Financial Crisis Looms: Court Freezes Osun State Bank Accounts, Government Vows to Fight Back

The bank accounts of the Osun State Government have been placed under a 'Post No Debit' restriction by the Federal High Court in Lagos. This action follows an application by Gamji Nigeria Company Limited, a contractor involved in water infrastructure projects, seeking to preserve $13.9 million and N157.5 million awarded to it through arbitration. The Osun State Government has subsequently asked the Federal High Court to vacate this order, arguing that Gamji allegedly failed to disclose material facts to the court.

This latest restriction is distinct from a previous freeze on Osun government accounts by the Economic and Financial Crimes Commission (EFCC) during the build-up to the August 15 governorship election. That earlier restriction, which involved an investigation into the alleged handling of N11 billion in various funds, was lifted on August 22 following an intervention by President Bola Tinubu, who expressed concerns about the timing creating an impression of interference with the election.

The current dispute stems from two contracts awarded by the Osun State Government to Gamji Nigeria Company Limited in June 2017, during the administration of former Governor Adegboyega Oyetola. These projects involved the construction of transmission mains, booster pump stations, and water reservoirs in the Ilesa West Local Government Area, funded through an Islamic Development Bank loan facility facilitated by the Federal Ministry of Finance.

Initially valued at $15.98 million and $9.70 million, the contract values were subsequently revised to $20.24 million and $10.95 million, respectively, due to changes in engineering designs and variations in the scope of works. Gamji claimed approximately 93 percent of the work had been completed by October 2023, with a Substantial Completion Certificate issued on November 14, 2024. However, disagreements arose over claims for extensions of time, price adjustments, and increased costs of materials and labor. After mediation attempts failed, Gamji issued an arbitration notice on April 3, 2025, which the state government accepted, leading to preliminary proceedings in Lagos on May 15, 2025.

An arbitral panel issued its final award on July 24, 2026, directing the Osun government to pay Gamji $13.9 million and N157.5 million in reimbursable arbitration fees, with an additional 20 percent annual interest on any outstanding balance after the compliance deadline. Following the expiration of the August 24 deadline without payment, Gamji Nigeria Company Limited approached the Federal High Court.

Judge Daniel Osiagor of the Federal High Court in Lagos, in suit FHC/L/CS/1233/2026, issued an interim order directing commercial banks to place a 'Post No Debit' restriction on the state government’s accounts. This order covers funds up to $13.9 million and N157.5 million and is intended to preserve these funds towards the liquidation of the arbitral award, pending the hearing and determination of Gamji’s motion on notice. Affected financial institutions include Guaranty Trust, Access Bank, First HoldCo, Zenith Bank, United Bank for Africa, Ecobank, Fidelity Bank, Stanbic IBTC, Sterling Bank, Union Bank, and Wema Bank.

In response, the Osun State Government, through its Commissioner of Information and Public Enlightenment, Oluomo Kolapo Alimi, filed an application on October 2, arguing that Gamji failed to disclose crucial information. The state contends that it had already approached the Lagos State High Court on September 1, 2026, to challenge the arbitration award and had also filed an application to suspend its enforcement before Gamji sought the Federal High Court order.

Mr. Alimi further stated that the arbitration award itself was