Wednesday, November 25, 2020 / 01:00PM
/ Abdulmajeed Abolaji, Aelex / Header Image Content: Aelex
Introduction
In an earlier article series1, we examined the extent
and limitation of the powers of regulatory agencies and financial institutions
to issue a directive freezing accounts of individuals that are subject to their
regulatory oversight or individuals under their investigation. To this end, we stated
that the power of regulators of financial institutions, as well as other regulatory/law
enforcement agencies, to direct the freezing of accounts of bank users is exercisable
subject to the directives of a court of law. In other words, in addition to any
law that may empower a regulator to issue a directive freezing an account, such
regulator must also obtain an order of a competent court before issuing a
freeze directive to commercial banks.
Recognising this
limitation, the Central Bank of Nigeria (the “CBN” or “apex bank”) recently obtained
an order, of the Federal High Court (the “FHC”), sitting in Abuja, to freeze 20
bank accounts linked to individuals and a Company that allegedly sponsored the
#EndSARS protest2 in Nigeria.
Despite what appears to
be compliance with the procedure for directing the freezing of bank accounts by
the CBN, controversy trailed CBN’s application as well as the order made by the
court pursuant to the Motion Ex-parte filed by the CBN.
However, it is imperative
to point out that these controversies have nothing to do with the procedure
adopted by the apex bank in directing that the 20 bank accounts be frozen. Rather,
it relates to the propriety of the court order directing the freezing of the
accounts of the individuals involved.3
To efficiently examine
the propriety or otherwise of the ex-parte order, it is important to consider
all the background facts surrounding the grant of the order vis-a-vis the facts
placed before the court by the CBN in obtaining the said order.
1.
Governor, Central Bank Of Nigeria V. Bolatito Rachael Oduala & 19
Others4
1.1. Facts
By a Motion Ex-parte dated 20 October 2020 (the “Application”), the CBN requested an order of the Federal High Court, Abuja
Division freezing the accounts of 19 individuals and 1 Company on the ground
that the funds
in the accounts might have been linked to terrorist activities in contravention of Section 13(1)(a) and (b)
of the Terrorism (Prevention)(Amendment) Act (the TPA), 2013 and Regulation
31(2)(a) and (3)(b) of the Central Bank of Nigeria Anti-Money
Laundering/Combating the Financing of Terrorism Regulations, 2013 ( “the Regulation”).
In the affidavit in support of the application
deposed to by one Aondowase Jacob on behalf of the CBN, it was averred, among
other things, as follows:
“There is a grave allegation that the defendants
are involved in suspected terrorism financing via their bank accounts in
contravention of the provisions of extant laws and regulations. The aforesaid
transactions undertaken by the defendants, using their bank accounts, can cause
significant economic and security harm to the public and the Federal Republic
of Nigeria if left unchecked.
“The applicant (CBN
Governor) is thus desirous to have the court empower him to direct the freezing
of the 20 accounts listed on the annexure to this application and all other
bank accounts held by the defendants.
“A freezing order of this
Honorable court in respect of the defendants’ accounts would also enable the
investigation of the activities of the defendants to a logical conclusion, with
a view to reporting same to the Nigerian Financial Intelligence Unit.”
Furthermore, the written address in support of the
application partly reads as follows:
“My lord, the nature of the transactions
undertaken through the defendants’ accounts are of suspected terrorism
financing in contravention of Section 13(1)(a) and(b) of the Terrorism
(Prevention)(Amendment) Act, 2013 and Regulation 31(2)(a) and (3)(b) of the
Central Bank of Nigeria Anti-Money Laundering/Combating the Financing of Terrorism
Regulations, 2013.”
1.2. Order
In his decision, Hon. Justice Ahmed Mohammed ordered
that the accounts of the 20 Respondents be frozen for an initial period of 90
days, subject to renewal upon an application by the CBN. The order was to allow
CBN conclude its investigations.
