04 Oct THE ORDER OF THE FEDERAL HIGH COURT ON BVN: MY TAKE.
THE ORDER OF THE FEDERAL HIGH COURT ON BVN: MY TAKE. One of the beauties of democracy is the fact that it continues to throw up issues that tickle our intellectual fancy and allows us to think outside the box. The recent order of My Lord, Justice Nnamdi Dimgba (Ph. D) of the Federal High Court onBVN is the latest of such issues that have generated divergent views amongst lawyers on different fora, the arguments have been diverse and indeed interesting. My Take: As lawyers, our duty is to state the law as it is even where there is a clear legal hiatus. I will therefore address this issue from different perspectives as adumbrated below: 1. OWNERSHIP OF MONEY IN THE BANK: An understanding of the simple, but technical question of “who is the owner of the money in a bank account’’ is fundamental in addressing whether or not the Court was justified in making an order that affects over 46 million account holders in Nigeria. As a student of the law of banking at the faculty of law Ahmadu Bello University Zaria, I was shocked beyond words, when Professor Goldface Irokalibe, told me during one of our lectures on the relationship between a Banker and a Customer that “my money” in my banker account belongs to the bank and I am only entitled to it upon the making of a demand. Incredible, but that is the law, the monies in all those frozen account, technically belongs to the bank and not the account holders who kept them there. This is because the law had long been settled since 1848 (over 200 year ago) in the notorious case of FOLEY .v. HILLS (1848) 2 .H.L. Cas 28; 9 ER 1002, where Lord Cottenham L.C stated the law in a most brutal form thus: “Money when paid into a bank, ceases altogether to be the money of the principal, it is then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it… The money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable; to the principal, if he puts it into jeopardy, if he engages in ahazardous speculation; he is not bound to keep it, or deal with it, as the property of his principal, but he is of course answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands. That has been the subject of discussion in various cases… That being established to be the relative situations of banker and customer, the banker is not an agent, or factor, but he is a debtor”. The case of FOLEY .v. HILL (supra) therefore laid to rest the question of the relationship between a Banker and Customer by stating unequivocally that the relationship is simply that of a “debtor” and “creditor”. The above authority has been applied in a long line of authorities in Nigeria, it will suffice for present purposes to refer only to a few of such authorities where this principle has been stated and re-stated. Thus, in AKWULE .v. R (1963) 1 ALL NLR. 285 and OFFICIAL RECEIVER AND LIQUIDATOR .v. MOORE (1959) LLR 46 the Nigerian Supreme Court and the High Court had no difficulty at all in invoking and applying the principle in FOLEY v HILLS. The Supreme Court had cause to hold further in EKPEYONG .v. STATE (1967), ALL NLR 193 that “when a person has an account which is in credit, the bank is his debtor to the extent of the credit balance”. This was also the decision of the Apex Court in FESTUS YUSUF .v. CO-OPERATIVE BANK (1994) 9 SCNJ 67 The import of the foregoing argument is that the monies in ALL of the accounts affected by the order of the Federal High Court, though deposited by about 46 million Nigerians, belongs to the nineteen listed banks by law. These points raise some vital issues, thus: a. The Learned Attorney General was therefore right when he sued the nineteen listed banks in that suit because they are technically the “owners” of the money. b. The issue of expropriation of the funds of about 46 million account holders as a result of the order which has raised serious concerns is misplaced. The argument has been that you cannot expropriate the funds of about 46 million Nigerians without a hearing. By the legal principle of ownership of money domiciled in a Bank account belonging to the bank, the only persons who have the locus to complain are the listed banks who indeed are the “owners” of the money and not the 46 million of account holders. So, the question of the breach of the constitutional right to own property of 46 million Nigerians does not apply. And those 46 million account holders cannot be heard to complain of a breach, in court, only the banks are invested with the vires to do so. c. In law, it is only the banks that will therefore be justified in law to challenge the order and urge the court to dismiss the suit on the grounds inter alia that EVEN THE CBN POLICY ON BVN DOES NOT PROVIDE FOR FORFEITURE IN THE CASE OF A DEFAULT. 