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Borrowing N17trn from pension funds by 36 state governors: SERAP to Buhari: Stop this sleaze



…“This proposed borrowing faces the risks of corruption and mismanagement, and would ultimately deny pensioners the right to an adequate standard of living and trap more pensioners in poverty. Rather than devising ways to address pensioner poverty, governments at all levels would seem to be pushing to exacerbate it.’’

Rising to the occasion again, the Socio-Economic Rights and Accountability Project (SERAP) has registered its objection and resentment to a plan by the 36 state governors to borrow N17 trillion from the accumulated pension funds for some phony projects called ‘infrastructural development’.

In a strongly worded open letter to President Muhammadu Buhari, SERAP is urging him to use his “good offices and leadership position to urgently instruct the Director-General and Board of the National Pension Commission (NPC) to use their statutory powers to stop the 36 state governors from borrowing and/or withdrawing N17 trillion.

The Attorney General of the Federation and Minister of Justice, Malam Abubakar Malami (SAN) was also copied.

Persecondnews recalls that the governors had last week broached the idea of borrowing about N17 trillion from the pension funds after receiving a briefing from the Kaduna Gov. Nasir el-Rufai.

El-Rufai is the Chairman of the National Economic Council Ad Hoc Committee on Leveraging Portion of Accumulated Pension Funds for Investment in the Nigeria Sovereign Investment Authority (NSIA).

SERAP states: “Under Section 85 of the Pension Reform Act, pension funds and assets can only be invested in accordance with the regulations set by the NPC. Section 100 prohibits mismanagement or diversion of pension funds.

“Therefore, the proposed borrowing by governors from the pension funds is implicitly inconsistent and incompatible with the letter and spirit of the Act, and with Nigeria’s international obligations.

“Several states have also failed to observe Convention No 29 on Forced Labour and other international standards on the right of workers to timely payment of salaries and pensions.

“Borrowing from the pension funds is also implicitly inconsistent with right to work recognized by various ILO instruments and article 6 of the International Covenant on Economic, Social and Cultural Rights, to which Nigeria is a state party.

“The right to work is essential for realizing other human rights and forms an inseparable and inherent part of human dignity. The governors cannot on the one hand fail to pay workers’ salaries and pensions while on the other hand proposing to withdraw money from pension funds.”

The letter dated December 5, 2020 and signed by SERAP’s Deputy Director, Mr Kolawole Oluwadare, and made available to Persecondnews, also said: “Allowing the governors to borrow from pension funds would be detrimental to the interest of the beneficiaries of the funds, especially given the vulnerability of pension funds to corruption in Nigeria, and the transparency and accountability deficits in several states.

“It is patently unjust and contrary to the letter and spirit of the Nigerian Constitution 1999 [as amended], the Pension Reform Act, and the country’s international anti-corruption and human rights obligations for the Federal Government and state governors to repeatedly target pension funds as an escape route from years of corruption and mismanagement in ministries, departments and agencies (MDAs.

“SERAP expresses serious concerns that the proposed borrowing by the 36 state governors from the pension funds would lead to serious losses of retirement savings of millions of Nigerians.

“This proposed borrowing faces the risks of corruption and mismanagement, and would ultimately deny pensioners the right to an adequate standard of living and trap more pensioners in poverty. Rather than devising ways to address pensioner poverty, governments at all levels would seem to be pushing to exacerbate it,’’ the organization said.

It added: “Allowing the governors to borrow money from the pension funds would amount to a fundamental breach of constitutional provisions, the Pension Reform Act, and Nigeria’s international obligations, as well as fiduciary duties imposed by these legal instruments on all public officers to prevent pension funds from unduly risky investments, and to ensure transparency and accountability in the management of pension funds.

“We would be grateful if your government would indicate the measures being taken to instruct the NPC to stop the 36 state governors from borrowing and withdrawing any money from the pension funds within 14 days of the receipt and/or publication of this letter.

“If we have not heard from you by then as to the steps being taken in this direction, the Registered Trustees of SERAP shall take all appropriate legal actions to compel your government to implement these recommendations in the interest of millions of Nigerian pensioners.

“It would also be very difficult to hold state governors to account for the spending of pension funds, as states have persistently failed to account for the spending of public funds including security votes.

“Transparency is a key instrument in the spending of any pension fund investment, as it is necessary to ensure the accountability of the funds. However, several states routinely claim that the Freedom of Information Act is not applicable within their states.

“Pension funds should not be used to make up for the failure of governments at all levels to cut the cost of governance, and the persistent refusal to reduce wastage and corruption in MDAs, as well as failure to obey court orders to recover life pensions collected by former governors and their deputies, and public funds collected by corrupt electricity contractors who disappeared with the money without executing any power projects.”

Chiding state governors for their poor records of meeting their obligations to their workers and retirees, SERAP said: “Many state governors have repeatedly failed to pay workers’ salaries and pensions; several states are failing to pay contributory pension.

“Therefore, allowing state governors to collect a windfall of pension funds at the expense of pensioners who continue to be denied the fruit of their labour would amount to double jeopardy.

“Fiduciary duties require public officers to ensure that pension funds are managed solely and exclusively for the benefit of pensioners, and to consider the socio-economic and human rights impact of pension investment decisions on the intended beneficiaries.

“Our requests are brought in the public interest, and in keeping with the requirements of the Nigerian Constitution 1999 [as amended], the Pension Reform Act 2014, and Nigeria’s international obligations, including under the UN Convention against Corruption, and the International Covenant on Economic, Social and Cultural Rights.’’

SERAP reminded President Buhari that his administration had a legal obligation under Articles 1 and 5 of the UN Convention against Corruption to prevent and combat corruption effectively, to promote integrity, accountability and proper management of public affairs and public property, including pension funds.

“Public confidence and accountability in public administration are instrumental to the prevention of corruption and greater efficiency.

“Article 10 requires Nigeria to take measures to enhance transparency in its public administration relative to its organization, functioning, decision-making processes and/or other aspects, including pension fund investment. Nigeria has ratified the convention,’’ it stressed.


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