August 28, (THEWILL) – Controversy has a way of tearing relationships apart, especially when money-related issues are involved as state governments, the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, have found out in the ongoing tussle over the payment of $418 million to some persons claiming to have provided “consultancy” services to the states, with respect to Nigeria’s debt cancelation by the London and Paris Clubs in 2005.
Many cash-strapped state governments are currently finding it hard to henceforth meet their financial obligations to the governed, following the failure of traditional cash cows like the Nigeria National Petroleum Corporation Limited (NNPC) to remit money to the Federation Account, despite making N2.38 trillion in the past six months. They will not back down on their ongoing “war” with the AGF and consultants.
“We are surprised that after President Muhammadu Buhari said payment in the matter be discontinued, two days later AGF Malami said they would continue payments. Are we now in Malami’s government?” Mallam Abdulrazaque Bello- Barkindo, Director, Media and Public Affairs, Nigeria Governors Forum, told THEWILL on Friday in an interview.
Narrating how the governors, under the auspices of the NGF, would have lost out in the matter that had been partly settled by the law courts, though some aspects of it are still under litigation, which makes any further action a contempt of court, Barkindo said that seasoned lawyers in the Federal Executive Council (FEC) saved the day.
“Three weeks ago, we got a hint that the FEC was going to discuss the matter and we quickly wrote a letter to the Secretary to the Federal Government of the Federation, Boss Mustapha, that it was subjudice. Fortunately for us all, the seasoned lawyers in FEC, such as the Minister of Works, Babatunde Fashola; the Minister of State for Labour, Festus Keyamo; the Secretary to the Government of the Federation, Boss Mustapha and two other cabinet members told the President that the matter was subjudice and it should be thrown out. And the President agreed and said payments should be discontinued. Surprisingly, both the Minister of Finance and AGF are pushing hard to pay the consultants. Why are they running away from the court?”
The FEC members who spoke against the deduction also argued that it was insensitive for the Finance Minister, Mrs Zainad Ahmed and Malami to have tabled a proposal for the payment of controversial debts to contractors at a time the government is struggling to pay its workers and fulfill its obligations to the citizens.
When THEWILL contacted the AFG’s office for response, someone who answered the phone said Dr Umar Jubril Gwandu, Special Assistant to the AGF, was in a better position to speak and he would provide the link. He never did and refused to pick up further calls.
Even so, the $418 million commission, according to Malami, is a legitimate claim. Malami, who is also the Minister of Justice, insists that the consultants are entitled to the sum on the justification that they had satisfactorily discharged their obligations under an agreement legally entered into by both parties, regarding the Paris Club refund.
The governors, on their part, dispute the claim by the consultants and the position of the AGF. They have also kicked against moves by the Federal Government to continue to make deductions from their shares of federal allocations to settle the “consultants”.
But Malami would not budge. He said there was no going back on the decision to deduct $418 million from the 36 states’ accounts to settle their indebtedness to consultants and private firms concerning the Paris and London clubs refund. The matter is now in court with the Federal Government as the defendant.
ORIGIN OF THE MATTER
The genesis of the crisis can be traced to the ballooning of Nigeria’s external debt profile in the 1980s from something in the neighborhood of $3 billion to about $30 billion in 2005.
Available data showed that only $400 million was borrowed after 1985 and that Nigeria had made $8 billion payments on the debt to the Paris Club of debtors. The increase in Nigeria’s external debt, which was about $23 billion accrued on the initial external loans through interest arrears, interest charges on these arrears and applied penalties.
According to experts, instead of applying Nigeria’s payments to post-1985 loans, to make the performing loans increase arithmetically, the creditors had applied the payments to arrears and penalties.
That way, the post-1985 loans were left unserviced to accumulate and accrue their own interests and penalties without protest or challenge from all the ministers of finance since 1985.
The debt burden with the accompanying debt servicing created serious fiscal challenges to the Federal Government and by extension, to the state governments. Addressing the post-military government infrastructure deficit inherited by the Obasanjo-led government was seriously challenged because of paucity of funds.
