The unconstitutionality of the Unclaimed Funds Trust Fund

Nigeria is undergoing an economic and fiscal crisis. This is a product of decades of mismanaging the national economy by successive governments. The mismanagement has manifested in the inability to invest available resources in a sustainable manner, diversify and transform the economy from overreliance on crude oil, develop human capital and reduce corruption. At no time in recent memory has the economic crisis been so dire compared to what we have witnessed in the last five years. There have been two recessions and an economy that grew at less than the population growth rate.

In a period like this, with declining government revenue, increasing public indebtedness and growing infrastructure deficit, the government needs to look for credible ways of funding public expenditure. Enter the Finance Act 2020, its Crisis Intervention Fund and a sub-fund called the Unclaimed Funds Trust Fund. First, Nigerians need to be brief on the history of the 2020 Finance Act. It was an Act enacted with unimaginable speed, clinical efficiency and where the National Assembly appeared to be working from the answer to the question. The public hearing was advertised in national newspapers on a Tuesday for the hearing held on a Thursday and by the following Monday, the Senate committee had already prepared a report in favour of the bill and the Senate in plenary voted to pass the bill the same Monday. Unprecedented speed! It bears interrogating the legality and propriety of the Unclaimed Funds Trust Fund.

The Unclaimed Funds Trust Fund provides that:“From the commencement of this Act, any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the Unclaimed Funds Trust Fund”. The proviso is that this provision shall not apply to bank accounts owned or belonging to the Federal Government, state government or local government or to any ministry, department or agency of government. The Act further provides that such “unclaimed dividends or unutilised amounts in a dormant bank account transferred to the Unclaimed Funds Trust Fund shall be a special debt owed by the Federal Government to the shareholders and dormant bank account holders respectively and shall be available for claim, together with the yield thereon by the shareholder or bank account holder at any time pursuant to the perpetual trust”.

This Trust Fund is created subject to S.44 (1) and (2) (h) of the Constitution of the Federal Republic of Nigeria 1999 as amended. Banks and companies are under obligation at the pain of punishment of a fine not less than five times the amount of the money in question to comply with this “law”. The first point to note is that what is at stake is private property, private money in bank accounts which have gone dormant and dividends which have not been claimed. Dormant accounts can be reactivated by their owners or legal beneficiaries in the event the owner is no more and the same can be stated of unclaimed dividends. The second is that private property by S.44 (1) of the Constitution cannot be compulsorily acquired without the payment of adequate compensation and the owners have the opportunity of access to a court or tribunal to determine their claim and interest in the property. The third point is while the Act seeks to rely on S.44 (2) (h) which states that nothing in subsection (1) of this section shall be construed as affecting any general law relating to trusts and trustees, it also states that the “unclaimed dividends or unutilised amounts in a dormant bank account transferred to the Unclaimed Funds Trust Fund shall be a special debt owed by the Federal Government to the shareholders and dormant bank account holders respectively”. Pray, do you create a debt by legal fiat, without the consent of the owners of money to be “borrowed”. A debt situation is created by the consensus of the lender and a proposed debtor and the terms are generally agreed before the lender parts with the debt sum. It is not the practice in any part of the world and it does not accord with common sense and reason that the debtor sets the terms for “borrowing” money from the creditor. Where are the terms for repayment? To be set by the debtor after the debtor has taken possession of the creditor’s money! This is exactly what this Act seeks to do by the foregoing provisions.

Can the executive and the legislature in good conscience come under the protection of the law of trusts? Generally, it is accepted that atrust is created by a settlor, who transfers title to some or all his property to a trustee, who then holds title to that property in trust for the benefit of the beneficiaries. Can a person, entity or government that has no iota of claim as owner or co-owner of a property create a trust over the property of another? Can the government constitute itself into a trustee of a property that belongs to citizens? Can a transaction be a trust as well as a creditor-debtor relationship at the same time? The answers to these posers are clearly in the negative. Trusts are created in an atmosphere of integrity and managed with utmost good faith which is not the case in this unholy transaction. A party (government) with the sole intention of grabbing the property of another cannot be the initiator and creator of a trust while at the same time appointing himself the trustee.

The Act did not create any trust known to law as to make this Unclaimed Funds Trust Fund to come under S.44 (2) (h) and the entire attempt is illegal and unconstitutional. Nigeria is broke and its leaders have refused to adjust to this reality and cut down waste, reduce corruption and manage available resources in a sustainable way while uniting the nation in the struggle for economic growth and development. Rather, leadership at the federal and other levels are behaving like they have another country to escape to after ensuring the economic, social and political collapse of Nigeria.

This unholy property grabbing Act needs to be challenged in a court of law and through all legitimate means and eventually thrown to the dustbin of history. The Act is a full manifestation of economic dictatorship, brazen violation of the right to private property and full circle return to dictatorship. Fundamental rights like the right to free speech, personal liberty and freedom of opinion are already under intense threat in Nigeria; if we allow our properties to be taken by fiat by rulers who do not see themselves as accountable to anyone, we will regret our docility when full blown dictatorship is restored.

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The unconstitutionality of the Unclaimed Funds Trust Fund

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