Reports have it that the 36 state governments sued the Federal Government to stop deductions from their allocations at source to pay Paris and London clubs refunds due to consultants who reportedly worked to assist the state governments get the refunds in the first place.
According to the reports, the President, Major-General Muhammadu Buhari (rtd), had ignored the governors’ protest against the payment and directed that the creditors be paid the $418 million relating to Paris and London clubs refund, as a result of which the governors headed for court.
Delivering judgment on Friday, November 5, 2021, the Federal High Court, Abuja reportedly “stopped the Federal Government from deducting $418 million from the accounts of the 36 state governments 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 overdeducted 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 … Inyang Ekwo, the judge of the Federal High Court in Abuja, issued a restraining order against the Federal Government following an ex-parte application argued by their lawyer.
“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”.
What the heck if they cannot pay salaries! They should bridge the gap with a portion of their humongous and unaccounted for security votes! If many of them cannot pay salaries, it is as a result of their reckless spending and laziness to grow their IGR. If truly the state and local governments owe those contractors/ consultants, shouldn’t they think those ones, too, have staff salaries to pay?
Mr. Okutepa, however, 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 are, 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” This is not a new matter. It has been on for quite some time. So, where were the 36 states when the contractors or consultants were getting judgment against them? They slept on their rights or what? The usual carelessness, I-don’t-care-attitude, impunity or what?
It was also reported that “43 defendants were sued in the application; these include the Attorney-General of the Federation (AGF), the 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. “After listening to the arguments of the applicant’s lawyer, the judge granted three of the four prayers of the applicants, including the 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” One prayer of the applicants (Prayer 4) which the judge did not grant before he adjourned the matter to November 30th was the one asking for a refund of part of the money that could or might have been deducted by the Federal Government.
The judge also ordered that all the defendants be served with the court processes.
At the next adjourned date, hopefully, issues will be joined and the judge will be able to look into the merits and demerits of the case.
The elders’ proverbs and wise-cracks are very didactic; they are truly the saying of the wise! One such says: To eat pork meat purchased on credit is delicious but to pay back can be hellish! We were all here when the governors were collecting the Paris and London clubs refunds.
Many of the governors suddenly became spendthrift, spending as if money was going out of fashion. I am not sure we can find a handful of governors who judiciously applied the refunds.
Unfortunately, many of those who will suffer for the deductions being demanded, if eventually that becomes the judgment, are governors who were not yet in office when all or part of the refund was collected by their state. Such a thing can be very annoying, especially if there is nothing on ground to show for it.
But, then, this matter should have been sorted out a long time ago if, going by the church and mosque people that we are, we have the fear of God. Scripture says “Thou shall pay him his wages on the same day, the sun shall not go down upon it…” (Deuteronomy 24:15). I think this injunction of God should apply to both rich and poor. If it is not the X amount being demanded, what is it? If not this much, how much?
If nothing at all, why is that so? It is commendable but interesting that the president is standing on the side of probity, accountability, justice and fair play in this respect. Again, scripture says of debtors who renege on their obligations: The wicked borroweth, and payeth not again: but the righteous shows mercy and gives… (Psalm 37: 21).
One reason why some borrow and are reluctant to pay back is because the borrowed money must have been misappropriated, misapplied, or wasted. As such, the borrowed money does not add value, does not regenerate itself, not to talk of yielding profit. Therefore, such borrowers actually have nothing to pay back.
And where the capacity to pay back is lacking, they invent excuses, hold on to straws and grasp the wind. But feeding on illusions, they fall deeper into the miry clay of indebtedness. Cheryl Payer in “The Debt Trap: The IMF and the Third World” gave a graphic illustration of how countries fall into the debt trap and find it difficult to extricate themselves.
Now, debt traps are not only set by the Bretton Wood institutions, the London and Paris clubs of creditors but, importantly these days by the new metropolitan power called China. Nigeria reportedly is indebted to the tune of N42.7 trillion; in addition, the Senate recently approved a fresh loan of US$16 billion.
We have been told by the finance minister that the country will go on borrowing, unmindful of the saying that he who goes a-borrowing always goes asorrowing! But the FG should be reminded that as it goes about compelling the states to come alive to their financial obligations, it should not forget that what goes around comes around!
At the recently-concluded 76th session of the United Nations’ General Assembly, Buhari was widely reported as begging for debt forgiveness from the creditor-nations!
He was quoted as saying, inter alia: “Therefore, there is an urgent need to consider expansion and extension of the debt service suspension initiative to include all developing, least developed countries and small-island developing states facing fiscal and liquidity challenges.
In addition, a review of the eligibility criteria for debt suspension, including outright cancellation, is needed for countries facing the most severe challenges” They have heard! As stated earlier, Buhari is begging for debt forgiveness because there is practically nothing worth the while to show for the humongous sums we have borrowed and are still borrowing.
Assuming that we have judiciously invested the borrowed sums and that the gestation period for the projects that we invested in is what makes repayment impossible now, all we need to ask for, with empirical evidence, is more convenient repayment terms – not debt cancellation or debt forgiveness.
The question to ask is: What became of the debt forgiveness Nigeria got during the tenure of former President Olusegun Obasanjo?
The moment some debts were cancelled, we raced to quickly pile up fatter loans, insisting again and again that we were (or still are!) within our borrowing limits! If so, why are we now crying for debt cancellation or debt forgiveness?
If every debt owed by Nigeria is forgiven today, what is the assurance that before he leaves the saddle in 2023 that Buhari would not have piled up more misery upon the country?
The earlier we put the illusion of debt forgiveness behind us and become alive to our responsibilities and obligations, the better for all of us – federal and state governments alike. Enough of financial rascality!