…States, LGAs Insist On NASS Approval Before Payment Could Be Made Legally
States and local governments in Nigeria have kicked against plan by the federal government to directly deduct from their allocations to pay Paris Club related judgement debts to some consultancy firms and individuals who reportedly facilitated the refund.
The New Diplomat recalls that the consultants, including Nigerian businessman, and husband of Regina Daniels, Ned Munir Nwoko had secured a judgement purportedly authorizing the federal government to pay the sum of $350 million to them as consultancy/legal fees for helping states to reclaim the sum of $2,689,279,365 as final payment arising from the refund of Paris Club loans by the Federal Government.
Whereas the federal government relying on legal advice by the Attorney General of the federation, Abubakar Malami had in 2018 directed the Accountant-General of the federation to release the fund to the Consultants, but the immediate past Chairman of the Nigerian Governors’ Forum (NGF) and Governor of Zamfara State, Abdullaziz Yari, objected to it at the time, insisting that the $350 million set aside for consultants’ fee cannot be released without clearance by the National Assembly and other legally designated legal bodies.
The New Diplomat‘s investigations into the refunds revealed that in August 11, 2018, in a letter titled: “Legal opinion on 3rd party claims”, Malami had identified one of the consultants as Honourable Ned Munir Nwoko, who sued the NGF and seven others in suit: FHC/ABJ/CS/148/2017 and claimed that he was engaged by NGF to provide legal/consultancy services on the Paris Club refund.
Malami noted that parties to the suit, including Nwoko and the NGF, entered a consent judgment on May 9, 2017 “to the effect that Hon. Nwoko is entitled to be paid a negotiated percentage on every refund made by the Federal Government to the states,” something the Governors have been kicking against.
The consistent opposition by the NGF and LGAs through the Association of Local Governments of Nigeria (ALGON) has made the implementation of the FG’s thoughts and court judgement on the subject matter difficult, triggering a complicated process with legal experts and governors now insisting that the national parliament of Nigeria (Senate and House of Representatives) MUST weigh in or reign in as it is no longer an administrative matter but a legal process that involves foreign loan protocols that must undergo parliamentary approval.”
A Lagos-based senior Advocate of Nigeria (SAN) and a Queens Counsel (QC) who wishes to remain anonymous confided in The New Diplomat that the position of the Law is that any subject matter relating to foreign loans by either a national or subnational government MUST have the National Assembly approval as the recognized legal and constitutional entity that deals with such matters.
He said: “Any purported agreement or arrangement entered into by the Governors Forum with the parties, especially the consultants without the National Parliament’s approval or endorsement, is illegal as long as the subject matter touches on foreign loans by any tier of government. The Governors Forum is a purely administrative arrangement, or an ad hoc framework unknown to the Constitution of the Federal Republic of Nigeria, 1999 as amended. You for instance, can have a body of journalists or writers set up as administrative body to manage and regulate your affairs and membership, etc.
“That is what the Governors forum is all about in Nigeria. Recall that in 1979 we had the South West States forum, meaning Lagos, Ogun, Oyo, Ondo States Governors Forum. Is it still in existence as at today? It was purely administrative entity.
“The federal government MUST, I repeat MUST obtain NASS consent, endorsement, concurrence or approval before any deduction can be made on Paris refund debt. If deductions are made without going through this legal and procedural route, there will be challenges, crisis, and in the near future, another government can open up the case and send all persons involved in that deductions for possible questioning…That is the position of the Law. I am not talking about politics but the Law. I am not a politician.”
However, a fresh dust is currently being raised on the payment, following a leaked letter dated 14 December, 2020 by the Minister of Finance, Mrs Zainab Ahmed to the Presidency, detailing, in a recommended format, how deductions from allocations to states and local governments would be effected over a ten year period, to offset the outstanding financial obligations due to the designated consultants.
Signed by the Minister of Finance, Ahmed, the letter is entitled; “Re: Liquidation of Judgment Debts On Behalf of Federal Ministries, Departments & Agencies (MDAs); States and Local Governments” with reference number FMF/PSSD/SH/01/VOL.II/320.