This amazing discovery of the nation’s debt situation, which shocked the Olusegun Obasanjo Administration, had triggered prolonged negotiation with the Paris Club during which some individuals and/or groups found out that there were some over-deductions which they offered to assist the country recover.
It was during this time that a process was initiated that led to the agreement with the Paris Club of creditors to the effect that 60 percent of Nigeria’s debt or $18 billion would be written off, while the balance of $12 billion would be paid by Nigeria in one fell swoop to the creditors.
According to a top government official, who spoke to this newspaper on the condition of anonymity, “This is where the consultancy claim, whether right or wrong, must have emanated from. We had ministers of finance who could not identify the over-deductions and wrong application of the debt payments that the country made to the London and Paris clubs of debtors. The country was just paying and paying debts, yet the fiscal condition kept worsening.”
THEWILL learnt that the negotiation with the Paris Club took some time. It was initiated by some concerned persons and groups who committed their resources to prosecute the case. This was when most people, including the federal and state governments, were skeptical of the success of the legal initiative which focused on the over-deductions on Nigeria’s external debts.
“Now, someone is making a claim over the ‘services’ rendered and because of our endemically corrupt system, it is difficult to ascertain the veracity of the claim, the scope, the terms and all the conditions,” the source, said.
According to findings, it was when the ‘skeptics’ saw that tangible progress was being made that the government showed interest.
The state governments were said to have been convinced that positive results would come out of the legal battle. This resulted in their engaging more institutions and later entered into formal agreements with the private law firms of the concerned legal practitioners to pay commissions to the consultants should they succeed.
THE STATES HAD THEIR CAKES
The negotiations were successful and the deal fell through. The three tiers of government, being collectively and individually victims of the over-deductions from the Federation Account, were equally the rightful claimants of the refund. And the refunds were effected.
THEWILL findings showed that the repayment of the Paris Club refund to the 26 states spanned five years from 2017: This included the sum of N516 billion paid in late 2017. The following year, 2018, the Federal Government paid the sum of $2.69 billion to the states, which amounted to N523.5 billion at the prevailing exchange rate at the time. Another tranche of N649.43 billion was made in 2019.
According to reports, a total of N2.233 trillion was paid to the 36 sub-national governments as the Paris Club refund.
MALAMI Vs NGF
The $418 million is what the AGF is pushing for payment as commission accruing to the private law firms that prosecuted the case to a logical conclusion before Nigeria’s foreign creditors agreed to write off part of the debt and effectively refunded the ascertained over-deductions. But it is now stalled by litigation.
Giving a historical perspective to the dispute in Abuja recently, the AGF said, “Sometime as far back as 2013, there was an engagement by the outgoing administration and the NGF in respect of certain consultants that were engaged by the two (NGF and ALGON) for the purpose of recovering certain amounts of money relating to Paris Club refund.
“These consultants that were engaged have indeed delivered and fundamentally, they were not paid the fees for the services they claimed to have rendered and on account of which they approached the judicial system for the determination of their rights and indeed, the enforcement of their fees.”
“Now, in 2013 parties, the then Federal Government and the Nigerian Governors’ Forum came together, agreed and submitted to a consent judgment by the court of law in 2013. That consent judgment is what gave rise to the liability in contention, as we are talking today.
“Some years back, the Federal Government was approached by these consultants for the purpose of payment of their respective professional fees. The government then approached the Nigeria Governors Forum and ALGON and they collectively walked to the Federal Government and conceded to the position that the consultants had indeed provided the services and that they were ready and willing for the payment.’’
He stated that because the huge claim the NGF and ALGON made on behalf of the consultants, which was in the region of $3.2billion, the FG had to invite the Economic and Financial Crimes Commission (EFCC) and the State Security Services (SSS) to verify the services rendered by the said consultants.
He said upon verification, the Federal Government took steps to demand for confirmation in writing from ALGON and the governors. He said that both the governors and ALGON wrote individually to the effect that they were liable. And eventually this payment commenced as far back as 2016.
The crux of the matter, Malami insisted, is that, taking into consideration that the Federal Government was indeed sued as a party, that at the end of the day the liability would be placed exclusively at the door steps of the Federal Government, where in actual fact, this is a liability that was incurred by the NGF.
