Court Stops FG From Deducting $418m From States’ Account

Court Stops FG From Deducting $418m From States’ Account

The Federal High Court in Abuja, led by Justice Inyang Ekwo, has ordered the Federal Government of Nigeria to stop deducting $418 million from the bank accounts of the 36 states of the Federation.

Following an ex parte plea filed by two counsels to the 36 states, Jibril Otukepa and Ahmed Raji, Justice Ekwo issued a restraining order against the Federal Government on Friday.

The states’ legal team, lead by Otukepa, explained to the judge that if the federal government went forward and deducted the massive amount from the states’ bank accounts, the states would be severely crippled.

In 2006, Nigeria paid $12 billion to get a debt write-off of $18 billion by the Paris Club of international creditors.

According to reports, states and local governments that did not owe the Paris Club later requested a refund after they discovered that the payment was made directly from the revenue accruing to the entire federation.

Following this, another report disclosed that some consultants who claimed a percentage of the refunds as payment for services they said they rendered to the states and local governments, went to court in a bid to get their pay.

Afterwards, the sum of $418 million was agreed as a judgment debt following the Federal Government’s opt to negotiate an out-of-court settlement with the contractors.

However, this move was rejected by the states who sought redress in court after the Federal Government declare its moves to commence the deduction.

In a suit dated October 27, the Attorney-Generals of the 36 states were listed as plaintiffs.

Those listed as respondents include the President, the Attorney-General of the Federation, the Accountant-General of the Federation, and the Ministry of Finance.

Others on the respondents’ list were the Central Bank of Nigeria, the Debt Management Office, the Federal Account Allocation Committee, and various commercial banks in Nigeria.

Meanwhile, the states and other plaintiffs had also sought an order of interim injunction restraining the Federal Government, any of its agencies, or any other person from deducting any money due to the states for the payment of any judgement debts arising from contracts and suits in relation to the Paris Club Refund.

The states also requested the refund of all money deducted by the government from the Federation Account in relation to the issue in dispute, without the express consent of the states.

One of the grounds of the application read that the states and the other plaintiffs which include the attorney-generals are the chief law officers of their respective states as created by the Constitution.

The fourth ground of the application read “Part of the deductions in the FAAC summary is for the liquidation of judgement debts in favour of persons who neither had any contractual relationship with the plaintiffs/applicants nor obtained any judgement against any of the plaintiffs/applicants.”

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