The federal government’s decision to debit local government accounts in order to begin a payment of $418 million (N172 billion) to private advisers on the Paris Cub refund has pitted states and local governments against the FG.
Only three Nigerian state governments (Lagos, Rivers, and Akwa Ibom) can sustain their recurring expenditure without federal government allocation, according to BudgIT, a civic initiative dedicated to government financial transparency.
The Nigeria Governors Forum (NGF) and the general public have put pressure on the government to halt the dubious payments to the consultants.
The Attorney General of the Federation and his allies in government pushed for this payment.
In a spectacular turn of events, less than a month after President Muhammadu Buhari’s direction, the Ministry of Finance, Budget, and National Planning has begun deducting funds to pay claimants.
The Federal Ministry of Finance’s permanent secretary told the Federation Account Allocation Committee (FAAC) meeting on Friday that deductions to pay the consultants had begun.
The states were irritated by this information, and they refused to consider revenue for the month of October 2021 unless the FG clarified the deductions.
In 2006, the federal government paid $12 billion to the Paris Club of international creditors in exchange for a $18 billion debt write-off.
States and LGAs that did not owe the Paris Club requested a reimbursement from the federal government because the payment was made straight from funds accruing to the entire federation.
Some consultants arose along the way, claiming a cut of the reimbursements as remuneration for ostensibly providing services to the states and LGAs.
The Association of Local Governments of Nigeria, according to certain contractors, has requested them to carry out projects across the country (ALGON).
However, it was questioned why states would need advisors to negotiate with the federal government over the reimbursement when the projects ALGON claimed to have granted were primarily non-existent.
Before any payments, the governors, led by Dr Kayode Fayemi, requested a forensic audit.
While the contractors and consultants were in court, Abubakar Malami, the Attorney General, negotiated an out-of-court settlement with them, agreeing to pay $418 million in judgment debt.
Despite the governors’ and activists’ resistance, President Buhari went ahead and approved the payments.
The Nigeria Governors’ Forum (NGF) had instructed banks and compliance officers to overlook the $418,953,670.59 payment to consultants.
The governors reiterated that the promissory notes should be ignored in a new letter dated September 3 and signed by P. H. Ogbole, another Senior Advocate of Nigeria (SAN).
The governor of the Central Bank of Nigeria (CBN), the Attorney-General of the Federation (AGF), the finance minister, the director-general of the Debt Management Office, and the MDs/CEOs/compliance officers of all commercial banks in Nigeria were also addressed in the letter.
“The issuance of promissory notes of a humongous sum of over $418 million to private persons for alleged consultancy work demands not only caution but strict due diligence; particularly when the judgements which gave rise to the payments sought to be enforced are the subject of pending litigation.
“Matters that are sub judice must not be acted upon in a manner that will foist a situation of complete helplessness on the courts and render their decisions nugatory.
“This caveat is therefore issued as a further notice to the honourable minister of finance and the director-general, Debt Management Office to act in the interest of the public and refrain from foisting on the nation another case of P&ID in which but for due diligence, the nation would have been fleeced of billions of dollars.
A terse statement signed by Mr. David Olofu, chairman, Forum for Commissioners of Finance of Nigeria said the debit happened without notification of all concerned.
The statement indicated that “members declined approval after consideration of the reports for the disbursement of the available revenue because of deduction on funds belonging to the Local Government Councils in favour of some consultants for a $418 million judgment debt for consultancy services with respect to Paris Club Loans refund.”
It said: “Based on available information, the deduction will continue for 10 years (120 months). This is contrary to the provisions of Section 162 of the Constitution of the Federal Republic of Nigeria 1999 as amended.”
Mr. Olofu also noted that “the Nigeria Governors’ Forum (NGF) had objected to the execution of this judgment until full determination of ongoing litigation on the subject matter.”
He disclosed that the “Commissioners for Finance representing states and local government councils do not have prior knowledge of the deduction and coming at a time when states and LGCs are in dire straits will further worsen the fiscal position of these tiers of government.”
He added that “consequent upon these, the meeting was adjourned to allow for further consultations and resolution of all the issues that had been previously raised by the Nigeria Governors’ Forum (NGF) regarding the assignment that gave rise to the claim and the judgment.”
