FAAC meeting deadlocked as states, local councils protest $418 million Paris refund deductions

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, in her goodwill message yesterday during the commemoration of the “2021 International Women’s Day National Policy Dialogue,” noted that through the implementation of Finance Acts 2019 and 2020, the federal government is providing tax relief and other forms of support to micro, small and medium enterprises (MSMEs), many of which are owned by women.

A meeting of the Federation Account Allocation Committee (FAAC) for October 2021, held last Friday, was inconclusive as states and local governments resisted the commencement of deductions in relation to the $418 million judgement debt for “consultancy services,” with regard to the Paris Club Loans refund.

In a letter obtained yesterday, the Nigeria Governors’ Forum (NGF) objected to the execution of the judgement until the full determination of ongoing litigation on the subject matter. The governors insisted that the deductions were done without their knowledge.

Chairman, Forum of Commissioners for Finance of Nigeria, which represents state governments at the FAAC meeting, Mr David Ilofu, signed the document.

Owing to the development, the monthly gathering was postponed to allow all pending issues to be sorted out.

The letter said, “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.

“The October 2021 meeting, which was chaired by the permanent secretary on behalf of the honourable minister, received revenue performance reports from the revenue-generating agencies (Nigerian National Petroleum Corporation, Federal Inland Revenue Service, Department of Petroleum Resources, Nigeria Customs Service, and Ministry of Mines and Mineral Development).

“These reports by the agencies and the revenue inflow analysis by the office of the Accountant General of the Federation for the month of October 2021 could not be adopted by the committee.

“Members declined approval after consideration of the reports for the disbursement of the available revenue because of deduction on funds belonging to the local government councils in favour of some consultants for a $418,000,000.00 judgement debt for consultancy services with respect to Paris Club loans refund.”

The letter stated that based on available information, the deduction would continue for 10 years or 120 months, contrary to the provisions of Section 162 of the Constitution of the Federal Republic of Nigeria 1999, as amended.

The finance commissioners noted that NGF had objected to the execution of the judgement until the full determination of current litigation on the subject matter.

The document added, “Commissioners for Finance representing states and local government councils did not have prior knowledge of the deduction and coming at a time when states and local governments are in dire straits, it will further worsen the fiscal position of these tiers of government.

“Consequent upon these, the meeting was adjourned to allow for further consultations and resolution of all the issues that had been previously raised by the Nigeria Governors’ Forum (NGF) regarding the assignment that gave rise to the claim and the judgement.”

The governors had in August written through their lawyer, Mr Femi Falana, to the Federal Ministry of Finance, seeking a stay of execution of the judgements of the trial courts on the matter, pending the determination of all appeals. They argued that once an application for injunctive reliefs was pending in a court of law, parties were barred from engaging in any act that could foist a fait accompli on the court in respect of that application or action.

The FAAC committee is chaired by the Minister of Finance, Budget and National Planning, while Commissioners for Finance in the states are members, representing the 36 states and 774 local government councils.

Other members of the committee, which meets monthly in Abuja to distribute accrued revenue to the three tiers of government, are the Federal Capital Territory (FCT) Director, Treasury, Accountant General of the Federation (AGF), as well as the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC).

In a January letter, President Muhammadu Buhari had approved the payment of the controversial sum to six creditors, in defiance of the issues raised by the 36 state governors on the illegitimacy of the demands by the claimants.

The “Category A” judgement creditors included a former member of the House of Representatives, politician and lawyer, Ned Nwoko, who is claiming $142,028,941 via a consent judgement marked FHC/ABJ/CS/148/2017, while Riok Nigeria Ltd, Orji Nwafor Orizu, and Olaitan Bello are laying claim to $143,463,577.76 via a judgement marked FCT/HC/CV/2129/2014.

From the total money, Riok Nigeria Limited has a share of $142,028,941.95, Nwafor is entitled to $1,219,440.45 while Bello has a share of $215,159.36.

Ted Iseghoghi, it was learnt, is claiming $159,000,000 through a judgement he obtained in suit number FCT/CV/1545/2015, while a firm, Panic Alert Security System Limited, owned by George Uboh, is claiming $47,831,920.

The Debt Management Office (DMO) was directed to commence issuance of promissory notes to the creditors by the president, a development the governors have described as suspicious.

Claiming to be “consultants” and “contractors,” the creditors are insisting that they helped the state and local governments to recover the funds over-deducted by the federal government from their allocations between 1995 and 2002.

In addition, some of the claimants told the courts that they were engaged to execute certain projects in all the 774 local governments in anticipation of payment from refunds, in a deal with the Association of Local Governments of Nigeria (ALGON). Although the council chairmen said the contacts remained mostly unexecuted.

Aside from the Kayode Fayemi-led NGF, the Minority Caucus of the House of Representatives had also raised concerns over the federal government’s plan to pay the judgement debt, despite pending court cases.