A correspondence dated 14th December, 2020 from the Ministry of Finance to the Chief of Staff to the President of the Federal Republic of Nigeria, Professor Ibrahim Gambari on a 10-year period deductions from allocations to states and local governments in Nigeria was recently leaked to the press.
The letter, signed by the Honourable Minister of Finance, Mrs (Dr.) Zainab Shamsuna Ahmed is entitled; “Re: Liquidation of Judgment Debts On Behalf of Federal Ministries, Departments & Agencies (MDAs); States and Local Governments” with reference number FMF/PSSD/SH/01/VOL.II/320.
It was stated in the letter that the Judgment Debts in Category A, “which are Paris Club related judgment debts would not be included in the 2021-2023 Federal Government Borrowing Plan.”
According to the letter, the debts were not liabilities of the Federal Government of Nigeria (FGN), but of the States and Local Governments, which they said emanated from legal consultancy contracts agreements entered into by those tiers of Government.
“The settlement of this Category of judgment debts should ordinarily be effected from funds belonging to the States and Local Governments in the custody of the FGN. That being so, legislative resolution by both Chambers of the National Assembly would not be required for their liquidation.
“On whether the States and Local Governments have formally signed off on the proposed equal monthly deductions from their Statutory Allocations over a period of ten (10) years to defray the relevant expenses incurred by the FGN on their behalf in relation to the claims of the Category A Judgment Creditors, it is pertinent to state that the consent of a Judgment Debtor (in the case of the States/Local Governments is not required before a valid Judgment of a court of competent jurisdiction can be enforced,” the letter read.
The said deductions were proposed to be made to some individuals and organizations that were involved in the said Judgment.
The Finance Minister said further in the letter that both the former Chairman of the Nigeria Governors Forum (NGF) and the Association of Local Governments of Nigeria (ALGON) had in 2019, given an indemnity and “No Objection Letters authorizing deductions from the relevant Statutory Allocation to meet the Paris Club related claims, especially the claims by Riok Nigeria Ltd and Dr. Ted Iseghohi Edwards.
“While the Judgment debt claims by Hon. Ned Munir Nwoko and Panic Alert Security System Ltd, emanated from Consent Judgments between the Judgment Creditors and the Nigeria Governors Forum, making it unnecessary that further clearance should be sought from the two tiers on the matter,” the letter read.
The Minister added that the recommendations that the deductions be “staggered over ten (10) years is intended to cushion the adverse effect/impact that one lump sum deduction or shorter period of deduction of the debts would have on the economy of the affected States and Local Governments and therefore consent of States and Local Governments were not obtained.”
However, a top official of ALGON who didn’t want his name mentioned denied that consent was given by the local government association.
“We don’t know anything about this arrangements between the Minister of Finance and the judgement Creditors. How would you be deducting a tier of government’s allocation from the source to some individuals without their knowledge. This is just to keep a whole 774 local governments and the states in economic bondage for a decade. This must not be allowed” the ALGON official stated.
