Federal government drags Osun to Supreme Court over withheld LG funds

By Kunle Sanni –

The Federal Government of Nigeria has asked the Supreme Court to compel the Osun State Government to refund seven months’ worth of local government allocations, accusing the state of unlawfully withholding funds meant for its 30 local councils.

The request was made by the Attorney-General of the Federation (AGF) and Minister of Justice, Lateef Fagbemi, in a counter-motion filed in response to a suit instituted by the Osun State Government marked SC/CV/379/2025. Osun had taken the AGF to court, alleging that the federal government wrongfully withheld its March 2025 LG allocations.

According to Osun’s suit, the Minister of Finance, Wale Edun, claimed he withheld the funds under the directive of the AGF. However, Fagbemi, through his counsel, Akin Olujimi (SAN), denied issuing any such instruction.

In a counter-affidavit deposed by Taye Oloyede, Special Assistant to the President on Justice Sector Reform, the AGF maintained that neither he nor the finance minister ordered the suspension of Osun’s LG funds. Oloyede noted that on May 22, 2025, the finance minister personally denied— in his presence — ever receiving such instructions from the AGF.

The affidavit stated that Osun State failed to prove that the local government allocations were deliberately withheld or that its local councils had submitted the necessary account details to the Ministry of Finance — a prerequisite for direct disbursement.

Furthermore, the AGF argued that the state lacked the legal standing to sue on behalf of the LGAs, having failed to present evidence of consent or authorization from the councils.

The federal government also accused Osun of planning to use LG funds to finance state-level projects in health and education — a move it said contravenes a Supreme Court judgment that prohibits states from tampering with local government finances.

Oloyede further noted that a previous Federal High Court ruling in favour of the Osun State Government had already been overturned by the Court of Appeal. He also cited the Supreme Court’s July 11, 2024 judgment, which reaffirmed that LG allocations must be directly disbursed to and managed by the LGAs — not state governments.