FG, States on Collision Course over $418m Paris Club Refund

 With an appeal pending at the Court of Appeal, the 36 states of the federation are contesting the federal government’s excessive speed to begin the deduction of the $418 million judgment debts from the London/Paris Club Loan refund, writes Vanessa Obioha

The 36 state governors of the federation last Monday warned the federal government against going ahead with the planned deduction of $418 million from the federation account to settle debts purportedly owed to consultants engaged by the states and local governments on the London/Paris Club refunds.

They said they were not parties to any suit on the London/Paris Club refund, and thus were not 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 had become a contentious issue among the three tiers of government. Consultants had laid claim to the amount as a percentage of the payment of services rendered to the states and local government councils.

In March, the Attorneys-general of the 36 states had appealed a judgment that dismissed a suit seeking to restrain the federal government from effecting the planned deduction of $418 million from states’ funds.

The appeal was borne out of the fact that Justice Inyang Ekwo of the Federal High Court in Abuja had dismissed a suit filed by the 36 states, through their Attorneys-General to stop the federal government’s decision to deduct $418million from the funds standing to the credit of the states to pay debts owed the consultants engaged in relation to the Paris Club refunds made to states. The judge held that 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 said.

The judge further held that the state AGs, having admitted that the debt arose from the contracts entered with the consultants by the NGF and ALGON, they cannot claim that such contracts were not binding on the states.

Before the case was taken to the court, Malami had boasted 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.

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

Tracing the genesis of the dispute, 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.

He recalled that because the federal government was suspicious of the huge claim the NGF and ALGON made on behalf of the consultants, which was about $3.2 billion, the federal government invited 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.

“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 was a liability admitted 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. They wrote individually; the governors wrote, individually directing the federal government to effect payment of this amount. And we have the letters at our disposal, perhaps copies could be made available to you after this session. So, what we are saying in essence, is that this is a self-induced problem arising from the concession, arising from the consent, arising from agreement of the governors’ forum and arising from the agreement of 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.

But speaking through the Body of Attorneys-General of the Federation last Monday, the states warned further that should the federal government proceed to make any such deduction, it would be acting illegally and in contempt of their appeal challenging the judgment. They gave the warning in an April 4 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 a November 11, 2021 letter from the minister, advertising the commencement of the deduction for the liquidation of the alleged judgment debts, 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, warned 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.

In the letter, it was noted that the deduction of the allocations due to the 36 states of the federation from the Federation Account to liquidate the London/Paris Club Loan refund-related judgment debts is the subject of an appeal filed by the 36 states at the Court of Appeal, Abuja.

The letter explained that: “The appeal challenges the Federal High Court (per Honourable Justice I.E. Ekwo) judgment 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.”

In addition, it noted that the states have also filed a Motion on Notice for an Order of Injunction pending Appeal. The letter added that the Body’s legal representatives had published a public caveat in National Dailies notifying the public of the pending Appeal, which also advised concerned parties “to desist from dealing with the subject matter thereof pending the hearing and determination of the Appeal and the application for Injunction pending Appeal.”

It said that given the above, “the law requires you to restrain from taking any step whatsoever that is capable of interfering with the rest of the suit, which is now a subject of an appeal.

“Accordingly, Nigerian case law enjoins you to refrain from effecting any deduction whatsoever from the allocations due to the 36 states from the federation Account for the liquidation of the London/Paris Club Loan refund-related judgment debts purportedly on behalf of the 36 states of the federation and the 774 local government areas, pending the hearing and determination of the appeal by the states of the federation. Doing otherwise in the face of the pending appeal and motion on notice for injunction pending appeal shall be at your peril.”

As it stands, since the state governments have appealed the case, it is expected that Malami and the federal government should exercise restraint and wait for the right of appeal to be fully exhausted before any further action is taken. The AGF needs to ward off pressure from the consultants in the overall interest for justice