Authority is instructed to devise its own infrastructure plan but coordinate to the extent possible with appropriate federal and state agencies involved in infrastructural development. This sounds good in theory. In practice, it will result in nothing but confusion and incoherent overlap. In practice, the Authority will do its thing and any harmony with what other government agencies are doing will be by pure chance.
“On the Stabilization Fund, the Finance Minister has the unilateral right to withdraw from the Fund if the actual quarterly federal revenues fall below a certain point. This should not be a unilateral decision. Also the acute inexactness in how the Federal Government calculates actual revenue means this provision can be manipulated particularly when there is nothing that requires the Minister to detail how the funds will be used.
“As with most laws we pass, this law seems more interested in setting up an unrestrained bureaucracy than it seems interested in the substance of the work that bureaucracy is to perform. Consequently, the Authority can hire unlimited asset managers, advisors and consultants and no maximum cap is placed how much can spend on these outsiders in a given year. This will encourage abuse. The SWF will become a place to hire political cronies and distribute political favours. As such, it will bankrupt the Fund that was allegedly intended to enrich Nigeria.”
Tinubu further argued that the SWF insults the constitution as did its predecessor, the Excess Crude Account.
“The excess crude account disrespected the constitution because it sequestered funds rightfully due the states. The SWF perpetuates this constitutional infraction. Those who will benefit from the creation of this fund seek to convince us that it will bolster Nigeria’s financial standing.
“Because we are a pliable citizenry that does not regard the rule of law as we should, we are easily fooled into thinking the uncertain financial benefits claimed by SWF supporters should outweigh the clear violation of the constitution the SWF poses.
“We should inquire of ourselves when was the last time the obvious abrogation of the constitution ever benefitted the people? The answer is never. The SWF will be no exception.”
He called for either the scrapping or modification of the fund.
“SWF must be scrapped or substantially modified. I am not opposed to an SWF. Properly established, it can be useful. If the Federal Government wants to establish a SWF funded from a portion of its own revenue allocation, it may do so.
“This would be a proper exercise of federal authority. Those states wanting to participate can join as well. Even there, the current structure of the SWF needs to be amended so that its operations are more transparent and as made to be more prudent.”
By Henry Ojelu