Paris Club Refund: Court stops FG from deducting $418 million from state governments’ allocations

Gov Kayode Fayemi of Ekiti state

The Federal High Court Abuja on Friday stopped the Federal Government from deducting $418 million from the accounts of the 36 states government to settle the judgment debts concerning the Paris and London clubs refund.

The debts had accrued from court judgments awarding the creditors, who claimed to be “consultants” and “contractors” to the states and local governments, various sums of money which currently stand at $418 million.

Some of the creditors claimed to have earned their shares of the money through ‘consultancy services’ of helping state and local governments to recover funds over-deducted by the federal government from their allocations between 1995 and 2002 to service the London Club and Paris Club loans.

President Muhammadu Buhari had ignored the protests by the Nigerian Governors’ Forum (NGF) to approve the issuance of promissory notes to the creditors.

The promissory notes asked to be issued by the Debt Management Office (DMO) are to be funded through deductions from the allocations of the states and local governments for a period of 10 years.

But on Friday, Inyang Ekwo, the judge of the Federal High Court in Abuja approached by the governors, issued a restraining order against the federal government following an ex-parte application argued by their lawyer.

President Muhammadu Buhari

The state governments’ lawyers – Jibrin Okutepa and Ahmed Raji – both Senior Advocates of Nigeria, moved the application on Friday.

In his submission, Mr Okutepa , who led the legal team, hinted that the deductions were to begin in November.

He said if the deductions were allowed to go on, the states would be completely crippled and that they would not be able to pay salaries.

“That is why we ran to your court,” he said.

Mr Okutepa added that the 36 states’ attorneys-general had scrutinised the purported contracts and judgment debts, and found that the states were not parties to the court action that resulted in the judgment debts.

He said the purported contracts claimed to have been executed for the states were not known to any of the 36 state governments and is, therefore, phony contracts.

The lawyer added that the federal government was the only party to the court case that brought the judgment and therefore such judgment was not binding on the state government.

The News Agency of Nigeria (NAN) reports that 43 defendants were sued in the application.

They include the Attorney-General of the Federation (AGF), Accountant General of the Federation and Ministry of Finance, the Central Bank of Nigeria (CBN), Debt Management Office (DMO), the Federation Account Allocation Committee (FAAC), and the Association of Local Government of Nigeria (ALGON), among others.

Being an ex parte hearing, the respondents were not represented in court on Friday.

After listening to the arguments of the applicant’s lawyer, Mr Ekwo granted three of the four prayers of the applicants.

Part of the orders granted by the judge was one restraining the federal government from going ahead to make any deductions from the states’ accounts in respect of the purported court judgments until all issues relating to it were fully determined.

“Order as prayed except prayer 4 which the court cannot grant,” he said.

The applicant’s prayer 4, which the court did not grant, asked for a refund of part of the money that could have been deducted by the federal government.

He also ordered that all the defendants be served with the processes.

The judge then adjourned the matter.(NAN)


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