States Fail to Stop $418m Payment to Debt Consultants

States Fail to Stop $418m Payment to Debt Consultants

The 36 states of the federation yesterday failed in their moves to stop the federal government from deducting their funds in the federation account to pay fees allegedly owed to consultants that supposedly handled the Paris Club loan payments’ refunds to the states.

The suit filed on behalf of the states by their various Attorneys-General was dismissed for lacking in merit.

A source close to the Chairman of the Nigerian Governors Forum (NGF), Governor Kayode Fayemi of Ekiti State, said he was shocked by the ruling and had directed their lawyers to swiftly appeal the judgement.

Justice Inyang Ekwo of the Federal High Court in Abuja dismissed the suit on the grounds that the plaintiffs lacked the legal powers to institute the suit.

The Attorney General of Abia State and his counterparts from the 35 states had approached the court to stop the federal government from going ahead with the planned deductions of their funds in the federation accounts to pay six consultants that allegedly helped the states recover excess deductions in payment of the Paris Club loans.

President Muhammadu Buhari had approved the deduction of $418 million being judgment debt entered against the 36 states over their failure to pay the consultants.

Amongst the reasons adduced by the AGs was that they never authorised any contract and that the said contracts were suspected as fraud, hence the need for the court to stop the planned deductions.

However, delivering judgment yesterday, Justice Ekwo held that the plaintiffs, who are political appointees of their various state governors, lacked the powers to initiate the suit without the consent of the governors.

He added that since the controversial judgment debt arose from the actions of the governors, who are members of the Nigeria Governors Forum (NGF), the AGs as appointees cannot therefore sue to challenge the action of their bosses.

The court also dismissed the suit as an abuse of the court process because, according to the judge, the plaintiffs by the suit are seeking to get the court to review the judgment of $418 million entered against the 36 states.

Ekwo ruled: “This court cannot review any judgment of this court or court of coordinate jurisdiction or the Court of Appeal or the Supreme Court. I therefore dismiss the case for being an abuse of court process.”

The judge explained that what the plaintiffs should have done was to have filed a suit to set aside the judgment debt.

On the substantive issue, the court held that the federal government has the powers to deduct from state funds to pay any debt owed by the state.

While stating that the Constitution does not prevent deductions of debt, he said, “the Constitution will not permit arbitrary deductions.”

Having established that the plaintiffs are not proper persons to make the case, Justice Ekwo held that, “Court does not grant reliefs to a non-party or a person that is not proper before the court.

“I do not see any merit in this case, I therefore dismiss it for lacking merit.”

Recall that the court had in November last year refused to grant an injunctive order seeking to stop the federal government from deducting $418 million from state governments’ account to pay the judgment debt to contractors of the Paris club refund.

Justice Ekwo rather granted accelerated hearing in the substantive suits filed by the 36 states government challenging the decision.

He had held that he could not proceed to determine the Motion on Notice following objections by some defendants challenging the court’s jurisdiction to entertain the motion.

According to him, since jurisdiction was a paramount issue in litigation, it was best to resolve it before proceeding further in the matter, adding that it would amount to wasted efforts by a court to proceed on a matter to only find out that it lacked jurisdiction.

“The application for interlocutory injunction is not granted,” the judge held. He subsequently adjourned till December 21, to hear the preliminary objection raised by the defendants, as well as the main suit.

The governors of the 36 states had rushed to court following President Buhari’s approval of the payment of the controversial $418 million to six creditors as judgment debts in their favour.

The six contractors it claimed were engaged by the 36 states government to help them recover excessive deductions from their accounts in payment of the Paris Club loans.

The beneficiaries include Ned Nwoko, $142,028,941; Ted Iseghoghi Edwards, $159 million; Riok Nigeria Limited, Orji Nwafor Orizu, and Olaitan Bello – $142,028,941.95 and Panic Alert System Limited and George Uboh, $47,831,920.

Based on Buhari’s approval, the Federal Ministry of Finance was also said to have directed the Debt Management Office (DMO) to commence issuance of promissory notes to the creditors.

The governors accused the president of approving the payment without considering their call for a forensic audit of the claims of the creditors.

But the defendants faulted the suit on the grounds that a Federal High Court had earlier issued an order that the federal government should deduct the money.

They argued that based on the earlier judgment of court, the former Chairman of Nigerian Governors Forum, Abdulazeez Yari issued a promissory note on behalf of the governors to the effect that the $418 million be deducted from their money from the federation account.

The defendants, who were represented by various lawyers, also challenged the jurisdiction of the court in the instant case, adding that since the earlier judgment was delivered by the same court, more than four years ago, the governors did not deem it fit to file appeal against the judgment.

They, therefore, prayed Justice Ekwo not to sit as an Appeal Court in a matter that had earlier been decided by his court.

While the 36 states’ Attorneys-General are the plaintiffs in the suit, some of the defendants listed in the suit include the Attorney-General of the Federation, Accountant-General of the Federation and Ministry of Finance.

Others are the Central Bank of Nigeria, Debt Management Office, Federation Account Allocation Committee, Incorporated Trustees of Association of Local Government of Nigeria, among others.

Fireworks on this case are expected at the Appeal Court very soon. The governors believe the judgement is not sound.

The source close to Fayemi remarked: “Most of his (Fayemi’s) colleagues were also shocked by the ruling. You know that they are all in Abuja for the APC convention. They all expressed reservations about the ruling and approved that their lawyers proceed to the appellate court immediately.