For ease of reference, the court order partly reads
as follows:
“A mandatory
order is made empowering the plaintiff/applicant to direct the head office of
the banks involved to freeze forthwith all transactions on the 20 bank accounts
listed for a period of 90 days pending the outcome of investigation and inquiry
currently being conducted by the Central Bank of Nigeria.”
“It is,
however, directed that the 90-day freezing order, when it lapses, may be
renewed upon good cause shown by the applicant. “It is also directed that any
person, whether artificial or natural, that is affected by this order may apply
to the court to have his grievance or complaint heard by the court. The suit is
adjourned till February 4, 2021.”
1.3. Other
Relevant Facts
Notably, the CBN did not disclose in the application
that the 20 bank accounts were owned by individuals and a Company that were involved
in the #EndSARS protests. Rather, the apex bank informed the court that the
funds in the accounts are of suspected terrorism financing in contravention of the
Terrorism Prevention Act and the CBN AML/CFT Regulations.
By the affidavit in support of the Application, CBN
informed the court that “There is a grave allegation that the
defendants are involved in suspected terrorism financing via their bank
accounts in contravention of the provisions of extant laws and regulations. The
aforesaid transactions undertaken by the defendants, using their bank accounts,
can cause significant economic and security harm to the public and the Federal
Republic of Nigeria if left unchecked.”
However,
the media reported that the CBN sought the freezing order against the 20
accounts after flagging them for receiving money with the narration “#EndSARS”.5 Other reports also alleged
that contrary to the narrative of the CBN, the apex bank had, prior to its
application for the court’s order, directed the freezing of the bank accounts of
persons suspected to have been involved in the #EndSARS protest.6
2.
Analysis 0f The Issues Arising from The Above
From the foregoing, there are several
issues that need to be examined in order to ascertain the propriety or
otherwise of the order freezing the accounts of the protesters. These include:
i.
Whether a Protest amounts to Terrorism under
Nigerian Law
ii.
The power of the Central Bank of Nigeria to
Apply for the Freezing Order
iii.
Propriety of the Ex-Parte Order Made by the
Court
iv.
Legality of Central Bank of Nigeria Freezing
the Accounts Before Obtaining a Court Order
v.
Options Available to the Owners of the 20 Bank
Accounts Frozen by the Ex-parte Order
2.1.
Whether a Protest amounts to Terrorism under
Nigerian Law
In its Ex-parte Application, the CBN
premised its prayers on the “allegation that the defendants are involved in suspected terrorism
financing via their bank accounts in contravention of the provisions of extant
laws and regulations.” In support of the reliefs sough in the
application, the apex bank relied on the provision of Section 13(1)(a) and (b) of the TPA and Regulation 31(2)(a) and (3)(b) of
the “Regulation. For ease of reference, Section 13(1)(a) and (b) of TPA provides as
follows:
“3(1) Any person or body corporate,
who, in or outside Nigeria:
(a) solicits, acquires, provides,
collects, receives, possesses or makes available funds, property or other
services by any means, whether legitimate or otherwise, to:
(i) terrorist organisation, or
(ii) individual terrorist, directly or
indirectly, willingly with the unlawful intention or knowledge or having
reasonable grounds to believe that such funds or property will be used in full
or in part in order to commit or facilitate an offence under this Act or in
breach of the provisions of this Act,
(b) attempts to do any of the acts
specified in paragraph (a) of this subsection
commits an offence under this Act and is
liable on conviction to imprisonment for a term of not less than ten years and
not more than life imprisonment.“
Before examining whether the above
provision empowers the CBN to file an Ex-parte Application, it is pertinent to
first examine whether the involvement of the 20 Respondents in the #EndSARS
protest amounts to an act of terrorism.
a)
What
is terrorism?
Section 40 of the TPA defined a
“terrorist” as “any
person involved in the offences under Sections 1 to 14 of this Act and includes
his sponsor“. Specifically, Section 1(3) of the TPA defined
acts of terrorism to include “an act
which disrupts a service but is committed in pursuance of a protest.”.7
From the above provision, we can say
that a protest which disrupts “services” qualifies as an act of terrorism under
the TPA. However, the TPA does not make a distinction between a peaceful
protest or violent protest; and it does not state the extent of “service
disruption” that may make a protest an act of terrorism.
