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FG, Govs persistent squabble over Paris Club loan refund

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Naira scarcity: Buhari meets govs, asks for more time to resolve challenges

By Adebayo Obajemu

The Paris Club loan refund, like many other issues monetary, is tearing apart the tenuous amity between the federal government and the 36 states governors.

At issue is the governors’ renewed clamour for federal government not to deduct their FAAC allocations from source for the alleged contract payment for the Paris Club loan refund. The governors took that position as a result of the dwindling monthly allocations to them from crude oil.

Recall that in April, 2020, 36 state governors cautioned the federal government not to go ahead with the contrived deduction of $418 million from the federation account to offset debts allegedly owed to consultants engaged by the states and local governments on the London/Paris Club refunds.

The governors alleged that they were not parties to any suit on the London/Paris Club refund, and in that wise not in any way liable to any person or entity in any judgment debt being relied on by the federal government.

The controversial payment of $418million to consultants over the Paris Club refund has for a long time turned contentious and subject of litigation among the three tiers of government. The Consultants had placed a claim to the said amount as a percentage of the payment of services rendered to the states and local government councils.

Acting on the advice of the Attorney General of the Federation, President Muhammadu Buhari had last November disregarded the governors’ protest against the payment and directed that the creditors be paid the $418 million relating to Paris and London clubs refund.

Some of the creditors claimed to have earned their shares of the money through ‘consultancy services’ by helping state and local governments to recover funds over-deducted by the federal government from their allocations between 1995 and 2002 to service the London Club and Paris Club loans.

In March, 2022, the Attorneys-General of the 36 states had launched an appeal against the judgment that dismissed a suit seeking to restrain the federal government from effecting the planned deduction of $418 million from states’ funds.

The governors’ appeal became necessary following the fact that Justice Inyang Ekwo of the Federal High Court in Abuja had earlier struck out a suit filed by the 36 states, According to Justice Ekwo, the suit was without merit.

Justice Ekwo, in the judgment on the suit marked: FHC/ABJ/CS/1313/2021, also held that the states’ Attorneys-General lacked the locus standi to bring such a suit that sought to challenge the acts and decisions taken by their governors, through the Nigeria Governors’ Forum (NGF) and the Association of Local Governments of Nigeria (ALGON).

The judge noted that since the debt, which the federal government sought to repay arose from the contracts entered by the state governors, who are members of the NGF and local government chairmen under ALGON, the Attorneys-generals, who are appointees of the governors, cannot, on their own sue to challenge the actions of their appointors.

“Looking at the subject matter of this suit, I can see that it is beyond such matters covered by Section 211 of the 1999 Constitution (as amended) where the Attorney-General has power to engage in suo motu (on its own volition) or upon the directive of the governor.

“Without demonstrating express consent of the respective state governors, who are members of the NGF, whose action they challenge in this suit and who they say they represent, the plaintiffs have not established the locus standi to bring this action in the first place,” Justice Ekwo admitted.

Before the controversial case was admitted to the court, Malami had told everyone that cared to listen that there was no going back on the federal government’s decision to deduct the fund from the 36 states’ accounts to pay private consultants for the Paris Club refund, saying government would not reverse itself on the matter.

He said that it was too late in the day for the governors to backtrack on the indebtedness they had earlier acknowledged and committed to pay.

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Malami said the NGF and ALGON, as well as the consultants, entered into a consent judgment of $3.2 billion in 2013, which they made a commitment to pay and actually made part payments between 2016 and 2017.

Suspecting the veracity of the huge claim the NGF and ALGON made on behalf of the consultants, which was about $3.2 billion, the federal government, according to Malami, brought in the Economic and Financial Crimes Commission (EFCC), and the Department State Services (DSS) to verify the services rendered by the said consultants.

“So, when eventually the services rendered were confirmed, out of further abundance of caution, the federal government took steps to demand confirmation in writing from ALGON and the governors”, Malami said.

