Paris Club Refund: As FG, States Battle on All Fronts

The squabbles between the federal government and 36 states over the Paris Club Refund has reignited the debate over fiscal federalism, Paul Obi writes

The row between the 36 state governors and the Attorney-General of the Federation (AGF) and Minister of Justice Abubakar Malami (SAN) over the $418 million Paris Club refund debt deepened last week when the state chief executives under the aegis of the Nigeria Governors’ Forum (NGF) accused the AGF of bias in his handling of the disputed debt allegedly owed private contractors and firms by the 36 states and 774 local governments.

The disagreement involves a directive by Malami to the Minister of Finance, Zainab Ahmed to pay some consultants a whopping sum of $418 million. The consultants are RIOK, Panic Alert Security System Ltd led by George Oboh and LINAS, promoted by Hon. Ned Nwoko among others.

The vexation of the NGF stemmed from the haste with which Malami is facilitating the payment. Added to that, the governors queried that the matter regarding the payment of the consultancy fees to the companies is still pending before the Court of Appeal.

They stressed that the order by the AGF mandating the Ministry of Finance to pay such humongous funds was a clear case of abuse of court process, which amounted to being subjudice.

But before this round of bickering over the Paris Club Refund, the NGF Chairman and Governor of Ekiti State, Dr. Kayode Fayemi had earlier dispelled speculations that the federal government was on the verge of deducting funds from the Paris Club Refund in order to pay the consultants. An apparently miffed Fayemi, had at a function in Abuja debunked such claims, stressing vehemently that, “we are dealing with the issue. We would find a resolution to it. As far as states are concerned, they do not accept that funds belonging to Federation Account could just be arbitrarily deducted without the input of the states, and that’s why we are insisting that until this is clarified, we would rather leave the money in the pool until we have all agreed on the direction,” the governor told journalists in the nation’s capital.

Few weeks after the NGF stated their position on the move by the federal government to deduct funds from the Paris Club Refund, and had also obtained a restraining order from the court to halt the move, the AGF, Malami, through his media aide, Dr. Umar Gwandu, argued that the desire to proceed with the payment was sequel to agreement reached by the NGF, Association of Local Governments of Nigeria (ALGON), the federal government and the companies involved.

Malami maintained that previous engagement with the NGF clearly indicated that the payment of consultancy fees had already been sealed.

He added that “it is remarkable to note that the NGF at various times in 2016 and 2018 received payments from the federal government under the guise of legal and consultancy fees related to the same Paris Club refunds.”

The nation’s Chief Law Officer observed that “it is, however, amazing that from 2013 – 2021 neither NGF nor ALGON deemed it fit to either challenge or fully comply with any of these judgments. Malami went further to state that in all the agreement for the payment of the consultancy fees, “both NGF and ALGON expressed no objection and actually recommended the same set of consultants for payment.”

Expectedly, the NGF would have none of the AGF’s explanation. Speaking through the Head of Media and Public Affairs, Abdularazaque Bello-Barkindo, the NGF accused the AGF of clandestine motives and a deliberate move to thwart the governors’ efforts to resolve the conflict through constitutional means.

In unraveling the position of the NGF, it is obvious that the governors are suspicious of Malami’s intentions, and perceive his actions to be cloaked by a cobweb of vested interests. In no hold bars, the NGF accused Malami of having untoward relationship with the consultants, stating that “the undue haste, with which the statement was issued, even before the service on the AGF of the court processes and the order dated November 5, 2021 restraining the federal government, seems to suggest that there is a special relationship between the Office of the HAGF and the consultants over and above Nigerian citizens, whose interest the AGF as the Chief Law Officer of the Federation is statutorily bound to always protect.”

The governors questioned the rationale behind Malami’s intervention on the matter and his swift mandate that the consultants be paid.

“Was the AGF not concerned that several contractors are laying claim to legal fees for the same Paris Club Refund? Was it lost on the AGF on the detailed procedure available under the law on how legal fees can be claimed in deserving cases?” the governors asked.

They argued that the AGF’s hasty commitment to the deduction of funds from the Paris Club Refund amounted to some form of unnecessary meddlesomeness.

“The AGF also claims he intervened to pay the contractors. That is absolutely not true at all. Assets of the FGN were not at any time threatened,” the governors observed.

Speaking to THISDAY, a Senior Advocate of Nigeria (SAN), Chief Mike Ozekhome maintained that, in a democratic society, litigation over issues of funds are bound to happen, more so, when political resolutions of such issues have failed drastically.

“In a democracy, where political solutions fail, parties are bound to go to court; the governors said the money belongs to them, if this money belongs to them and they have gone to court, it is left for the court to resolve the matter,” Ozekhome stated.

Also speaking, another legal luminary, Mr. Joseph B. Daudu (SAN), opined that it is incumbent on the governors to pay the consultants if there was any obligatory agreement between the parties. He added that it was a known fact that it was the consultants that first went on to unearth discrepancies in the Paris Club Funds with regards to what was legally due to the state governments.

“If you asked me, if the governors owed the consultants, they should be paid, but if the governors think otherwise, and that there is no such agreement, they should wait for the court, until the court decides, no action can be taken. First, they (governors) did not know about the Paris Club Funds’ exact dues accruable to the states, until the consultants went and brought that out to them, and the state started collecting the money, billions of dollars; but if you think the quantum of money is too much, then go and negotiate,” Daudu explained.

Beyond the divergent opinions on whether the states should pay or the AGF ought to have waited for the court process before jumping the gun, concerns have been raised over the perennial cases from the Office of the Attorney General of the Federation (OAGF) negotiating deals that often placed the nation at a disadvantaged position. The case of the repatriation of Abacha looted funds, where two Nigerian lawyers were allegedly paid about $15 million despite public outcry is still fresh in the mind. Also, the federal government’s negotiation with the telecom giant, MTN, did not receive applause in the court of public opinion.

More disheartening has been the growing lists of litigations between the states and federal government, all bordering on issues of fiscal federalism.

At the last count, there are about four cases pending before the Supreme Court for adjudication. They include the controversy over the collection of stamp duties by the federal government; the collection of Value-Added Tax (VAT); funding of state courts and the war over recovered looted funds.

Overall, Nigeria’s capacity to distribute resources and federal allocations (revenues) adequately among the three tiers of governments in recent years has been subject of controversy.

The results have been the reckless borrowing by the federal government and the mortgaging of the future of the young generation; states going bankrupt and local governments sinking into poverty.

All these cascading conflicts over the nation’s revenue sharing formula point to a disgruntled distributive crisis, made worse by Nigeria’s blatant refusal to adhere strictly to the ethos of fiscal federalism. For now, President Muhammadu Buhari-led administration’s politics of ‘us against them,’ has deepened the rancour on fiscal federalism to a clannish warfare of states vs the federal government.

As the administration stirs close to its departure and exit, history will reckon with Malami and Buhari’s government as the administration that was constantly into loggerheads with the states. It has been an all-out battle over the sharing of the nation’s stupendous wealth and bogus revenues that ended up ruining the country as the poverty capital of the world rather than prosperity. Thus, the Paris Club Refund has also shown that it was a battle on all fronts, as all eyes and hears await the courts, the Supreme Court in particular.