To resolve this unanswered part
of the definition, recourse is to the definition of terrorism provided by Nigerian
courts.
In the case of Adamu Ali Karumi
v. Federal Republic of Nigeria8, the Court of Appeal describes
terrorism as follows:
“The gravity of the offence of terrorism which
involves the use of violence or force to achieve something, be it political or religious, is a
grave affront to the peace of society with attendant unsalutary psychological
effect on innocent and peaceful members of the society who may be forced to
live in perpetual fear. It is an offence that may even threaten the stability
of the state. The sophisticated planning
and execution of the acts of terrorism show it is an offence that requires
premeditated cold-blooded organisation. The circumstances under which such
a crime is organised calls for appropriate sentencing to deter its recurrence
by potential or prospective offenders.“
From the above, we can then surmise
that for an act of protest to amount to terrorism, such act must involve the
use of violence, force, or an act which requires premeditated cold-blooded
organisation.
b)
Was
the #EndSARS Protest a Violent Protest?
Information
available to the public reported that the #EndSARS protest was a decentralised
social movement against police brutality in Nigeria. The core demand of the
movement was the disbandment of the Special Anti-Robbery Squad (SARS), a unit
of the Nigeria Police Force with long records of abuses, including torture; extortion;
and extrajudicial judicial killings of citizens all over Nigeria.9
In the same vein, various accounts of
the protest available to the public revealed that the protesters were peaceful
in their demonstration; and all their activities were conducted in a
well-coordinated, orderly, and nonviolent manner.10
In other words, from media reports, the
#EndSARS protest was a peaceful and nonviolent protest which does not appear to
qualify as an act of terrorism under TPA.
Moreover, the Constitution of the
Federal Republic of Nigeria 1999 (As Amended) [The “Constitution”], which is the grundnorm11for all other laws in the country
clothes every citizen with the right to peaceful assembly for
the protection of their interests. To this end, Section 40 of
the Constitution provides as follows:
“Every person shall be
entitled to assemble freely and associate with other persons, and in
particular he may form or belong to any political party, trade union or any
other association for the protection of his interests“
Therefore, it appears, from the foregoing that the ground upon
which the CBN’s Application to freeze the 20 bank accounts was premised is
unfounded in law. This is because a peaceful protest (like the #EndSARS
protest) done pursuant to a right derived from the Constitution does not
qualify as an act of terrorism as envisaged under the TPA upon which the apex
bank premised it Ex-Parte Application.
2.2. The power of the Central Bank of Nigeria to
Apply for the Freezing Order
The CBN also relied on Regulation 31(2)(a) and
(3)(b) of the Regulation to justify its power to file the Ex-Parte Application
seeking the freeze order.
Meanwhile, Regulation 31(2)(a) and (3)(b) of the Regulations
provides as follows:
“31(2) where a financial institution suspects
that the funds mentioned under sub-regulation (1) of this regulation-
(a)
Are derived from legal or illegal sources but
are intended to be used for act of terrorism
It
shall immediately and without delay report the matter to NFIU12 and
shall not be liable for violation of the confidentiality rules and banking
secrecy obligation for any lawful action taken in furtherance of this
obligation.
(3) A
financial institution shall immediately and without delay; but not later than
within 24 hours
(b) Take appropriate action to prevent the
laundering of the proceed of a crime, an illegal act or financing of terrorism”
The above provision of the Regulation, particularly Sub-Regulation
(3)(b), empowers the CBN, as a financial institution13, to “take appropriate action to prevent the laundering of the proceed of a
crime, an illegal act or financing of terrorism”.
However, Sub-Regulation (2)(a) circumscribes the nature of
“appropriate action” that is expected from a financial institution. Thus, the
Sub-Regulation stated that where a financial institution suspects that funds
derived from legal or illegal sources are intended to be used for act of
terrorism, such institution should immediately report the matter to the
Nigerian Financial Intelligence Unit (NFIU), without more.
