$418m debt: Governors kick against planned deductions from federation account to pay consultants

The Nigeria Governors’ Forum (NGF) has raised the alarm over a purported attempt to deduct $418 million from the federation account to settle the controversial Paris Club debt.

The governors said this in a letter dated August 1 and addressed to Boss Mustapha, secretary to the government of the federation (SGF).

They alleged that the plan is spearheaded by Abubakar Malami, attorney general of the federation (AGF), and Zainab Ahmed, finance minister.

“The attention of the NGF has been drawn to yet another attempt by the Attorney General of the Federation (AGF) and the Minister of Finance (HMF) 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,” the letter, signed by Kayode Fayemi, NGF chairman and governor of Ekiti, reads.

“It would be recalled that an earlier approval of Mr. President under the instrumentality of the AGF and HMF to pay the said sum to the contractors through the issuance of promissory notes had met stiff resistance by the 36 state governors who approached the court for redress through their Attorneys-General.

“The matter is currently pending on appeal at the court of appeal in Abuja for hearing.”

“Significantly, the governors said that while the appeal is pending, one of the contractors, who is a beneficiary of the promissory notes for $142,028,941.95, Riok Nigeria Limited, and who had lost at the court of appeal, further appealed to the supreme court, in suit no: SC 337/2018.

“The supreme court on June 3, 2022, also dismissed Riok’s appeal as lacking in merit. The SC had on the occasion made clear that neither the NGF nor ALGON have the power to award contracts and charge the same directly to the federation account as done in this case. The SC specifically held on page 43 that:

“The funds belonging to a state or local government must be kept in an account belonging to the state or local government as the case may be, and disbursed or expended by the state strictly in the manner and for the purposes prescribed in the constitution and an appropriation law or as prescribed by the house of assembly of the State and in the manner and for purposes prescribed in the constitution, a local government law or as prescribed by the council of the local government.”

According to the governors, the dismissal of RIOK’S case by the court also affected the payment of $1,219,440.45 and $215,195.36 to two private lawyers to RIOK, Nwafor Orizu and Olaitan Bello who are also beneficiaries of promissory notes by the Debt Management Office (DMO).

Besides RIOK and the two lawyers, the NGF added that the states had also challenged either on appeal or in other courts the claims by the other contractors including Dr Ted Isighohi Edwards ($159,000,000), Ned Nwoko ($68,658,192.83) and Panic Alert Security Systems Ltd ($47,831,920).

“These cases are pending and no steps ought to be taken to enforce the Judgment and alter the status quo until the matters are fully determined. A caveat issued to restrain all parties concerned and the public from dealing or honouring promissory notes issued had earlier been published,” the NGF added.

“The purport and essence of the definitive pronouncement by the SC is that none of the contractors recommended for payment of the sum of $418 Million by the AGF and HMF can be so paid because the contracts and payments relied upon were not processed as prescribed by the Constitution and the law.

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“The funds certainly cannot be accessed through the federation account as vigorously pursued by the AGF and HMF.

“FEC may also wish to note that the undue haste in which the payment of the contractors in the Paris Club refund has been pursued and processed by the AGF and HMF has already created the impression in the discerning minds of the public that it would appear that the interest of contractors takes precedence over and above the welfare and interest of the general public whom the senior officials of government had sworn to defend and protect.”

Over the years, the controversial payment of $418 million to consultants over the Paris Club refund had become a contentious issue between the three tiers of government.