SWF: Govs threaten to dump out-of-court settlement deal

SWF: Govs threaten to dump out-of-court settlement deal

Plans by the Federal Government to transfer $1 billion from the Excess Crude Account to a new account to be known as the “Sovereign Wealth Fund,” may have met a brick wall, as Governors of the 36 states of the Federation, have threatened to dump the out-of-court settlement deal.

This is even as the Chief Justice of Nigeria, CJN, Justice Dahiru Musdapher, has directed the Federal Government and the governors to appear before the apex court today with their report of settlement or be ready for a full-blown hearing into the substantive matter.

The governors had in a suit they filed before the Supreme Court on October 23, 2011, sought an order declaring the proposed creation of the “Sovereign Wealth Fund,” illegal and unconstitutional.

They are further praying the court to issue an order in the effect that all sums standing to the credit of the said “Excess Crude Account” (or any account replacing same by any name howsoever) be paid into court or be otherwise secured as the court may deem fit pending the hearing and determination of the substantive suit.

The governors maintained that unless the order of injunction was granted, the Federal Government would continue to disregard, disrespect and ignore the pending suits before the Supreme Court.

Considering that the issues the governors raised in their suit bothered on the constitution, the CJN, pre-empting the possible break-down of the out-of-court settlement deal between the parties, already constituted a seven-man panel of justices to commence hearing on the case today.

It would be recalled that despite that the Federal Government earlier expressed its readiness to join issues with the governors, having failed to persuade them to sheath their legal sword, however, on March 26, it re-approached the Supreme Court and pleaded with it to suspend hearing on the case to enable the parties to reach consensus on perceived grey areas in the out-of-court terms of settlement it said was presented to it by the litigants.

FG had previously told  the court via an affidavit deposed to by one of its lawyers, Mr Uchenna Njoku, that “the parties explored the possibility of an amicable settlement of the issues discernible in the case and mutually sought several adjournments of the case to enable them to conclude the settlement option and report same to the court. But when it became clear that the plaintiffs/applicants were not amenable to the settlement options, discussions in this regard were called off.”

The Federal Government, through its lead counsel, Mr Austin Alegeh, SAN, equally accused the state governors of mischief, insisting that they took part in the deliberation of the National Economic Council where the decision to transfer the $1 billion from the Excess Crude Account to the SWF was taken.

It stressed that the states had been receiving their shares from the money, saying their decision to frustrate the planned creation of the SWF was borne out of insincerity.

However, lead counsel to the governors, Chief Adegboyega Awomolo, SAN, maintained that 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, utilised, 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.

The plaintiffs’ counsel told the court that the Defendant in the suit (Federal Government), drew the irk of his clients (Governors) when it announced its intention to withdraw, disburse and utilize another one billion U.S Dollars from the credit balance from the account, an action he said would further amount to a sheer disregard to the subsisting suit and disrespect for the authority of the apex court.

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.”

The Governors further criticized the action of the government pertaining to the subject matter of the litigation, describing it as “executive lawlessness and impunity.”

They contended that the proposed disbursement of One Billion United State of America (USD) Billion Dollars 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 added.

In an-18 paragraph affidavit deposed to by one Mr. Ephraim Ajijola, a lawyer at the Law Office of Awomolo,  which was attached to the application, the governors averred that: “At a press briefing held on 18th October 2011 and reported same day on the “Network News” broadcast by the Nigerian Television Authority, the Government of the Federation, through the Minister of Finance, Dr. Ngozi Okonjo-Iweala, announced its intention to withdraw US$1 billion from the “Excess Crude Account” to start off a national sovereign wealth fund.

“That the said sum of US$1 billion sought to be withdrawn by the Government of the Federation from the “Excess Crude Account” to fund the national sovereign wealth fund forms part of the subject matter of the substantive suit.”

The Governors told the Supreme Court that one of the main issues in dispute between the parties in the substantive suit was, whether the payment of revenue which accrued to the Government of the Federation from the proceeds of crude oil sales, petroleum profits tax and oil royalties into any account other than the Federation Account by the Government of the Federation was illegal and unconstitutional notwithstanding that the proceeds from the aforesaid sources were in excess of the Government of the Federation’s estimate of the revenue that would accrue from the said sources.

Besides, it would be recalled that the governors had gone to court to challenge the action, conduct and activities of the Federal Government of Nigeria with respect to the management and operation of the Federation Account.

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”.

They also asked the court to order the Federal Government to transfer to the Federation Account all sums standing to the credit of the “Excess Crude Account”.

The parties had equally exploited avenues of out of court settlement for over one year and indeed agreed on a settlement but the settlement so reached could not be implemented and was also not entered as the judgment of the court.

In urging the court to grant their application, the governors said they had satisfied all the requirements of law to entitle them to the injunctive relief they sought.

They contended that there was a substantial issue of law bordering on the constitutionality of the Federal Government’s power to create or operate a separate account as against the spirit and letter of the Constitution in so far as it related to the revenue of the nation which is the subject matter of the  substantive suit.

Canvassing reasons behind the suit, Governor Babatunde Fashola, SAN, of Lagos state, while speaking to journalist last week Wednesday, stressed that the state governors’ opposition to the Sovereign Wealth Fund and the Excess Crude Account was borne out of distrust over ability of FG to judiciously manage the funds and utilize it for the purpose it was meant for.

According to Fashola who made the disclosure at the Renaissance Capital’s 3rd annual Pan-Africa Investor Conference in Lagos, “these really are the issues. It is not that the governors are up in arms against the idea of saving. But we are asking what the rules of engagement are and do those rules of engagement work within the rules that bind all of us.”

He said the governors’ apathy stems from the fact that the fund lacks the necessary constitutional backing, explaining that until the controversial issues surrounding the fund are addressed, it will continually be seen as a high risk venture by investors.

He said: “Which fund are you saving? Are they yours or are they mine? Before you save on my behalf, there is also need to address the issue of trust. How efficiently have you managed the funds that the federation has put in your trust? And what makes you the better saver and better investors. And is the saving done within an expectable framework of the constitution?

“Those are the issues surrounding the Sovereign Wealth Fund. For instance, the excess crude account has no constitutional legality. And I think in trying to find a way around that, we create another solution that will be subject to constitutional scrutiny. And indeed, can we, therefore, build an economy whose constitutional scrutiny is questionable? And until these issues are resolved, there are risk issues for investors.”


Source: Naija.ng

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