The Minister in the letter noted that states and Local Governments are expected to bear the judgement debts, absolving the federal government of any liability. She added that the debts accrued from legal consultancy contracts agreements entered into by the two tiers of Government.
The letter in parts read that the Judgment Debts in Category A, “which are Paris Club related judgment debts would not be included in the 2021-2023 Federal Government Borrowing Plan.”
“The settlement of this Category of judgment debts should ordinarily be effected from funds belonging to the States and Local Governments in the custody of the FGN. That being so, legislative resolution by both Chambers of the National Assembly would not be required for their liquidation.
“On whether the States and Local Governments have formally signed off on the proposed equal monthly deductions from their Statutory Allocations over a period of ten (10) years to defray the relevant expenses incurred by the FGN on their behalf in relation to the claims of the Category A Judgment Creditors, it is pertinent to state that the consent of a Judgment Debtor (in the case of the States/Local Governments is not required before a valid Judgment of a court of competent jurisdiction can be enforced,” the letter read.
Justifying the planned recommended deductions to be credited to the consultants, the Finance Minister in the letter further said that the consent of the states and LGs were not needed before proceeding ahead with the deductions as both the former Chairman of NGF, Yari and ALGON had in 2019, given an indemnity and “No Objection Letters authorizing deductions from the relevant Statutory Allocation to meet the Paris Club related claims, especially the claims by Riok Nigeria Ltd and Dr. Ted Iseghohi Edwards.
“While the Judgment debt claims by Hon. Ned Munir Nwoko and Panic Alert Security System Ltd, emanated from Consent Judgments between the Judgment Creditors and the Nigeria Governors Forum, making it unnecessary that further clearance should be sought from the two tiers on the matter,” the letter read.
The Minister consequently proposed that the deductions be “staggered over ten (10) years” to cushion” the adverse effect/impact that one lump sum deduction or shorter period of deduction of the debts would have on the economy of the affected States and Local Governments and therefore consent of States and Local Governments were not obtained.”
Upon getting the wind of this latest recommendation, states and LGs are now up in arms against the move. The New Diplomat’s checks reveal that these two tiers of government have been protesting against the plan to make any deductions from their monthly allocations without their consent, and most importantly, demanding that an approval from the National Assembly must be obtained before any legal deductions could be effected.
A top ALGON source who spoke in confidence said “the recommendation by the Finance Ministry to the Presidency was wrong because the Ministry of Finance has not sought the consent of the local and state governments and above all, the endorsement of NASS before proposing a plan to deduct from their statutory allocations to settle the consultants.”
According to him, it would amount to “another case of the federal government riding roughshod over the already afflicted local governments should the planned deductions be implemented without Council and National Assembly’s approval.”
Reacting, another external debt consultancy expert who once worked at the World Bank but now based in Washington DC, US told The New Diplomat in confidence that the approval of the National Assembly is mandatory before going ahead with the proposed deductions by the federal ministry of Finance.
He explained: “The Paris Refund is a clear case of external debt pardon and the National Assembly or National parliament must give an approval on the settlement of any accruing fees as a result of the external instruments and foreign protocols involved.
“FG cannot just dip its hands into the funds meant for the states and local governments to pay the consultants. If it were to be an internal loan refund process, it would have been a different ball game entirely.
“Any mistake in this direction would be a grave error which could land even the consultants and the ministry of finance in serious issues bordering on procedural, legal, lawful and ethical infractions…It is your memo and actions in government that would normally speak to the issues you when you are gone. Tomorrow you could be called to answer for this type of obvious breach. I would advise that the federal government especially the ministry of Finance should slow down and do the needful by securing appropriate legislative instruments or approval on the matter.”
The New Diplomat‘s findings show that a total refund of about $13, 572,014, 203.93 ($13.5b) may have been made by the federal government following the debt relief by the London-Paris Club; Fed Govt/FCT takes $7,089,331,779.32 share of the fund; States/LGs – $6,483, 282,424.61
While the states reportedly had $3, 858,189,596.76, the LGs got $2,626,092, 828.84 of the funds’ share.
However, only a few number of states directly remitted the refund to the local government councils as majority of state governments claimed the funds as theirs.