Paris Club refund: Court bars Buhari, AGF from deducting $418m from states

A Federal High Court in Abuja yesterday restrained  President Muhammadu Buhari, the Attorney General of the Federation (AGF) and five others from proceeding with the planned deduction of about $418 million from the accounts of the 36 states in settlement of alleged debt from the Paris Club Refund and judgements got by some individuals and firms against the Association of Local Government of Nigeria (ALGON).

Justice Inyang Ekwo issued the order after listening to Jibrin Okutepa (SAN)  and Ahmed Raji (SAN) who argued the states’ ex-parte application.

Also restrained by the court order were the Accountant General of the Federation, Ministry of Finance, the Central Bank of Nigeria (CBN), Debt Management Office (DMO) and Federation Account Allocation Committee (FAAC) -who are all listed as the first to seventh defendants   in  suit FHC/ABJ/CS/ 1313/2021.

But the federal government insisted ,last night,that the deductions were lawful.

While moving the ex-parte motion filed by the 36 states, Otukepa, argued that his clients  would be crippled if the Federal Government, acting through the first to seventh defendant, went  ahead to deduct the huge amount from the bank accounts of the States.

He said the Federal Government claimed that the planned monthly deduction, scheduled to commence at the end of November, was to settle debts for contracts allegedly executed for the states.

Otukepa, however, said that the 36 states’ Attorneys-General have read the purported judgment displayed by the Federal Government and found that the states were not parties to the court cases which led to the judgment debt.

He added that the purported contract claimed to have been executed for the states was not known to any of the 36 state governments and is therefore a phony contract.

Okutepa noted that the Federal Government was the only party to the court case that resulted in the judgment and therefore such judgment is not binding on the state government.

In a brief ruling, Justice Ekwo granted three of the four reliefs contained in the ex-parte motion, with the one that sought a refund, which Okutepa agreed to withdraw on the grounds that no deduction had been made.

Justice Ekwo then adjourned further hearing till November 30.

Deductions lawful, Federal Government insists

Reacting, the Federal Government faulted the claim by the 36 state governments that the planned deduction of $418million was unlawful.

It said  the debt arose from contracts willfully entered by the states and Local Government, which resulted in litigations and judgments given in favour of the consultants engaged by them.

Umar Gwandu, the media aide to the Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami,said in a statement that  the Federal Government gave  funds to the states and Local Governments, between 2016 and 2018, to defray consultancy fees and related expenses incurred by them.

The FG wondered why the same states and LG, that had paid part of the Paris Club refund debt to the same consultants, were now opposed to its move for final settlement of the outstanding debt.

He said:”It is remarkable to note that the Nigeria Governors’ Forum (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.

“Specifically, NGF was paid US$86,546,526.65 and N19,439,225,871.11 in 2016 and US$100,000,000.00 in 2018. It was, however, convenient at that time not to complain about payment of consultants,” the FG said.

The statement reads: “It can be noticed that some reports contain willful statements suggesting that some government officers were acting without due process in the settlement of certain judgment debts (totaling US$418million) arising from the deduction and refunds due to the States and Local Governments from the Paris Club loan refunds.

“It is important and necessary to state, at the onset, that the deductions were on account of four judgments in contention which were delivered at various times in 2014, 2015, 2017 & 2019.

“Two of these judgments were consent judgments based on terms of settlement entered into by NGF in 2017 & 2019. Again, two of the four judgments were based on an earlier judgment delivered by the Federal High Court in 2013.

“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. In furtherance of the consent and settlement the NGF itself made payments in billions to the consultants based on the same judgment it is deriding now.

“By various letters addressed to the Honourable Attorney General of the Federation and Honourable Minister of Finance, both NGF and ALGON expressed no objection and actually recommended the same set of consultants for payment.

“Indeed, the judgement debts were much higher than the above figure, but these officers ensured that the consultants granted a consistent concessional offer.

“The office of the HAGF also subjected the claims of the consultants/contractors to investigations by both the DSS and EFCC in order to further ascertain the veracity of the claims. Recommendations for payment were thus made based on the positive outcomes of these investigations.

“Since both NGF and ALGON that have entered into judicial settlement on account of which consent judgment was entered have refused to comply with these judgments, it became pertinent for the Federal Government to take the initiative in order to prevent a situation where the debt liability of NGF and ALGON would be transferred to the Federal Government and eventually excluded against its assets and interest.

“The interest of the Federal Government to intervene in the negotiated settlement was borne out of the fact that the Consultants made Federal Government a party to the action against NGF and ALGON the implication of which was that the judgment may be executed against the interest and assets of the Federal Government over liability that was incurred exclusively by NGF and ALGON in respect of which the Federal Government is not responsible.

“It is curious to note that both NGF and ALGON who had actual knowledge of these judgments between 2013 and 2019, consented to their partial compliance and also undertook in 2019 to settle them from their FAAC Allocations, only turned around in 2021 to take steps to challenge the judgments.”

By admin

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