Resolving the $418m Paris Club Refund Conundrum

The dispute between the federal government and sub-nationals over payment of $418million allegedly owed the consultants on Paris Club refund is now in the judicial arena and should be resolved there, writes Louis Achi

Last week, President Muhammadu Buhari halted the controversial payment of $418million from the federation account, related to the Paris Club refunds allegedly owed four contractors. The presidential directive was to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed.

This development followed the efforts by some ministers, who during the weekly Federal Executive Council (FEC), moved against the idea being resolutely  pushed by the Attorney General of the Federation and Minister of Justice, Abubakar Malami and  Ahmed, saying the idea was inimical to the current realities in the country.

But the ministers’ effort had the prior backing of the state governors. The Nigeria Governors’ Forum (NGF) had consistently resisted the renewed moves by Malami to pay the money. In a letter to the federal government, through the Secretary to the Government of the Federation (SGF), Boss Mustapha, the governors condemned restarting of the deduction being challenged in court.

According to the letter signed by Chairman of the NGF and Governor of Ekiti State, Dr. Kayode Fayemi, the governors held the new move was an “attempt by the Attorney General of the Federation (AGF), Abubakar Malami, and the Minister of Finance to circumvent the law and the recent judgment of the Supreme Court by surreptitiously securing the approval of the 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.”

Specifically, in their letter, the governors were of the position that the essence of the definitive pronouncement by the Supreme Court was that none of the contractors recommended for payment of the sum of $418 million could be so paid, because the contracts and payments relied upon were not processed as prescribed by the constitution and the law.

This notwithstanding, at the FEC meeting of Wednesday, August 3, Ahmed and Malami presented a memo, urging the cabinet to approve the deductions from funds due to states from the federation account. But this cut little ice with the other ministers who swiftly countered the duo. Vice-President Yemi Osinbajo; ministers; and the SGF, Mustapha led the charge.

The FEC members who spoke against the deduction, contended that it would be sub-judicial for any payment to be made to the contractors while cases were pending in courts, according to THISDAY sources.

It could be recalled that in 2006, the federal government under the Olusegun Obasanjo presidency had paid $12 billion to secure an $18 billion debt write-off by the Paris Club of international creditors. But because the payment was made directly from the revenue accruing to the entire federation, states and local government councils that did not owe the Paris Club asked the federal government for a refund.

Some consultants nimbly surfaced along the line to claim a percentage of the refunds as payment for their services to the states and councils. Some of the contractors also claimed they were asked to execute projects across the country by the Association of Local Governments of Nigeria (ALGON).

Cogent questions were raised on why states would need consultants to negotiate with federal government over the refund, while the projects said to have been awarded by ALGON reportedly turned out to be mostly non-existent.

Subsequently, state governors then asked for a forensic audit. Significantly, while the contractors and consultants went to court, Malami curiously went to negotiate an out-of-court settlement with the consultants and agreed to pay $418 million as judgment debt.

Despite opposition by the governors and activists, President Buhari went ahead to approve the payments and directed the Ministry of Finance to ask the Debt Management Office (DMO), to pay in form of promissory notes. Malami had reportedly persuaded Buhari to approve the Paris Club claims because Nigeria’s foreign assets “might be attached”.

But against the background of persistent opposition by governors who also enlisted the legal process, President Buhari altered course and directed the Ministry of Finance to stay action “until all the cases are exhausted”. This was in September 10, 2021 – while the latest such position came up last week by the president.

But certainly not a fellow to allow the grass grow under his nimble feet, Malami stoutly fought back, stating on Thursday that the state governors had no basis to refute $418million deductions from the Paris Club refund paid to consultants they hired. He spoke to newsmen at the 46th Session of the State House Ministerial Briefing organised by the Presidential Communications Team at the Aso Rock Villa, Abuja.

Malami declared that the governors originally created the liability whose payment they had also indemnified explaining that when the NGF requested the refund, one of the conditions was the settlement of the consultants it engaged.

He noted that when the refund was paid to the states, a part payment was also made to the consultants. But the governors eventually halted payment, requesting for an out-of-court settlement instead.

Dismissing Malami’s position, the governors maintained that it is immaterial that part of the contract sums had been paid, explaining the payments did not validate the unlawful nature of the contracts. “The Supreme Court has spoken. It is final and must be obeyed,” the NGF noted.

In NGF’s words: “The rule of law is not only supreme but 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.

At a time many state governments cannot pay salaries or cope with the high cost of administration, not many Nigerians are wondering why the AGF is so interested in paying the consultants the controversial sum. They wonder whose interest is he representing in the matter: public interest or personal interest?

However, of some concern is that Buhari’s directive to “stay action” may not be final. This is because in the past, a dubious payment of legal fees was made to lawyers over the Abacha Loot despite the president initially holding off.

Enrico Monfiri, a Swiss lawyer, had already been paid by the federal government for the recovery of the loot and all that was left was for AGF Malami to write for the money to be repatriated. But the Attorney-General went ahead and engaged lawyers to write the letter, and they were paid $17 million – $5 million more than Monfrini who had traced and frozen the loot over a period of seven years.