By Ada Samson, Abuja
The Federal Government has demanded that the Osun State Government refund seven months’ worth of local government allocations allegedly withheld in violation of a Supreme Court order, escalating a legal battle over fiscal autonomy for councils.
In a submission to the apex court, the Attorney General of the Federation (AGF), Lateef Fagbemi (SAN), accused Osun of unlawfully diverting funds meant for the state’s 30 local governments between July 2024 and February 2025—despite a judgment barring states from controlling council finances.
The AGF’s filing, argues that Osun’s continued retention of the funds constitutes “egregious contempt” of the Supreme Court’s July 2024 ruling, which affirmed the constitutional right of local governments to receive allocations directly. The federal government is now seeking a court order compelling full restitution, warning that failure to enforce compliance would “undermine judicial authority.”
The dispute stems from Osun’s lawsuit challenging the non-release of its March 2025 allocations—a case the AGF has dismissed as “an abuse of process” meant to legitimize the state’s defiance. Documents reveal the Finance Minister denied withholding funds, while the AGF insists only duly elected councils—not state governments—can legally demand unpaid allocations.
With Osun reportedly withdrawing its suit ahead of a September hearing, the standoff has intensified scrutiny over states’ adherence to fiscal federalism principles. Legal analysts say the Supreme Court’s final decision could set a precedent for enforcing financial autonomy across Nigeria’s 774 local governments.
In 2025, the Special Assistant to the President, Taye Oloyede, provided sworn testimony asserting that Osun State had neglected to demonstrate compliance with the requisite procedural formalities regarding local government account submissions to the Federal Ministry of Finance.
The deposition further contended that the claimant lacked proper locus standi to institute proceedings, having neither obtained authorisation from the affected local government authorities nor demonstrated their consent to be represented in the litigation.
Crucially, the evidentiary filing revealed Osun State’s purported intention to divert local government allocations towards state-administered healthcare and educational programmes – a clear violation of the Supreme Court’s unambiguous pronouncement in AGF v. Attorney General of Abia State & Others (2024) which expressly prohibited state governments from exercising any form of fiduciary control over local government finances.
This judicial precedent had established the constitutional imperative for direct fiscal transfers to democratically constituted local government administrations.
The submission highlighted how a previous interlocutory injunction secured by Osun State executives at the Federal High Court had subsequently been vacated by the appellate court, reinforcing the hierarchical authority of the Supreme Court’s landmark judgement.
The Attorney General maintained that Osun State stood in flagrant disregard of the court’s peremptory order issued on 11 July 2024, which had mandated the complete cessation of state-level intermediation in local government fund distribution.
Notwithstanding its formal recognition as the twenty-ninth respondent in the original constitutional matter, Osun State allegedly persisted in its unlawful retention and expenditure of local government allocations between July 2024 and February 2025. This conduct, according to the Attorney General’s office, constituted a brazen circumvention of judicial authority and represented ongoing contempt of court.
The federal government’s legal team characterised Osun State’s current application as a disingenuous stratagem to obtain retrospective judicial sanction for its continued non-compliance with subsisting court orders. Such litigation tactics were portrayed as an abuse of process designed to undermine the finality of the Supreme Court’s earlier determination regarding the fiscal autonomy of local governments.
In his submission, the Attorney General emphasised the fundamental constitutional principle that only properly constituted local government administrations possessed the necessary legal personality to seek redress for alleged financial deprivations. The state government’s attempt to assume this representative capacity was denounced as both procedurally irregular and substantively untenable under established principles of Nigerian constitutional law.
The affidavit evidence systematically dismantled Osun State’s legal arguments, noting the conspicuous absence of any presidential directive authorising the withholding of funds and highlighting the Minister of Finance’s categorical denial of receiving such instructions. Furthermore, it underscored the claimant’s failure to adduce credible evidence demonstrating that the affected local governments had fulfilled their obligation to provide requisite banking particulars to the central treasury.
This comprehensive rebuttal positioned the federal government’s response as both a robust defence against spurious claims and a vigorous assertion of judicial authority. By framing Osun State’s actions as constituting contemptuous disregard for the rule of law, the Attorney General sought not merely to defeat the instant suit but to reinforce the binding nature of constitutional judgements and maintain the integrity of Nigeria’s federal structure.
He called it an “egregious contempt” and asked the court to enforce judicial accountability.
“The only way to vindicate the authority of this court,” he stated, “is to order the plaintiff to pay back all LG funds collected between July 2024 and February 2025. These should be remitted to the Minister of Finance for onward transfer to the respective local governments.”
In a five-ground preliminary objection, the AGF argued that: “The plaintiff is not entitled to be heard due to contempt. The plaintiff has no right of appeal against the Supreme Court’s decision. The case does not present a genuine dispute to trigger the court’s original jurisdiction under Section 232(1) of the Constitution. The plaintiff has no locus standi to sue on behalf of local governments. Only LGs—not state governments—can seek redress for unpaid allocations. The AGF stressed that Osun State had improperly appointed itself as a ‘watchdog’ over LG funds, despite having no authority to litigate on their behalf.
“If any LG has been wrongly deprived of its funds,” he concluded, “it is the council itself—not the state government—that has the right to sue.”
Meanwhile, it was gathered that Osun State government has withdrawn the suit. However, Olujimi, who confirmed this, said the suit remains in court until the application for withdrawal is formally heard by the court in September.
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