Further giving credence to the limited obligation of the CBN as a financial
institution with respect to funds suspected to be used for financing acts of
terrorism, Section 14(1)
of the TPA provides as follows:
“14(l) A financial institution or designated
non-financial institution shall, within a period not more than 72 hours, forward reports of suspicious transactions
relating to terrorism to the Financial Intelligence Unit which shall process
such information and forward it to the relevant law enforcement agency where
they have sufficient reasons to suspect that the funds –
(a) are derived from legal or illegal
sources but are intended to be used for any act of terrorism;
(b) are proceeds of a crime related to
terrorist financing; or
(c) belong to a person. entity or organisation
considered as terrorist.”
It can be gleaned from the above that the CBN’s duty, as a
financial institution, with respect to any funds suspected to be used for
financing act terrorism, is to report issues relating to such funds to the NFIU.
There is nothing in the relevant laws that empowered the apex bank to apply for
and obtain an order of court to freeze the accounts holding the funds “ntended
to be used to finance act of terrorism”, as it has done in this case.
Therefore, even when it is established that the funds in the
accounts of the 19 individuals and 1 corporate entity were funds intended to
finance terrorism activities, it is not the CBN’s place to apply for an order
freezing the accounts. Its duty herein is limited to reporting such suspicion
to the appropriate authority, which may then act according to its statutory
mandate.
2.3. Propriety of the Ex-Parte Order Made by the
Court
The Federal
High Court (Civil Procedure) Rules 2019 (“FHC Rules”) provides that where an
order is made pursuant to a Motion Ex-Parte, such order shall remain valid for
only 14 days after any person affected has applied to the court to vary or discharge
the order, unless the court, considering the interest of justice directs otherwise.
For ease of
reference, Order 26 Rule 10 (1)(2) and (3) of the FHC Rules provide as follows:
“10(1)
An Order made on motion ex parte may not, unless
the Court otherwise directs in the interest of justice, last for –
(a) More than 14 days after the party or
person affected by the Order has applied for the Order to be varied or
discharged; or
(b)
Another 14 days after application to vary or discharge it has been argued.
(2)
An application to vary or discharge an order made ex-parte may be made by the
party or person affected within 14 days after service and shall not last for
more than 14 days after the application has been argued unless the Court
otherwise directs.
(3) Where
a motion to vary or discharge an ex parte order is not taken within 14 days of
its being filed, the ex parte order shall lapse unless the court otherwise
directs in the interest of justice.”
It appears that in delivering the ruling, the court did not
consider the above provision of the FHC Rules. The court ordered that the accounts of the 20 Respondents be
frozen for an initial period of 90 days, subject to renewal upon an application
by the CBN.
It may be argued in favour of the court’s order that the decision
of the court to make the ex-parte order freezing the 20 accounts last for 290
days”, contrary to the 14 days allowed under the FHC Rules, is in exercise of
the court’s discretion to 2otherwise
direct in the interest of justice”.
However, the exercise of discretion by the court appears to run
contrary to the plethora of judicial authorities on this point as the appellate
courts have consistently held that “ex-parte orders are made for a short
duration”.14
This was exemplified by the Supreme Court’s decision in Group Danone & Anor v. Voltic (Nigeria)
Limited15where it held as follows:
”An
ex-parte Injunction, is expected to last for a very short time moreso, as the
procedure, is likely to be abused by litigants. This is why, the order, must be
very sparingly made and only when the circumstances, are urgent and compelling
such as to leave the court with no other alternative in preventing an anticipated
injury of a grave nature.”
In the same vein, the Supreme Court has also emphasised the
importance of adherence to the provisions of the Rules of Courts, when it held
as follows in Abia State Transport
Corporation & Ors. v. Quorum Consortium Ltd16:
“The
settled law is that rules of court of each court are not made for fun, but to
be obeyed. Once such rules are in place they must be adhered to and not
contravened or ignored. This is most especially in matters or procedures of
fundamental importance like in the instant case”.
