Sovereign Wealth Fund: Govs ask S-Court to abort FG’s plan to withdraw $2bn
By Ikechukwu Nnochiri
ABUJA — Legal tussle over the proposed creation of a “Sovereign Wealth Fund” assumed a fresh dimension, yesterday, as Governors of the 36 states of the federation approached the Supreme Court, asking it to abort plans by the Federal Government to withdraw $2 billion from the “Excess Crude Account.”
The governors made the request on a day they told a seven-man panel of Justices of the apex court, presided by Chief Justice of Nigeria, CJN, Justice Dahiru Musdapher, why they failed to reach agreement with the Federal Government, regarding its plans to transfer $1 billion from the “Excess Crude Account” to a new account to be known as the “Sovereign Wealth Fund.”
Alleging that the Federal Government has continued to deplete the funds in the “Excess Crude Account” despite the pendency of their legal action, the governors, through their lead counsel, Chief Adegboyega Awomolo, SAN, noted that whereas $20 billion was in the account as at 2008 when the case was entered, they maintained that only $3.1 billion is currently remaining in the account.
Consequently, they urged the apex court to go ahead and order the Federal Government to maintain status-quo by refraining from making further withdrawals from the “Excess Crude Account” pending the determination of all the constitutional issues they have raised in their suit.
The Governors, said their fears that the remaining fund inside the account may be depleted before the conclusion of the suit, was further heightened by a recent advice by the Finance Minister that $2 billion be withdrawn from the “Excess Crude Account” to off-set the burden of debt on the shoulders of the Federal Government.
Therefore, they urged the adjudicating panel to compel the Federal Government to sign an undertaking that it would no longer touch funds in the account till the suit is determined.
While blaming the Attorney General of the Federation and Minister of Justice, Mohammed Adoke Bello, SAN, for failure of the Federal Government to amicably resolve the contentious issues with them without recourse to the court, the governors, said they would still be open to talks whenever the central government showed genuine commitment towards embracing an out-of-court-settlement deal.
They told the court that since a draft of their terms of settlement was sent to the AGF, he refused to act upon it, thus leaving them with no choice than to seek full-blown hearing into the matter.
FG challenges court’s jurisdiction
Meanwhile, the Federal Government, yesterday, challenged the jurisdiction of the apex court to hear the suit, arguing that the matter was not between states and the federation, but a dispute between the states and the Federal Government which it said ought to have been filed before a Federal High Court.
Counsel to the Federal Government, Mr. Austin Alegeh, SAN, urged the apex court to go ahead and hear preliminary objections challenging the legal competence of the suit, even as he refuted allegations that funds inside the account were being depleted by the Federal Government.
According to him, it would be wrong for the Supreme Court to compel the Federal Government to enter any undertaking since the said funds were withdrawn and handed over to the 36 states.
He contended that rather, the court should compel the state governments to undertake not to further disturb the Federal Government for funds pending when the controversy is resolved.
After listening to all the parties yesterday, the CJN, Justice Musdapher, adjourned the case till September 25 for definite hearing, even as he conceded to request by the governors that their originating summons be heard alongside the preliminary objection that was filed by the Federal Government.
It would be recalled that 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 equally prayed the court to issue an order to 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.
On March 26 when the case was fixed for hearing, FG pleaded the apex court to allow the parties to explore the possibility of settling the matter out-of-court.
It had earlier told the court via an affidavit that was 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 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.
While asking the Supreme Court to dismiss the suit, counsel to the federal government insisted that his client would run into problem if the application was granted as prayed by the governors.
He stressed that the day-to-day running of the nation’s economy would be put in danger if the application is granted.
However, lead counsel to the Governors, Chief Awomolo, SAN, 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.
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.