Home » Latest Politics, State News » States sue FG, want Excess Oil Funds in S’Court’s custody

States sue FG, want Excess Oil Funds in S’Court’s custody

SOME states of the federation, opposed to the newly launched Sovereign Wealth Fund (SWF), have sued the Federal Government.

Their action followed the failure of the states and the central government to resolve the legality and propriety of the SWF through dialogue.

The suit came three years after the Federal Government opted for an out-of court settlement with the state, on the legality of the oil funds.

Before the Supreme Court yesterday, 23 of the 36 states filed a fresh application, praying for an injunction stopping the Federal Government from tampering with the funds domiciled in the Excess Crude Account.

Even deductions from the Federation Account by the Federal Government to execute some power projects and the railway modernisation scheme are being contested by the states.

The states also want their share of the monies from the sale of federal landed property and revenue generated by its parastatals and agencies.

They further asked the apex court to order the transfer of the funds in the Excess Crude Account into its (court’s) custody pending the determination of the substantive suit, where they challenged the constitutionality or legality of the Excess Crude Account.

The states are Kogi, Bauchi, Osun, Nassarawa, Rivers, Plateau, Ogun, Ekiti, Lagos, Kwara, Borno, Imo and Cross River.

Others are Bayelsa, Yobe, Benue, Edo, Taraba, Niger, Kano, Gombe, Oyo and Sokoto.

In the suit filed on behalf of the states by Chief Adogbeya Solomon Awomolo (SAN) and brought pursuant to Order 3 Rules 1 and 14 of the Supreme Court Rules (as amended), the states asked the Supreme Court to restrain the Federal Government and its agencies from making any withdrawals from the account styled the “Excess Crude Account” or any account replacing it by any name pending the hearing and determination of the case.

The states also want all monies standing to the credit of Excess Crude Account or any account replacing it be paid into Supreme Court or be otherwise secured as the court might deem fit pending the conclusion of the matter.

In 2008, a dispute broke out between the Federal and state governments over the Excess Crude Account leading to some states embarking on separate legal actions against the Federal Government. These actions, being of the same subject matter – Excess Crude Account – were later consolidated by the apex court.

Although the Federal Government opened the door to horse-trading with the aggrieved states by initiating at the Supreme Court an out-of-court settlement, The Guardian had reported on January 26, 2009 that the negotiations had almost broken down irredeemably, a position, which seems to be buttressed by the present application for interlocutory injunction.

Awomolo predicated the current suit on the following grounds:

• this suit challenging the legality and constitutionality of the Excess Crude Account, had been filed since 2008;

• the respondent had caused appearance of counsel, frustrated negotiation and joined issues with the plaintiff; and

• the government of the federation and its officers have consistently and in total disregard for this pending suit withdrawn, utilised, disbursed and allocated funds from the account and had nearly depleted the sum of N5.51 trillion being the balance on the account as at 2008 when the case was instituted.

Awomolo further said the respondent and the government of the Federation had announced its intention to withdraw, disburse and utilize another $1 billion from the credit balance from the account in disregard to the subsisting suit and in disrespect for the authority of the Supreme Court.

He said unless the order of injunction was granted, the government would continue to disregard, disrespect and ignore the pending suits in the Supreme Court as if it does not exist.

According to him, the conduct of the government and its officials violated the principle of the rule of law and breached the independence of the judiciary.

Awomolo said: “The conduct of the respondent and the government of the Federation, its ministers, officials and privies in continuous dealing with Excess Crude Account is a violation of the principle of rule of law handed down by the Supreme Court in the case of Governor of Lagos vs Odumegwu Ojukwu (1986) pt 1 NSCC 304 and Rotimi Chibuike Amaechi vs INEC (2008) 5 NWLR (PT 1080) 277.”

“The proposed disbursement of $1 billion by the respondent, the states argued would “create a state of fait accompli and helplessness, if not stopped immediately.

“The conduct of the Federal Government is executive lawlessness and impunity,” he stated.

The states said 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 also asked the court to order the government to render full and proper account of accruals to and disbursements from the Federation Account from 2004 to 2007.

Similarly, the states prayed the court to compel the government to pay earnings from the excess crude account totalling N17 billion into the Federation Account.

The Federal Government had set up a committee under the leadership of the Vice President to hold talks with states so as to resolve the dispute amicably.

When the Federal Government set up the committee, the states decided to stop the court action.

But the discussion between the states and Federal Government collapsed when President Goodluck Jonathan delegated the chairmanship of the negotiating team to then Minister of State for Finance, Mr. Remi Babalola.

Babalola had at one of the meetings told the states that they could not come to the negotiation table with their lawyers. The states, which were uncomfortable with the condition, withdrew from the negotiations and briefed their lawyers to intensify their agitations in court.

In the substantive suit filed by Oyo State, which reflects the same demands by the other states, it wants a declaration that the government of the Federation is mandatorily obliged by the combined effect of Section 162(1) and (10) of the 1999 Constitution to pay into the Federation Account income accruing from “signature bonus.”

It asked the court to direct the government of the Federation to pay to the plaintiff (Oyo) N2.1 billion being the lawful share of Oyo State in the income, which accrued from signature bonus received by the Federal Government between 2004 and 2007.

The Oyo government also prayed the apex court to order the central government to pay it N1.55 billion being the lawful share of its 33 local councils in the income, which accrued from signature bonus received by the government of the Federation between 2004 and 2007.

On the dividend from Nigeria Liquefied Natural Gas (NLNG), Oyo asked for a declaration that the Federal Government is mandatorily obliged by the combined effect of Section 162(1) and (10) of the 1999 Constitution to pay into the Federation Account income or return by way of dividends paid in respect of shares held by the government of the Federation, through the Nigerian National Petroleum Corporation (NPC) in the NLNG.

It sought the payment of N870 million being its share of the income or return by way of dividends received in respect of shares held by the Federal Government through the NNPC in the NLNG between 2004 and 2007.

Other prayers sought by Oyo state are the payment of N670 million as the lawful share of the 33 councils in the income or return by way of dividends received in respect of shares in NLNG.

The proceeds of the sale of government property are also being contended by the states.

Oyo government also wants N1.3 billion from the money and N1.1 billion as the share of its councils from the said transactions.

Another prayer of the state government is the payment of its share of the privatisation proceeds, which it alleged amounted to

N4.2 billion from 2004 to 2007 and N3.3 billion for the 33 councils.

For proceeds from education tax, Oyo said it is entitled to N910 million and N700 million for the councils.

The state government also wants to take the sum of N2.4 billion and N1.8 billion for the councils from the internally generated revenue of Federal ministries, parastatals and agencies from 2004 to 2007.

On excess crude, the state government sought a declaration that the establishment and maintenance of the Excess Crude Account and the payment thereto of crude oil earnings and oil taxes (Petroleum Profits Tax and Royalties) in excess of the oil price benchmark set by the Federal Government (or the payment thereto of any crude oil earnings and oil taxes) is illegal and unconstitutional.


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Posted by on Oct 24 2011. Filed under Latest Politics, State News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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