“Return Illegally Withheld Funds” — AGF Asks Supreme Court To Compel Osun To Refund Seven Months Of LG Allocations

The Attorney General of the Federation and Minister of Justice, Lateef Fagbemi, has urged the Supreme Court to compel Osun State Government to refund seven months’ local government allocations to the Minister of Finance.

The request was contained in a response filed through Fagbemi’s counsel, Chief Akin Olujimi SAN, to a suit instituted by the government via its attorney general.

Osun had sued the AGF as the sole defendant, alleging that the Federal Government failed to release the statutory allocation due to its 30 local government councils for March 2025.

In the suit marked SC/CV/379/2025, the state government claimed that whenit queried the Ministry of Finance over the unpaid allocation, the Minister of Finance, Wale Odun, allegedly said he was acting under the AGF’s directive.

However, the AGF denied the claim, challenging the legitimacy of the suit, accusing the state government of contempt for allegedly disobeying a July 11, 2024, Supreme Court judgment.

Fagbemi argued that Osun’s reliance on the 2004 case of AG Lagos State v. AG Federation—where the Supreme Court ordered the release of withheld funds to Lagos State—was misplaced.

In a counter-affidavit deposed by the Special Assistant to the President, Taye Oloyede, the AGF insisted that neither he nor the Minister of Finance instructed the withholding of Osun’s LG funds.

Oloyede testified that on May 22, 2025, in his presence, the Minister of Finance denied ever receiving such instructions.

According to the affidavit, Osun State never alleged that the President issued an order, nor did it provide evidence that the LG funds were deliberately withheld.

Oloyede emphasised that direct payment of allocations to LGs requires only that they submit account details to the Ministry of Finance.

He claimed the individuals currently administering Osun’s LGs were elected under the previous APC-led state government and remain in office until October 2025.

He asserted that Osun failed to show that its LGs had submitted their account details to the Finance Ministry.

Oloyede further argued that the plaintiff failed to show that it had the legal authority or consent of the LGs to initiate the lawsuit.

Instead, the affidavit indicated Osun’s intention to use the LG allocations to fund state-level health and education initiatives directly contravening the Supreme Court’s judgment prohibiting states from managing LG finances.

He also pointed out that an earlier Federal High Court ruling in favour of the Osun State Governor had been overturned by the Court of Appeal.

Fagbemi insisted the Osun State Government was in contempt of the July 11, 2024, Supreme Court order in AGF v. Attorney General of Abia State & Others, which ruled that LG allocations must be paid directly to LG councils and not through state governments.

The order barred states from collecting or disbursing LG funds. Osun, listed as Defendant 29 in that suit, had acknowledged the order but allegedly continued to receive and spend LG funds from July 2024 to February 2025.

The AGF described Osun’s lawsuit as a calculated attempt to gain the Supreme Court’s backing to continue violating its own ruling.

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.