2. THE LOCUS OF THE ATTORNEY GENERAL OF THE FEDERATION (A.G.F) TO INSTITUTE AND MAINTAIN THIS SUIT. The other argument against the order of the court is the fact that it is the CBN and not the A.G.F. that ought to enforce the BVN policy in court by reason of the fact that it is a policy of the CBN. My take on this is that, whilst it is conceded that, the BVN policy is a policy of the CBN, it must also be noted that the policies of the CBN are indeed policies of the Federal Government as the CBN is an agency of the Federal Government. The .A.G.F as the Chief Law Officer of the Federation can in fact take steps in court to enforce any policy of the FGN made pursuant to an enabling Act. 3. ENFORCEMENT OF POLICIES/GUIDELINES: Another argument against the order is predicated on the fact that the BVN policy is not law and cannot be enforced by a court of law to the extent of making an order for forfeiture which by its nature is penal. It is imperative to note that the CBN is empowered by Section 57 (2) of the BOFIA which provides: “Without prejudice to the provisions of subsection (1) of this Section, the Governor may make rules and regulations for the operations and control of all institutions under the supervision of the Bank”. To the extent that the BVN policy was made pursuant to this provision, it is submitted that they can be considered as subsidiary laws as provided by Section 18 of the Interpretation Act which provides thus: ““Law” means any law enacted or having effect as if enacted by the legislature of a State and includes any instrument having the force of law which is made under a Law” Moreso, Section 5 (1) of the Money Laundering (Prohibition Act) Cap. M18 L.F.N 2004. Provides: “a financial institution shall verify its customer’s identity and address before opening an account for, issuing a passbook to, entering into a fiduciary transaction with, renting a safe deposit box to or establishing any business relationship with the customer”. The verification of customer’s identity is a practical step not provided in the law. The BVN policy is therefore in tandem with this law that compels a financial institution to “verify” the identity of its customers. The argument that this Section did not mention BVN is untenable. The Section does not mention I.D Card or Utility bills either, the Banks demand for both before opening an account. So I believe that the court can enforce the CBN Regulation on BVN as a subsidiary legislation made pursuant to Section 57, of the BOFIA, and Section 5 of Money Laundering (Prohibition) Act. Having stated the above, it is clear that the order of forfeiture cannot stand, because even the CBN Policy on the BVN does not provide for forfeiture as a consequence for failure to obtain same. The Penalty for default is inaccessibility of the funds by the account holder of the funds in his bank account. And if we should apply the concept of ownership of money in an account as argued above, the banks will continue to utilize the funds to the detriment of the account holder and the State. The Federal Government of Nigeria will therefore need to ensure the enactment of a Legislation that will allow forfeiture should any money remain inaccessible after a period of time. Failing which the banks shall continue to hold the funds and utilise them until the account holders regularise. So, this is really a fight for the Banks. REMEDY ACCRUABLE TO ACCOUNT HOLDERS Having said the above, the genuine question that agitates the mind is what then is the remedy of the account holders? It must be stated that the right of the account holder accrues upon the making of a DEMAND to the bank for the payment of “his money” in the custody of the bank, failing which the customer can institute an action to recover same. In the instant case, the Bank will certainly have a good reason not to honour that demand on the grounds that the account holder cannot be allowed to access the funds due to his failure to comply with the BVN regulation. And, the State cannot invoke the sanction of forfeiture against the bank because no law provides for it, even the BVN Policy does upon which the order is predicated does not contain that sanction. Forfeiture being punitive must be provided for by law and the process strictly followed. Interestingly, Section 17(5) of the Foreign Exchange (Monitoring and Miscellaneous Provision) Act provides that where money is imported and domiciled in a domiciliary account to carry out transactions in the foreign exchange market it cannot be liable to seizure, forfeiture or suffer any form of expropriation by the Federal or a State Government. This provision expressly forbids and prohibits seizure, forfeiture or any form of expropriation of money in such domiciliary accounts which are operated for such specific purpose as stated in the Foreign Exchange (Monitoring and Miscellaneous Provision) Act. This is yet another fundamental legal pitfall of the said order. In conclusion, since the duty of Government is to make life easier for its citizens, the Federal Government of Nigeria ought to ensure that Banks make it much more easier for account holders to complete the BVN process, by providing a longer period of grace for the exercise and ensure the promulgation of a law that provides the strictures of forfeiture ONLY, AND ONLY if account holders fail to complete the BVN process within a period of at least 5years from now. Matthew Burkaa, Esq.