Last Friday’s meeting of the Federation Account Allocation Committee (FAAC) for October 2021 was inconclusive, as states and local governments resisted the start of deductions for the $418 million judgment debt for “consultancy services” in relation to the Paris Club Loans refund.
In a letter, the Nigeria Governors’ Forum (NGF) objected to the execution of the judgment until the ongoing litigation on the subject matter was fully resolved. The governors insisted that the deductions had taken place without their knowledge.
Mr. David Ilofu, Chairman of the Forum of Commissioners for Finance of Nigeria, which represents state governments at the FAAC meeting, signed the document.
As a result of the development, the monthly gathering was postponed to allow all outstanding issues to be resolved.
“The FAAC meeting for the month of October 2021, held on Friday 22nd October 2021, to distribute revenue that has accrued to the federation (federal, state, and local governments) was inconclusive,” according to the letter.
The revenue-generating agencies provided revenue performance reports to the October 2021 meeting, which was chaired by the permanent secretary on behalf of the honorable minister (Nigerian National Petroleum Corporation, Federal Inland Revenue Service, Department of Petroleum Resources, Nigeria Customs Service, and Ministry of Mines and Mineral Development).
“The committee could not adopt these agency reports and the revenue inflow analysis by the Office of the Accountant General of the Federation for the month of October 2021.”
Members declined approval after reviewing the reports for the disbursement of available revenue due to a deduction on funds belonging to local government councils in favor of some consultants for a $418,000,000.00 judgment debt for consultancy services related to Paris Club loan refund.”
According to the letter, based on available information, the deduction would continue for 10 years or 120 months, in violation of Section 162 of the Federal Republic of Nigeria 1999 Constitution, as amended.
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The finance commissioners noted that NGF had objected to the execution of the judgment until the current litigation on the subject matter was fully resolved.
“Commissioners for Finance representing states and local government councils did not have prior knowledge of the deduction,” the document continued, “and coming at a time when states and local governments are in dire straits, it will further deteriorate these tiers of government’s fiscal position.”
As a result of these developments, the meeting was adjourned to allow for additional consultations and resolution of all issues previously raised by the Nigeria Governors’ Forum (NGF) regarding the assignment that gave rise to the claim and the judgment.”
The governors had written to the Federal Ministry of Finance in August, through their lawyer, Mr. Femi Falana, requesting a stay of execution of the trial courts’ judgments on the matter, pending the resolution of all appeals. They contended that once an application for injunctive relief was filed in a court of law, the parties were barred from engaging in any act that could result in a fait accompli on the court in relation to that application or action.
The FAAC committee is chaired by the Minister of Finance, Budget, and National Planning, and members include state Commissioners for Finance, who represent the 36 states and 774 local government councils.
The Federal Capital Territory (FCT) Director, Treasury, the Accountant General of the Federation (AGF), and the Revenue Mobilisation, Allocation, and Fiscal Commission are also members of the committee, which meets monthly in Abuja to distribute accrued revenue to the three tiers of government (RMAFC).
In a January letter, President Muhammadu Buhari approved the payment of the disputed sum to six creditors, despite the 36 state governors’ concerns about the illegitimacy of the claimants’ demands.
Ned Nwoko, a former member of the House of Representatives, politician, and lawyer is claiming $142,028,941 through a consent judgment marked FHC/ABJ/CS/148/2017, while Riok Nigeria Ltd, Orji Nwafor Orizu, and Olaitan Bello are claiming $143,463,577.76 through a judgment marked FCT/HC/CV/2129/2014.
Riok Nigeria Limited has a share of $142,028,941.95, Nwafor has a share of $1,219,440.45, and Bello has a share of $215,159.36 of the total money.
It was learned that Ted Iseghoghi is claiming $159,000,000 in a judgment obtained in suit number FCT/CV/1545/2015, while Panic Alert Security System Limited, owned by George Uboh, is claiming $47,831,920.
The president directed the Debt Management Office (DMO) to begin issuing promissory notes to creditors, which the governors described as suspicious.
Claiming to be “consultants” and “contractors,” the creditors insist that they assisted state and local governments in recovering funds that the federal government had improperly deducted from their allocations between 1995 and 2002.
Furthermore, some of the claimants told the courts that they were contracted to carry out certain projects in all 774 local governments in exchange for payment from refunds, as part of a deal with the Association of Local Governments of Nigeria (ALGON). Despite the fact that the council chairmen stated that the contacts were mostly unfulfilled.
Aside from the Kayode Fayemi-led NGF, the House Minority Caucus had expressed concerns about the federal government’s plan to pay the judgment debt despite pending court cases.