Therefore, it can be surmised that the ex-parte order freezing the
accounts of the 20 Respondents for 90 days was not granted in consonance with
the FHC Rules and, by far, exceeds the short limit recognised by the courts.
Thus, the freezing order cannot be said to be appropriate in the light of
relevant laws, as the order made was not intended to last for “short duration”
as established by judicial precedent.
2.4.
Legality
of Central Bank of Nigeria Freezing the Accounts Before Obtaining a Court Order
Some of the persons affected by the ex-parte application filed by
the CBN alleged that the apex bank, had frozen their accounts before the order
was made.17
The position of the courts in
recent decisions is that a regulatory or law enforcement agency desirous of issuing
a directive freezing any bank accounts must first obtain an order of a
competent court.18 Where it fails to obtain such
order, any directive issued in this regard is a nullity and liable to be set
aside by the court.19
Therefore, assuming the prior inability of the Respondents to
access their accounts before the court order was as a result of a directive
issued by the CBN before obtaining the court’s order, such act by the CBN is
illegal and amounts to an abuse of its regulatory power. Such act may
constitute a cause of action against the CBN and any commercial bank which
complied with such directive by the CBN in the absence of a court order.20
2.5. Options Available to the Owners of the 20 Bank
Accounts Frozen by the Ex-parte Order
The options available to the owners of the 20 bank accounts frozen
by the ex-parte orders made pursuant to CBN’s Application includes the
following:
a)
Apply to vary or discharge the order
The affected
persons may apply to the court that granted the order to vary or discharge it.
This is in accordance with Order 26 Rule 9(1) of the FHC Rules which provides
that:
“Where an order is made on a motion ex-parte, any person affected
by it may, within 7 days after service of it or within such further time as the
Court may allow, apply to the Court by motion to vary of discharge it”21
b)
File
an appeal where the application to vary or discharge is refused
In the event that the court refused to discharge the order, the Respondents
may file an appeal against the refusal to vary or discharge the ex-parte orders
before the Court of Appeal.22
c)
Institute
an action for damages against the CBN and their respective commercial banks for
breach of banker- customer relationship
The Respondents
may institute an action against the CBN for exceeding its statutory mandate and
against their respective commercial banks claiming damages for breach of their
banker- customer relationship. However, this may only be possible where the Respondents
are able to establish that their accounts had been frozen by the commercial
banks before the ex-parte order was made.23
3.
Conclusion
Although, the CBN appeared to have complied with the procedure for
freezing bank accounts, the grounds upon which the apex bank obtained the order
freezing the 20 accounts appears to be faulty as it is arguable that not only
does the #EndSARS protest not qualify as an act of terrorism under the Terrorism
(Prevention)(Amendment) Act, 2013; but the apex bank also lacks the power to
bring the ex-parte application that was granted by the court.
The foregoing notwithstanding, there are remedial actions that may
be explored by the persons affected by the order in a bid to mitigate or
rectify hardship that may result. This includes filing an application to vary
or discharge the ex-parte order; filing an appeal in the event that their
application to vary/discharge is refused; or bringing an action for damages
against individual commercial banks of breach of banker-customer relationship.
Nonetheless, individual persons are advised to seek legal counsel
to address the peculiarity of their case.
Footnotes
1 Abdulmajeed Abolaji: “Post-No-Debit Alerts on
the Accounts of Customers: Limitation to the Powers of Regulatory Agencies and
financial institutions“
2 A
movement which called for disbandment of the Special Anti-Robbery Squad (SARS),
a notorious unit of the Nigeria Police Force with long records of abuses
including torture, extortion and extrajudicial judicial killings of citizens
all over Nigeria.
3 Alfred
Olubunmi: “#EndSARS: Lawyers,
activists condemn Nigerian govt. for freezing accounts of protesters“;
4 Fikayo
Olowolagba: “End SARS: Nigerians
threaten protest as court grants CBN request to freeze Rinu, others’ accounts“
5 Suit No: FHC/ABJ/CS/1384/2020
6 Chike
Olisa: “#EndSARS: CBN says funds in
frozen accounts may be linked to terrorist activities“
7 Alao
Abiodun: “#EndSARS:
Fresh protest threat over freezing of accounts“; See also William
Ukpe: “#EndSARS: Activists
petition courts to unfreeze accounts of supporters“
8 See Section 1 to 14 of TPA
for all acts that constitutes act of terrorism under the Act
9 (2016) LPELR-40473(CA). Per IKYEGH, J.C.A.
