Paris Club Refund: President Buhari, Governors To Meet, October Revenue Sharing Suspended

There were strong indications on Monday that state governors would soon meet with the President, Major General Muhammadu Buhari (retd.), over the Federal Government’s decision to debit local government accounts.

The governors decided to meet the President after Friday’s Federation Account Allocation Committee meeting ended in a deadlock following the states’ opposition to the commencement of deduction of $418 million from the local governments’ accounts to pay private consultants for the Paris Club refund.

It was learned that commissioners of finance had briefed the governors and that the states would take up the matter with the President last week.

Speculations from the Federal Ministry of Finance, Budget and National Planning disclose, “The governors’ meeting with the President is expected to hold this week because of the urgency of the matter. Without them, the states cannot pay salaries.”

The states were irked at Friday’s last meeting when they were informed by the Permanent Secretary, Federal Ministry of Finance that deductions from local governments’ allocations had started in order to pay the Paris Club consultants.

The Federal Government had in 2006 paid $12 billion to get an $18 billion debt write-off by the Paris Club of international creditors.

After realizing that the payment was made directly from the revenue accruing to the entire federation, states and local governments that did not owe the Paris Club demanded a refund.

Some of the contractors also claimed that they executed projects across the country for the Association of Local Governments of Nigeria.

Governors, who strongly opposed the deductions, insisted that the projects said to have been awarded by ALGON turned out to be mostly non-existent.

The governors, therefore, insisted on a forensic audit while the contractors and consultants went to court.

The Attorney-General of the Federation, Abubakar Malami, negotiated an out-of-court settlement with the contractors and consultants.

The sum of $418,953,670.59 was agreed on as the judgment debt.

The Nigeria Governors’ Forum subsequently went to court to stop the payment of the controversial sum to the consultants.

In a letter dated September 3, 2021, and signed by a Senior Advocate of Nigeria, P. H. Ogbole, the governors said the money should not be deducted from the local governments’ accounts.

It was learned that there was confusion at the FAAC meeting on Friday when the states were informed that deductions had commenced despite a subsisting court case on the matter.

The Chairman of the Forum of Commissioners of Finance and Benue State Commissioner for Finance, David Olofu, said the new date for the suspended FAAC meeting had not been announced.

He also confirmed that state governors would meet with the President over the controversial deductions.

Olofu disclosed that the commencement of deductions forced FAAC to suspend the revenue distribution for the month of October indefinitely.

The forum chairman recalled that the governors’ forum had objected to the deductions and requested that a forensic audit be carried out to ascertain the true position of things.

Olofu expressed dismay with the commencement of deductions even though the governors objected to such. According to him, the deduction is illegal because the issue is in court.

Olofu stated, “We went to the FAAC meeting for the month of October and noticed that the Paris Club deductions had commenced.

“The assignment is in respect of local government councils though I don’t know the nature of the assignment (work done in local government areas) but it is in respect of consultancy on the Paris Club loan refund.

“The decision was to suspend the distribution of revenue for the month of October pending the resolution of this issue. Recall that the governors’ forum objected to the deductions.”

Speaking on the planned meeting between Buhari and the governors on the issue, Olofu added, “We expect that the Nigerian Governors’ Forum will be meeting with the President to find solutions to this. It is not at our level that the issue can be handled; we are only representing the governors at FAAC.

“I understand that there is litigation on the issue; one would have expected that the deductions would be put on hold until the litigation is discharged.”

Olofu listed other deductions by the Federal Government from the states’ allocations to include bailout and budget support facilities.

Asked when the meeting might be reconvened for revenue distribution, the finance commissioner said there was no definite date yet.

According to him, states may be invited any moment an agreement is reached on the distribution.

“We may be called at any moment; if we are called this evening, it means tomorrow morning we will all meet, but as I am talking now (4.23 pm on Monday), I don’t have any information,” he stated.

Another member of FAAC and Delta State Commissioner for Finance, Fidelis Tilije, the NGF would meet the President on the matter.

He said, “The issue hasn’t been resolved and we are hoping that the NGF will have a meeting with Mr. President and we will take it from there.

“As for the allocation for the month of October, Delta State has not received it.”

Responding, the Director, Information, Press and Public Relations, Office of the Accountant-General of the Federation, Henshaw Ogubike, said there was no update on the issue from his end.

“There is no update; if there is any update on the issue, I will send it,” he simply stated.

When asked when the next FAAC meeting would be held, Ogubike said, “Don’t ask me for an update, because normally I send the update if there is any; if there is any press release, I will send it.”

Though it is speculated that the new date for the FAAC meeting will be announced Tuesday.