Why governors kick against FG’s move to deduct $418m Paris Fund alleged judgement debt

The lingering crisis trailing the plans by Federal Government to deduct the $418 million Paris Club Refund from the Federation Account is yet to laid to rest, as the 36 State Governors under the aegis of Nigeria Governors’ Forum (NGF) renewed opposition against Federal Government’s unilateral decision to deduct the fund from the treasury.

According to the NGF Counsels, Federal Government’s notice via a letter with Reference No: FMFBNP/SGOVS/DEDUCTION/PCL/11/2021 dated 11th November, 2021 to commence deduction from allocations due to the States from the Federation Account for the liquidation of London/Paris Club refund-related judgement debts on behalf of the 36 States of the Federation and the 774 Local Government Councils, was unconstitutional.

According to the letter seen by Nigeria Tribune, “the States of the Federation were not parties to any contract or suits concerning the London/Paris Club refund, from which the said judgement debts arose. Consequently, the 36 States of the Federation are not liable to any person or entity in any judgement debt.”

They maintained that the “deduction of the allocations due to the 36 States of the Federation from the Federation Account to liquidate the London/Paris Loan refund-related judgement debts is the subject of an Appeal filed by the 36 States of the Federation at the Court of Appeal Abuja.

“The Appeal challenges the Federal High Court’s decision (per Honourable Justice I. E. Ekwo) delivered on 25th March, 2022 in Suit No: FHC/ABJ/CS/1313/2021 between A. G Abia State v. President, Federal Republic of Nigeria & 42 Ors. Therefore, the issue is sub judice,” the letter signed by the 7 State Attorney Generals of Lagos, Nasarawa, Rivers, Abia, Taraba, Benue and Zamfara States, read in part.

The subnational governments’ position was contained in a letter dated 1st August, 2022 addressed to the Secretary to the Government of the Federation (SGF) Secretary to the Federal Executive Council (FEC), titled: ‘Re: The unconstitutionality of deducting USD 418 million from Paris Club Refund from the Federation Account in favor of Contractors’.

“The attention of the NGF has been drawn to yet another attempt by the Attorney General of the Federation (AGF) and the Minister of Finance (HMF) to circumvent the law and the recent Judgment of the Supreme Court by surreptitiously securing the approval of the Federal Executive Council (FEC) to effect payment of the sum of $418 million to four contractors who allegedly executed contracts in respect of the Paris Club refunds to the states and Local Governments.

“It would be recalled that an earlier approval of Mr. President under the instrumentality of the AGF and HMF to pay the said sum to the contractors through the issuance of Promissory Notes had met stiff resistance by the 36 State Governors who approached the Court for redress through their Attorneys-General. The matter is currently pending on appeal at the Court of Appeal in Abuja for hearing. The Letter by the State Attorneys General is attached.

“Significantly, while that appeal is pending, one of the contractors, who is a beneficiary of the Promissory Notes in the sum of $USD 142,028,941.95, Riok Nigeria Limited and who had lost at the Court of Appeal, further appealed to the SC in SUIT NO: SC 337/2018 BETWEEN: RIOK NIGERIA LIMITED V INCORPORATED TRUSTEES OF NIGERIA GOVERNORS’ FORUM &7 ORS. The Supreme Court on 3 June, 2022 also dismissed Riok’s appeal as lacking in merit. The SC had on the occasion made clear that neither the NGF nor ALGON have power to award contracts and charge same directly to the Federation Account as done in this case. The SC specifically held on page 43 that: “The funds belonging to a State or Local Government must be kept in an account belonging to the State or Local Government as the case may be, and disbursed or expended by the state strictly in the manner and for the purposes prescribed in the Constitution and an Appropriation Law or as prescribed by the House of Assembly of the State and in the manner and for purposes prescribed in the Constitution, a Local Government Law or as prescribed by the Council of the Local Government.

“The dismissal of RIOK’S case by the SC also affected the payment of $1,219,440.45 and $215,195.36 to two private lawyers to RIOK, NWAFOR ORIZU and OLAITAN BELLO who are also beneficiaries of Promissory Notes by the DMO.

“Besides RIOK and the two lawyers, the States have also challenged either on appeal or other courts the claims by the other contractors including: DR. TED ISIGHOHI EDWARDS ($159,000,000), NED NWOKO ($68,658,192.83) and PANIC ALERT SECURITY SYSTEMS LTD ($47,831,920).

These cases are pending and no steps ought to be taken to enforce the Judgment and alter the status quo until the matters are fully determined. A Caveat issued to restrain all parties concerned and the public from dealing or honoring Promissory Notes issued had earlier been published.

“The purport and essence of the definitive pronouncement by the SC is that none of the contractors recommended for payment of the sum of $418 Million by the AGF and HMF can be so paid because the contracts and payments relied upon were not processed as prescribed by the Constitution and the law. The funds certainly cannot be accessed through the Federation Account as vigorously pursued by the AGF and HMF.

“Those contracts as they stand are unconstitutional and unlawful and cannot vest any legal right on any of the contractors. It is immaterial that part of the contract sums has been paid. Those payments did not validate the unlawful nature of the contracts. The SC has spoken. It is final and must be obeyed. The excerpt of the decision of the SC is attached for ease of reference.

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“The NGF had in fact consistently posited that neither the States nor ALGON can appropriate/deduct monies directly from the Federation Account which funds are meant to be paid into the States/Local Government Joint Account for which the Houses of Assembly of the states are yet to appropriate and arising from Judgments to which the states that are custodians of the joint account were not a party. This position has been reinforced by the recent SC court decision in the RIOK’s Case.

“The NGF therefore urges that the AGF and the HMF should not under any guise whatsoever stampede the FEC to take a decision which will not only be patently unconstitutional and illegal but also an affront to the highest court of the land. The rule of law is not only supreme; it is a cardinal principle canvassed by the present administration and should in this particular occasion be strictly obeyed.

“In the face of the crushing economic realities and security challenges facing the nation and competing allocation of scarce resources, the payment of contractors of the humongous sum of $418 million from pubic treasury is not and should not be the priority of FEC. FEC may also wish to note that the undue haste in which the payment of the contractors in the Paris Club refund has been pursued and processed by the AGF and HMF has already created the impression in the discerning minds of the public that it would appear that the interest of contractors takes precedence over and above the welfare and interest of the general public whom the senior officials of government had sworn to defend and protect. The NGF therefore admonishes FEC to prevail on the AGF and HMF to toe the line of constitutionality and allow the due process of the law to prevail.

“Attached is the State Attorneys-General letter as well as the Caveat published by the NGF lawyers,” the letter read.