Osun APC calls on EFCC to freeze accounts over alleged ₦13.7bn payroll fraud

The Diaspora Committee of the Osun State All Progressives Congress (APC) Governorship Campaign Council has urged the Economic and Financial Crimes Commission (EFCC) to freeze accounts allegedly linked to a N13.7 billion payroll fraud, involving 'ghost workers' and irregular salary payments. This call highlights the EFCC's critical role in combating financial crimes and the legal framework governing its powers to freeze bank accounts. While the EFCC possesses statutory authority to investigate and secure freezing orders, such actions are subject to strict judicial oversight, requiring a court order to restrict accounts beyond an initial 72-hour investigative period. This development underscores the ongoing challenges of public sector corruption in Nigeria and the legal mechanisms available for asset recovery and prosecution.

Nigeria's fight against corruption frequently brings to the fore the powers and responsibilities of its anti-graft agencies. A recent development in Osun State has reignited public discourse on these issues, with the Diaspora Committee of the All Progressives Congress (APC) Governorship Campaign Council formally calling on the Economic and Financial Crimes Commission (EFCC) to intervene in an alleged N13.7 billion payroll fraud. The committee's petition specifically requests the freezing of bank accounts purportedly linked to a 'ghost workers' scheme and irregular salary payments within the state civil service.

This demand places the spotlight on the EFCC's investigative mandate and its formidable powers to restrict access to financial assets suspected to be proceeds of crime. For legal practitioners, this scenario raises crucial questions regarding the scope of the EFCC's authority, the procedural safeguards in place for account holders, and the broader implications for financial institutions and public accountability. The alleged fraud, if substantiated, represents a significant drain on public resources and a testament to the persistent challenge of corruption in public administration.

This article will delve into the legal framework empowering the EFCC to freeze accounts, examine relevant judicial pronouncements that define the limits and procedures for such actions, and discuss the implications for legal professionals advising clients on matters related to financial crime investigations and asset forfeiture in Nigeria.

The Economic and Financial Crimes Commission (EFCC) was established by the Economic and Financial Crimes Commission (Establishment) Act, 2004, with a broad mandate to combat economic and financial crimes. Among its key functions are the investigation of financial crimes, including money laundering, advance fee fraud, and other fraud-related offences, and the prosecution of offenders. A critical tool in the EFCC's arsenal for disrupting illicit financial flows and preserving assets for potential forfeiture is its power to freeze bank accounts.

Section 34(1) of the EFCC (Establishment) Act, 2004, is central to this power. It stipulates that the Chairman of the Commission, or any officer authorised by him, may, if satisfied that money in an account is derived from the commission of an offence under the Act or other specified enactments, apply to the court *ex parte* for an order to freeze the account. This provision allows the EFCC to act swiftly to prevent the dissipation of suspected illicit funds. Furthermore, the Money Laundering (Prevention and Prohibition) Act, 2022 (which repealed the 2011 Act), in Section 7(6), grants the EFCC the power to temporarily restrict an account for up to 72 hours for investigation without a court order, after which a court order becomes mandatory for continued restriction.

Payroll fraud, often involving 'ghost workers'—non-existent individuals on a payroll whose salaries are diverted—constitutes a significant economic crime. Such schemes typically involve false representation and an intent to defraud, falling under the purview of various criminal statutes, including the Criminal Code Act (e.g., Section 289 for theft by public servants) and the Advance Fee Fraud and Other Fraud Related Offences Act. The EFCC has a history of investigating and prosecuting such cases, underscoring its role in safeguarding public funds.

The EFCC's power to freeze accounts, while potent, is not unfettered and has been subject to significant judicial scrutiny, particularly concerning due process and the fundamental rights of account holders. While Section 34(1) of the EFCC Act allows for *ex parte* applications to freeze accounts, Nigerian courts have consistently emphasized that such orders must be obtained from a court of competent jurisdiction. This means that banks cannot unilaterally freeze customer accounts based solely on a directive from the EFCC without a valid court order.

Several appellate court decisions have reinforced this position. In *Guaranty Trust Bank Plc v. Akinsiku Adedamola* (2019) 5 NWLR (Pt. 1664) 30, the Court of Appeal held that a bank, before acting on EFCC instructions to freeze an account, must be satisfied that a court order has been obtained by the agency. The court further clarified that the EFCC is not a court of law and must operate within legal confines, following due process. Similarly, in *Diamond Bank v. Unaka & Ors* (2019) LPELR-50350 (CA) and *Polaris Bank Ltd V. Yayamu Global Services Ltd & Anor* (2022) LPELR-57376(CA), the courts reiterated that banks face liability for unlawfully freezing accounts without a proper court order.

However, it is important to note the provision in Section 7(6) of the Money Laundering (Prevention and Prohibition) Act, 2022, which permits the EFCC to issue a temporary stop order on a suspicious account or transaction for a maximum of 72 hours without a court order for investigative purposes. Beyond this 72-hour period, a court order is indispensable for the continued restriction of the account. This was affirmed in cases like *Mr. Ipinloju Damola Femi v. EFCC & 3 Ors* (2024) LPELR-61914 (CA), where the Court of Appeal held that while the EFCC can restrain an account for 72 hours, it must seek a court order to extend the block. The Federal High Court is typically the competent court for such orders.

The allegations of N13.7 billion payroll fraud in Osun State, involving 'ghost workers' and multiple salaries paid into single accounts, squarely fall within the EFCC's mandate to investigate economic and financial crimes. Such activities constitute offences like obtaining money by false pretences, theft, and money laundering. The EFCC has a track record of tackling such corruption, as seen in past cases where civil servants were arraigned for inserting fictitious names into government payrolls. The call by the Osun APC committee for swift action, including freezing accounts, is a legitimate request for the EFCC to exercise its statutory powers, provided it adheres strictly to the procedural requirements of obtaining judicial orders to ensure that fundamental rights are not trampled upon in the pursuit of justice.

The call by the Osun State APC Diaspora Committee for the EFCC to freeze accounts linked to an alleged N13.7 billion payroll fraud underscores the persistent challenge of corruption in Nigeria's public sector and the critical role of anti-graft agencies. For legal practitioners, this situation highlights the delicate balance between aggressive anti-corruption enforcement and the imperative of upholding due process and fundamental rights. While the EFCC is statutorily empowered to investigate financial crimes and freeze accounts, this power is not absolute and is subject to judicial oversight, particularly the requirement for a court order to sustain account restrictions beyond an initial 72-hour investigative period.

Practitioners advising clients, whether individuals or institutions, involved in such investigations must be acutely aware of the procedural requirements for freezing orders, the potential liabilities for banks acting without proper judicial authorisation, and the avenues available for challenging unlawful restrictions. The ongoing judicial pronouncements, such as those in *Guaranty Trust Bank Plc v. Akinsiku Adedamola*, serve as crucial reminders that adherence to the rule of law is paramount, even in the face of serious allegations of financial misconduct. As the EFCC proceeds with its investigation into the alleged Osun State payroll fraud, all parties will be watching to ensure that justice is pursued diligently and within the strict confines of Nigerian law.