Disagreeing with Malami’s position, professor of law and expert in project finance and execution, Konyinwola Ajayi, SAN, said on Friday evening that all parties to the controversy should await the ruling of the court, whether it takes two or three years to make. He expressed surprise that Malami “is so hard to challenge judgments in court,’’ adding, ‘’It makes you begin to question the propriety of the actions of the government.”
NGF DISAGREES WITH MALAMI
The Nigeria Governors Forum (NGF) disagreed with Malami on the payment of consultants for Paris Club refund. The Chairman of the NGF and Governor of Ekiti State, Dr Kayode Fayemi, dismissed the Attorney-General’s claims.
He said, “The forum set up a committee comprising the Chairman, the Governor of Ekiti State; Vice Chairman, the Governor of Ondo State; the Governor of Plateau; the Governor of Nasarawa; and the Governor of Ebonyi to interface with the committee set up by the President to review the matter.’’
The Ekiti State governor said the position of the NGF was clear and unequivocal, saying, “Although this matter is subjudice and we are very reluctant to get in the way of matters that are still being pursued in the court, the forum rejects all of the claims the Attorney-General has made on the issue.”
He said the NGF also insisted that states would not give up on insisting that the purported claims were fraudulent and would not stand as far as governors were concerned.
According to Barkindo, what is even more amazing is that the consultants are insisting they be paid in hard currency: “Are we a dollar operating country? Are we a Bureau de Change?” he asked.
NGF VERSUS CONSULTANT
Controversies have trailed the Paris Club refund to states and local governments in recent times.
A consultant that facilitated the London and Paris Club refunds had alleged that the NGF demanded and received the sum of $100 million to prosecute elections in some states.
The head of the Consultancy firm, Hon. Ned Nwoko, alleged that when he submitted a bill of $350 million as his consultancy fee, the state governors asked to be given 50 percent of it before it could be honoured.
He said a former chairman of the forum had explained to him that the money was needed to prosecute elections in Bauchi, Ekiti and Ondo States.
According to him, it was the Ministry of Justice that intervened before the governors eventually received the sum of $100 million.
Nwoko alleged that the money owed to his firm, Linas International Limited, was $68 million and not $418 million as claimed by the leadership of the NGF.
He equally distanced the firm from the $418 million figure being claimed by the NGF, saying it must be a miscalculation and adding, “We have nothing to do with it.”
Absolving the Attorney-General of the Federation of any wrongdoing, Nwoko stated that the agreements and judgments being executed were reached before the emergence of the current administration.
Last Thursday, Nwoko accused the NGF of casting a slur on his status as a registered lawyer in the United Kingdom, in a statement and threatened to sue the forum unless its members apologised to him in two national daily newspapers.
NWOKO SPILLING HALF-TRUTHS
In a later reaction to Mr Nwoko’s statement, the governors, in a statement by their spokesperson, Barkindo, which was made available to THEWILL, said that besides spilling half-truths, Nwoko tried to single out and justify his $68 million, while the total sum, which all the consultants working in concert collectively seek and claim from the states and local governments albeit unlawfully, is $418,953,690.59.’
The total sum was broken down as follows: Ned Nwoko ($68,658,192.83), Dr Ted Edwards ($159,000,000) and Panic Alert Security Systems Ltd ($47,831,920).
Others are Riok NIG. Ltd (USD142,028,941.95), Prince Orji Orizu (USD1,219,440.45) and Barrister Olaitan Bello (USD215,195.36). TOTAL – USD$418,953,690.59.
The attempt by Mr Nwoko, the NGF said, to separate his own claim of $68 million as though not related to the claims of other consultants, is being clever by half.
“In his desperation to justify his claim, Mr Nwoko peddled untruths that his team was a member of the Federal Government Committee constituted to reconcile figures under the Paris Club refunds to the states and local governments. That is patently false. The report of that committee dated May 2007 shows that only the FMF, OAGF, CBN, DMO and RMFC (secretariat) were members. Private persons who were not privy could not have been included in a committee that was meant to examine purely public financial records. It was this Committee that did all the work now claimed by Ned (Nwoko) and the other consultants,” Barkindo said.