(P. 25, Paras. A-D)
10 END SARS‘; Stephanie Busari (CNN): “Nigeria’s Youth find Its
voice with the EndSARS Protest Movement“
11 Some report also revealed
that the protest was later hijacked by hoodlums. See Tobias
Sylvester: “Police Beating and
Harrasing Peaceful #EndSARS Protesters in Nyanya, Abuja“; Steve
Dede: “#EndSARS protest were
peaceful, until Nigerian Government Weaponised Violence to Crush them [Pulse
Features]“
12 See Section 1 of the
Constitution of the Federal Republic of Nigeria 1999 (As Amended)
13 Nigerian Financial
Intelligent Unit
14 CBN appears to qualify as a
financial institution under the CBN AML/CFT Regulation and the T by virtue of Regulation 132 of “the Regulation”
which defined financial institution to include any person or entity who
conducts trading in-foreign exchange, etc. Also, by Section 40 of the TPA which
defines Financial institution as any institution or persons regulated by any of
the enactments specified in the schedule to the Act, including the Central Bank
of Nigeria Act (the “CBN Act”)-the Act regulating the CBN.
15
See
Per. Ogbuagu, JSC in Group Danone & Anor v. Voltic (Nigeria) Limited (2008)
LPELR-1341(SC) and Per PATS-ACHOLONU, J. C. A. in Global Medical Care (UK) Ltd.
& Ors. V. Medicair (West Africa) Ltd. & Anor. (1997) LPELR-6296(CA) (P.
11, paras. B-D)
16 Supra.
17 (2009) LPELR-33(SC) Per
Mukhtar, J.S.C. (P.26, Paras.B-C); See also Okorocha v. PDP & Ors (2014) LPELR-22058(SC) Per OGUNBIYI, J.S.C
18 Alao
Abiodun: “#EndSARS: Fresh
protest threat over freezing of accounts“; See also William
Ukpe:”#EndSARS: Activists
petition courts to unfreeze accounts of supporters“
19 Abdulmajeed Abolaji: “Post-No-Debit Alerts on the
Accounts of Customers: Limitation to the Powers of Regulatory Agencies and
financial institutions“
20 Blaid Construction Limited
& Mrs. Ochuko Momoh v. Federal Republic of Nige ria FHC/ABJ/CS/132/2019
21 See Blaid Construction
Limited & Anor. v. Access Bank Plc.
22 See also Order 26 Rule 10(2)
of the FHC Rules; Abary v.
Talle & Anor (2016) LPELR-40805(CA)
23
See Section 240 of the Constitution
of the Federal Republic of Nigeria 1999 (As Amended).
24
See Blaid Construction Limited
& Anor. v. Access Bank Plc.
Related News
1.
#EndSARS: Federal Government
Condemns CNN, DJ Switch and Local Media Houses
2.
#EndSARS – Class Struggle Vs
Ethnic Conflict – LBS Executive Breakfast Session – November 2020
3. #EndSARS: The Aftermath
4.
#EndSARS: An Opportunity To
Deepen Insurance Penetration In Nigeria – Ekerete Ola Gam-Ikon
5.
#ENDSARS Events and the Impact
on the Insurance Industry
6.
#EndSARS: The State of The
“Revolution”
7.
NBC Fines Arise TV, AIT and
Channels TV Over #ENDSARS Protest Coverage
8.
The #ENDSARS Protests: A Fundamental Lesson in
Democratic Governance
9.
#ENDSARS: President Buhari to
Address the Nation by 7pm
10. NBA Condemns the Killing of
Peaceful #ENDSARS Protesters in Lagos by the Nigerian Military
Source: www.proshareng.com
