$3.1bn Refund to LGAs: A Pat on the Back for Judiciary


Idowu Ajibade

The recent judgement of the Federal High Court, Abuja ordering a refund of $3.1billion to the 774 local councils is indeed a cheery news. The Local Government, a third layer that constitutes the federating units is almost a forgotten level of government. It is the closest to the people and the layer that people can directly relate with. There is no doubting the fact that the local government system in Nigeria remain an unfortunate orphan of some sort. Even though, it draws its funding directly from the federation account as a matter of right, such allocations oftentimes, end up in the hands of the State Government.as “bailout” to assuage their financial burden.

President Muhammadu Buhari minced no word in announcing his sympathy for state governors. He observed that many have gone completely insolvent, with only few managing to pay workers salary. The State governors wield enormous powers that compel federal patronage. But no so for the Councils, many of who are slave to the official funding that accrue to them, even in the face of a more severe insolvency. The federal government has taken another move for a second bailout for the State government. It is regrettable that Local Government Councils are not in reckoning in the arrangement.
It is therefore a cheery development that the Councils are to receive a refund of monies illegally deducted from them as ordered by the federal high court 7, Abuja last Monday. The court directed the Central Bank of Nigeria (CBN) to pay the sum of $3.2billion wrongfully deducted from the accounts of the 774 Local Government Councils in the country. Specifically, the court ordered the immediate payment of “$3.1billion or its Naira equivalent” back to the Local Councils’ coffer.

Presiding judge, Justice AFA Ademola who delivered the ruling told the CBN after listening to the arguments of both sides, to go ahead to enforce the earlier judgement which directed a refund to the council. Lead Counsel to the Council, Mr. Joe Okay Agi (SAN) had prayed the court to garnishee the sum of $3.1billion in the hand of CBN and be paid to the Councils. Counsel to CBN, Ahmed Raji (SAN) had earlier told the court that the apex bank was in custody of over $26billion belonging to the Federal Government.

The order was an enforcement of earlier judgement of December 10, 2013 in which the court faulted the deduction from Councils account by the federal government to service loans owed to the London Club and Paris Club. The plaintiffs had also secured a federal government fiat to execute the judgement since similar refunds were made to some states.
It would be recalled that judgment was given in favour of the Councils in the suit ( No FHC/ABJ/129/2013), filed on 11 June 2013, at the Federal High Court, Abuja.

In the suit, Aba North Local Government, some other local councils (applicants) and Linas International Limited (creditor) sued the Attorney-General of the Federation, Ministry of Finance and Accountant-General of the Federation over the illegal deductions, totaling $3.2billion, made by the Federal Government from the statutory allocations due to the councils in respect of the 1992 London Club Debt buy-back and the 2006 London Club Debit exit championed by Mrs. Okonjo-Iweala.

The plaintiffs were challenging a decision taken by the Federal Government in 1992, when the action was based on the 1999 Constitution, which did not become operational until seven years after the decision. The suit also challenged the fact that the decision of the Federal Government was taken 21 years earlier.

The judgement was not appealed three years on. In fact, the federal government has shown willingness to comply with the order. But then, there is a concern that the money, when released may end up as another booty to the State government. Such is the dilemma of the third tier of government in Nigeria. Of course, the State also owe some responsibilities to the Councils. The State and Local Government joint account system provides a cover for the State to assume the father-son role in the arrangement.

Some will argue and rightly so, that there is nothing wrong with the State maintaining influence on the Councils since the state governor practically determines who occupy what seat at the various Councils.

That being so, the governors needn’t go to the federal for another bailout, especially, considering the controversies that greeted the first. The amount, $3.1billion runs into over a trillion Naira in value. The state government should waste no time to demand for timely payment of the sum rather than going cap in hand to the federal. But then, how it would be spent is certainly going to be of interest to all.