$418 Paris Club loan refund: Any deduction will be illegal, contempt of Appeal — Governors

…Say they were not parties to any suit on loan refund

…Deduction may cause slip into bankruptcy for some fiscally fragile states —  Muda Yusuf

By Uthman Salami and Ariemu Ogaga

The 36 states of the federation have warned that any deductions made from the Federation Account on account of satisfying an alleged $418 million Paris Club Loan would be illegal, noting that such actions would be deemed as contempt of Court.

The Governors through their Attorneys further revealed that they were never parties to any suit on the Paris Club refund, and as such were not liable to any person or entity in any judgment debt being relied on by the Federal Government, as contained in a document made available to journalists.

They further warned the Federal Government not to tamper with funds accruing to them and the 774 local government councils under the pretense of fulfilling an alleged $418 million London/Paris Club Loan refund-related judgment debts.

While speaking through the body of Attorneys-General of the Federation, the states said should the Federal Government proceed to make any such deduction, it would be acting illegally and in contempt of their appeal challenging the judgment.

They gave the warning in an April 4 letter as part of their response to a November 11, 2021 letter from the Minister of Finance, Budget, and National Planning, advertising the commencement of the deduction for the liquidation of the alleged judgment debts.

The response of the state Governors was signed by the body of Attorneys-General of the Federation Interim Chairman, Mr. Moyosore Onigbanjo (SAN) of Lagos

State and Interim Secretary, Dr. Abdulkarim Abubakar Kana of Nasarawa State as well as the Attorneys-Generalsof Rivers, Abia, Taraba, Benue, and Zamfara states, for and on behalf of all the state Attorneys-General.

The response read partly, “Their Excellencies have drawn our attentionto your letter referenced above, which the various states of the federation received at about the end of March 2022.

“The letter notifies the States of your intention to commence deduction from allocations due to the States from the Federation Account for the liquidation of the London/Paris Club Loan refund-related judgment debts on behalf of the 36 States of the Federation and the 774 local government councils. “Please note that the states of the federation were not parties to any contract or suits concerning the LondonParis Club refund, from which the said judgment debts arose.

“Consequently, the 36 States of the federation are not liable to any person or entity in any judgment debt.”

The letter further noted that the deduction of the allocations due to the 36 states of the federation from the Federation Account to liquidate the London/Paris Club Loan refund-related judgment debts was now subject of an appeal filed by the 36 States at the Court of Appeal, Abuja.

It explained that: “The appeal challenges the Federal High Court’s (per Honourable Justice Inyang Ekwo) judgment delivered on 25th March 2022 between A.G Abia State v. President, Federal Republic of Nigeria& 42 Ors. and, therefore, the issue is subjudice.”

In addition, the states have also filed a Motion on Notice for an Order of Injunction pending appeal, the letter read.

It added that the body’s legal representatives had published a public caveat in national dailies notifying the public of the pending appeal which also advised concerned parties “to desist from dealing with the subject matter thereof pending the hearing and determination of the Appeal and the application for Injunction pending appeal.”

Given the above, “The law requires you to restrain from taking any step whatsoever that is capable of interfering with the rest of the suit, which is now a subject of an appeal.

“Accordingly, Nigerian case law enjoins you to refrain from effecting any deduction whatsoever from the allocations due to the 36 States from the Federation Account for the liquidation of the London/Paris Club Loan refund-related judgment d debts purportedly on behalf of the 36 States of the Federation and the 774 local government councils, pending the hearing and determination of the appeal by the states of the federation.

“Doing otherwise in the face of the pending Appeal and Motion onNotice for Injunction pending appeal shall be at your peril,” the Governors said.

Meanwhile, in a chat with Nigerian NewsDirect on Monday, an Economist, the Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE) and Former Director General, Lagos Chambers of Commerce and Industry (LCCI), Dr Muda Yusuf, said any major deduction from states’ allocation may led to bankruptcy, due to fiscal fragility.

In his words, “Most of the states are in a very weak fiscal position.They have little headroom to absorb any shock. Any major deductions from their allocation would throw many of them out of balance.