“The governors individually wrote to the effect that they were liable. ALGON wrote to the effect that they were liable. And eventually, this payment commenced as far back as 2016. Now, nothing untoward happened thereafter until perhaps of recent when the governors wrote seeking to avoid their liability.”

“The implication of that, taking into consideration that the federal government was indeed sued as a party, was that at the end of the day the liability will be placed exclusively at the door step of the federal government, where in actual fact, this is a liability that was incurred by the Governors’ forum.

“This is a case in respect of which the Governors’ forum and ALGON conceded to judgment by way of submitting to a consent judgment before a court of law. So, what I am labouring to say in effect is that one, the engagement that gave rise to this liability was an engagement that was factored by ALGON and the Governors’ forum.

“Two, arising from such liability, by way of creating a contractual obligation, parties submitted to the jurisdiction of the court in the form of the case instituted by consultants against the governors’ forum and against ALGON, and the parties submitted to the consent judgment.

“Three, the governors have indeed each provided a letter of commitment to the federal government that they were indeed liable, the same thing with ALGON…

“And then four, over and above all these, payment has indeed been effected over time without any objection on the part of ALGON and the Governors’ forum over time. So it is indeed amazing that the governors are now belatedly, after having serviced the same claim for over a period of four-five years, are now belatedly turning round to raise objections in respect of the payment,” he said.

Not moved by Malami’s bravado, the governors through the Body of Attorneys-General of the States last week warned further that should the federal government go on to make any such deduction, it would be acting ultra vires and illegally, as well as acting in contempt of their appeal challenging the judgment.

The governors had also given similar warnings in an April 4, 2022 letter as part of their response to a November 11, 2021 letter from the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, advertising the commencement of the deduction for the liquidation of the alleged judgment debts.

The 36 states in their response to the November 11, 2021 letter from the minister, and signed by the Body of Attorneys-General of the Federation Interim Chairman, Mr. Moyosore Onigbanjo (SAN) of Lagos State and Interim Secretary, Dr. Abdulkarim Abubakar Kana of Nasarawa State as well as the Attorneys-Generals of Rivers, Abia, Taraba, Benue and Zamfara states, for and on behalf of all the state Attorneys-General, cautioned the federal government not to tamper with funds accruing to them and the 774 local government councils under the guise of satisfying an alleged $418 million London/Paris Club Loan refund-related judgment debts.

But last Thursday, Malami insisted states governors have no justification or any basis to query or challenge the $418 million deductions. In his view, the noise making arising from the Governors Forum was not only unjustified, but “a clear case of absence of defense.”

Malami took this position when he featured on the weekly Ministerial Media Briefing organized by the Presidential Communications Team last Thursday in Abuja.

He said the governors created the liability whose payment they had also indemnified. He stated that when the Nigeria Governors’ Forum (NGF) made a request for the refund, one of the component was the settlement of the consultants who were engaged by the forum.

He further averred the governors later took the decision to stop payment while asking for an out of court settlement. This development, he stated, informed the request to the President to make the payment, a request he said, was then passed on to the Office of the AGF for legal opinion.

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The minister said that after being subjected to necessary checks, it was found out that there was no element of fraud involved. He disclosed that the indemnity of the governors was also sought and received.

“I think you need to be informed first, as to the antecedents, prevailing circumstances and how the liability arose.

”But, one thing I’m happy to state, which I want to reiterate having stated same earlier, is the fact that the Office of the Attorney General and the government of President Muhammadu Buhari had not indeed incurred any major judgment debt for the period of seven years it has been on.

”They now embarked on a fresh legal suit, challenging the payment, challenging the previous agreement, challenging the indemnity and the court dismissed the application.
”Their case was dismissed by the Federal High Court. So, that is the foundation and I’m happy to report one,” he added.

He stated that the judgment and contention was a judgment that was obtained long before his appointment as minister and ”long before the administration of President Buhari came into office.”

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