The NGF challenged Nwoko to approach the necessary authorities to bring to justice any person or persons (including himself) who were allegedly involved in misappropriating public resources for campaign financing.
It also denied being involved in or being in receipt of $100 million or any other funds from Nwoko to finance elections in any state.
He asked the AGF and the consultants to allow the appeal processes to run and be exhausted.
THREAT OF LAWSUIT
Miffed by the words of the NGF, Ned Nwoko has threatened a lawsuit against the Governors’ Forum for libel and disparaging publications.
In a letter to the NGF, Nwoko, through his lawyer, accused the NGF of “publishing false, untrue and concocted stories about him without any attempt to verify.”
He described the publications as malicious and manipulative and demanded $40 million as compensation for the publications. He also demanded an “unqualified apology” to be published in national newspapers and online media.
In the letter, Nwoko accused the NGF of lying about his status with the U.K Law Society.
‘It is curious that in the introduction of himself, Mr Nwoko said nothing about his current status with the UK Law Society and the widely held belief that he was disbarred for fraudulent activities,’” the offensive statement was alleged to have been issued by the NGF.
He described the statement as profoundly malicious and false, saying he had “never been disbarred from legal practice in the UK.”
Reacting, Barkindo told this newspaper that he was shocked to read reports referencing Nwoko’s legal status attributed to his statement. He denied making such a statement, saying he never said anything about his legal status in the UK until he said so.
“I could not have said it. You can go through my statement and see for yourself,” Barkindo told THEWILL.
He however disclosed that the NGF’s lawyers have reached out to Nwoko to bring the facts to him.
When THEWILL called Nwoko for his reaction, his media aide, Mr Adeyemi Ifesayo, said they were yet to get any letter from NGF lawyers in respect of the defamation suit and insisted that his principal would press on with the case.
He said the NGF spokesperson has realised his mistake and now wants to deny it.
“If they do not tender an apology, published in two national newspapers and online mediums, they should leave the courts to interpret it,” he told THEWILL.
WAY FORWARD
For the state governors, the matter is currently pending on appeal at the Court of Appeal in Abuja for hearing. They said the Federal Government should exercise restraint in its handling of the matter.
They based their resistance on the ongoing judgment of the Supreme Court, which on June 3, 2022 dismissed the suit of one of the consultants, Riok Nigeria Limited, who is a beneficiary of the promissory notes in the sum of $142,028,941.95, and had lost at the Court of Appeal.
The governors argued that the Supreme Court had on the occasion made clear that neither the NGF nor ALGON had power to award contracts and charge the same directly to the Federation Account as done in this case.
They have also challenged either on appeal or 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 Limited ($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, the NGF maintained, adding that a caveat issued to restrain all parties concerned and the public from dealing or honouring promissory notes issued had earlier been published.
The governors said that the purpose and essence of the definitive pronouncement by the Supreme Court is that none of the contractors recommended for payment of the sum of $418 million by the AGF and finance minister can be so paid because the contracts and payments relied upon were not processed as prescribed by the Constitution and the law.
The NGF said it had consistently posited that neither the states nor ALGON can appropriate or deduct monies directly from the Federation Account which funds are meant to be paid into the States/Local Government Joint Account for which the Houses of Assembly of the states are yet to appropriate and arising from judgments to which the states, as custodians of the joint account, were not a party.
The position, it argued, has been reinforced by the recent Supreme Court decision in the RIOK’s case.
BUHARI’S INTERVENTION
Against the backdrop of the robust arguments advanced by the pro-NGF ministers, President Buhari was said to have insisted that the planned deductions being allegedly championed by both Malami and Mrs Ahmed be suspended until the courts make their final pronouncements.
“That is the way to go. In the current situation in which many states and local governments are experiencing financial crunch, money should not be frittered away unaccountably. That is why I insist that the courts should be allowed to decide the matter. The way the AGF is going about it makes me begin to ask if he is not a troublesome interloper. The Federal Government is not the one owing the money, but the states and the local governments,” Prof. Ajayi said.
About the Author
Amos Esele is the Deputy Editor of THEWILL Newspaper. He has over two decades of experience on the job.
