Vanguard (Lagos)

26 September 2012

Nigeria: Excess Crude Account - Governors Give FG Fresh Condition for Settlement

Photo: Vanguard
President Goodluck Jonathan with Governors.

Abuja — Governors of the 36 states of the federation, yesterday, returned to the Supreme Court to challenge what they termed "massive illegal deductions" from the Excess Crude Account by the Federal Government.

The governors are, among other things, contending that "the establishment and operation of, and unilateral deductions from the Excess Crude Account during the period 2004-2007, were inconsistent with the provisions of section 162 of the 1999 Constitution of the Federal Republic of Nigeria."

Besides praying the apex court to abort any move by the Federal Government to withdraw $2billion from the account or go ahead with the proposed transfer of $1 billion into a new account to be known as the "Sovereign Wealth Fund", the governors called for an immediate probe into claims by the Federal Government that it withdrew and spent the sum of $8.425billion on the National Integrated Power Project, NIPP.

President Goodluck Jonathan With (from right), Govs Isa Yuguda of Bauchi, Godswill Akpabio of Akwa Ibom, Deputy Governor of Adamawa State, Bar. Bala Nggilari, Govs Theodore Orji of Abia and Rotimi Amechi of Rivers State during a meeting on Saturday Night In Abuja. Photos-State House

They expressed readiness to go into full-blown legal tussle over the matter. The Federal Government urged the apex court to suspend hearing on the suit, saying it would need time to explore the possibility of an amicable resolution of the dispute without recourse to the court.

FG urges S-Court to suspend hearing

Lead counsel to the Federal Government, Mr. Austin Alegeh, SAN, told a seven-man panel of justices of the Supreme Court, who presided over the matter that though the case was adjourned on March 26, 2012, to enable an out-of-court settlement of the dispute, the governors, lastThursday, served fresh terms of settlement on the Federal Government.

Alegeh said: "The defendant is committed to the out of court settlement option, that is why we have begun the process of reviewing the new terms of settlement with the assurance to revert back to them (plaintiffs) thereof. We believe now more than ever that the process is beginning to yield result. We therefore pray the court for more time to enable us to actualize the settlement moves. The terms of settlement were sent to us last Thursday. We need time to study the terms thoroughly," he said.

Meanwhile, counsel to the governors, Chief Adegboyega Awomolo, SAN, who drew the attention of the court to the fact that the matter was ab-initio adjourned till yesterday for report of settlement, noted that the plaintiffs had been before the apex court over the issue since 2008.

He said the governors were ready to settle out of court "so far there is genuine desire on the part of the defendant for amicable settlement," saying, "if they fail this time, we are ready to allow this court to proceed with hearing this matter on its merit.

"It should not be seen as an unending desire for settlement on the part of the defendant considering that the plaintiffs have been before this court since 2008\2009. There had been discussions, offers and counter offers, we are glad to hear that they are now ready to settle," Awomolo added.

Alegeh, who spoke to newsmen after the proceeding, noted that the most contentious item in the new terms of settlement was the interest by the 36 states to share from the proceeds accruing from the Federal Government's share of the excess crude account.

"The critical component of the proposed terms of settlement is that, the governors want to share from the profit made on the Federal Government's share of the excess crude account. Their argument is that they are entitled to any profit made by the Federal Government, irrespective of the source yielding the interest" Alegeh said.

Meantime, the apex court panel presided by Justice Chukwuma Eneh warned that the court would not hesitate to hear the case on its merit should the parties fail to reach an amicable resolution of the matter before November 22 when the case was adjourned to.

However, in its fresh terms of settlement, the governors stressed that the Federal Government must admit and recognize "that it is a trustee of the Federation Account, which is established, maintained, operated and managed in pursuance of section 162 (1)- (10) of the 1999 Constitution of the Federal Republic of Nigeria (1999 CFRN) and that as a trustee, it is duty bound to maintain, operate and manage the Federation Account for the benefit of States and Local Government Councils in strict accordance with the provisions of the said section 162 (1)- (10) of the 1999 CFRN and render on demand and periodically, true account of the Federal Account to states and Local Government Councils.

"The plaintiff acknowledges that the Federal Government is at liberty, if it so desires, to seek amendment to the 1999 CFRN to give constitutional backing to the operation of the Excess Crude Account in the future."

The governors further insisted that the Federal Government must "cause all the assets (including contract of the National Integrated Power Project, NIPP, which was paid for using a sum total of US$8.425 billion from the Federation Account) to be clearly identified, inventoried and valued by a competent and reputable Nigerian accounting firm.

"Cause a company whose sole object shall be to take over and operate the assets and undertaking of the NIPP, to be incorporated as a Limited Liability Company under the Companies and Allied Matters Cap C20 Laws of the Federation of Nigeria 2004 with a share capital in a sum equivalent to the value of assets and undertaking of the NIPP as valued in pursuance of sub-section above."

Railway modernization deductions

On railway modernization deductions, the governors, said the Federal Government must "cause all the assets (including contracts) of the Railway Modernization Project, RMP, (which was paid for using a sum total of US$250 million from the Federation Account), to be clearly identified and valued by a competent and reputable accounting firm."

It would be recalled that the governors had in their substantive suit before the Supreme Court, sought an order declaring the proposed creation of the "Sovereign Wealth Fund", illegal and unconstitutional.

SWF illegal - Governors

Chief Awomolo, said his clients were forced to approach the apex court for redress in view of the fact that the Federal Government and its officers, had consistently and in total disregard for the pending suit, withdrawn, utilized, disbursed and allocated funds from the account.

He alleged that the Federal Government had nearly depleted the sum of N5.51 trillion being the balance on the account as at 2008 when the case was instituted.

According to the Governors: "The conduct of the Government of the Federation and her officials is a violation of the principle of the Rule of Law and breach of the Independence of the Judiciary and constitutes a violation of the principle of Rule of Law handed down by the Supreme Court in the case of Governor of Lagos V Odumegu Ojukwu (1986) pt 1 NSCC 304 and Rotimi Chibuke Amaechi V INEC (2008) 5 NWLR (PT 1080) 277."

S-Court adjourns case till Nov 22

They contended that the proposed disbursement of $1billion by the Federal Government, her Minister of Finance and other officers, would create a state of fait accompli and helplessness, if not stopped immediately.

"It is in the interest of justice, preservation of integrity of the Supreme Court and the Rule of Law that this application be granted", they prayed.

The governors had among others things, sought for an order compelling the Government of the Federation to pay into the Federation Account the sum of N5.51 trillion being the balance of the sum which accrued to the Government of the Federation during the period 2004 and 2007 from the proceeds of crude oil sales, petroleum profits tax and oil royalties which the Government of the Federation classified as "excess crude proceeds" and "excess PPT and Royalties" and paid into an account which was styled "Excess Crude Account."

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InFocus

Nigerian Govt Given Fresh Condition for Settlement

President Goodluck Jonathan with Governors.

36 states governors of the federation have returned to the Supreme Court to challenge what they termed massive illegal deductions from the Excess Crude Account by the Federal ... Read more »