Fresh N500b refund divides Governors’ Forum

•Say no to hiring of consultants

•Those engaged for first tranche still await payment

The second tranche of the London-Paris Club refund is already causing division within the rank of state governors even before it is released to them.

The cause of the disagreement is the hiring of consultants on the computation of what accrues to each state.

Several governors are strongly objecting to the deduction of about 5% of their refunds to pay consultants as was the case with the first tranche.
The protesting governors are angry with those who brought in the consultants for keeping them (governors) in the dark on the arrangement.

They claimed that the terms of engagement were known to only a few of their colleagues in the Nigeria Governors’ Forum (NGF).

About N19billion from the first tranche of N522.74 billion was remitted by states into two accounts of the NGF as commission to consultants.

However, the N19billion allegedly ended up in the accounts of some of the seven governors who played one role or the other in the deal, some public officers and some individuals who had no business whatsoever with the refunds.

It was also learnt that some consultants engaged by the NGF and some states have not been paid by the governors.

The Economic and Financial Crimes Commission (EFCC) has launched an investigation into the alleged shady deals.

Apart from locating the two accounts where the N19billion was remitted, the anti-graft agency has interrogated no fewer than four persons involved in the hiring of the consultants and payment.
Investigation by The Nation revealed that some states remitted as much as N600million into NGF’s emergency accounts as commission.
It was learnt that the two accounts of the NGF were opened at the last minute in defiance of the attendant agreement.
According to findings, reports made available to presidency by the EFCC and other security agencies showed that the governors did not keep to the terms for the refunds.

Some of the infractions noticeable in the management of the first tranche of the London-Paris Club loan refunds are as follows:

•Computation of state records done at a private house in Maitama, Abuja, belonging to a governor
•Accounts initially opened in the names of two lead consultants but the details of who to be paid was later changed
• N19b remitted into two accounts of NGF
•Commission to consultants cut from 10% to 2% but 5% was on paper as paid
•CBN paid directly to each state without the knowledge of the Accountant-General of the Federation
•Part of the N19b commission traced to a governor’s account and some individuals including some members of National Assembly
•Apart from central consultants, state governors still hire separate consultants
•Some state governors conceded about 10-20% commission to their consultants
•In some states, governors served as consultants through proxies
•Consultants yet to be paid because the NGF changed commission formula as soon as the first tranche was remitted
•Some governors deviated from using 25% to 50% for payment of outstanding salaries and pensions as agreed with President Muhammadu Buhari.
It was also gathered that these infractions have angered some governors who have vowed not to allow any deduction from their share for consultants.

A governor, who spoke in confidence, said: “The whole thing is a scam. Why should they ask states to remit as much as N400million to N600million each to pay consultants they did not hire.

“It is more saddening when we discovered that the N19billion we remitted was not paid to consultants. The money has been found in the accounts of some individuals or used for some extraneous purposes.

“In our state, we have taken a position that no kobo of our refunds will be paid as consultancy fee. We have the CBN, the Debt Management Office (DMO), the Office of the Accountant-General of the Federation (OAGF) and the Federal Ministry of Finance who have qualified officials to do the computation of the refund which each state should get.

“The second tranche of N500billion which we will get in the next few days will not be mismanaged like the first.
Another embittered governor said: “It is unfortunate that we contributed N19billion as consultancy fees but some consultants have been approaching us that they have not been paid.

Why will state funds be diverted to other use?
“At the appropriate time, some of us will certainly open up. We want the NGF to account for how it paid the N19billion to the consultants.

“Is it because we are in the opposition that some people can sit down somewhere and think they can manage our funds anyhow?
“We want the EFCC to get to the roots of what transpired. But my state will not remit any cash as consultancy fees. They should let us meet in court.”

A top source, speaking in confidence, gave an insight into how the governors outsmarted the consultants.
He said: “Two central consultants were appointed by the NGF.

“Each state later appointed its consultants. But for no justifiable cause, all state consultants were asked to cooperate and carry out the directive of the central consultants. This was where some governors, especially those in the opposition, started suspecting some foul play.

“At the initial stage, most states had their consultants but NGF asked to converge on Abuja to meet the central consultants.

“The consultants were asked to follow the directive of the NGF and central consultants.

“These aggrieved governors later got to realize that some of their colleagues had link with some consultants. This is why some governors want the EFCC to dig deeper on this N19billion.”

One of those hired by the NGF said: “Even though we have superior information, we did not have a choice than to share these with the central consultants.

“But we were uncomfortable with the approach. At a point, some consultants were reporting for work on records at the residence of one of the governors in Maitama.

“The initial commission negotiated was 10% but it was cut unilaterally by a governor from the North to 2% but states were asked to remit 5%. What is on the paper as commission is however 5%.

“It was on the basis of the N19billion that the consultants charged 10% but immediately the money was remitted, the governors changed the commission formula.

“But the most challenging thing is that most of the consultants have not been paid from the N19billion. We learnt about N305million to N500million has been made available by the NGF as payment to consultants. This is a far cry from the agreed consultancy fees.”
The Nation had exclusively reported that the presidency was uncomfortable with the attitude of some state governors to the management of the refunds.

The Federal Government had released N522.74 billion to 35 states as refunds of over-deductions on London-Paris Club loans.

President Buhari decided to release the refunds following difficulties being experienced by states in paying salaries and pensions.

It was gathered that Buhari acted on the recommendations of the Federal Government Committee on Over Deductions of Foreign Loan Obligations from states.

A June 1, 2016 memo by the Minister of Finance, Mrs. Kemi Adeosun on the recommendations of the committee said in part: “Following incessant claims by states for the refund of over deductions of foreign loan obligations(Paris Club and London) states, Mr. President constituted a committee comprised of the Federal Ministry of Finance(FMF), Debt Management Office(DMO), Office of the Accountant-General of the Federation(OAGF) and the Central bank of Nigeria with the Hon. Minister of Finance as chairman.

“The Terms of Reference of the Committee are: (i). To look into the claims of liabilities owed to states by the Federal Government and come up with concrete, coherent and permanent solution to the recurring claims of over deductions on foreign loan obligations from states.

“(ii) To develop a framework for assessing and validating claims made by the states; and
“(iii) To produce a Federal Government Policy paper stipulating the guidelines and procedures for assessing, validating and settling the claims by states.

“The committee after exhaustive deliberations agreed as follows:

(i) “That it was appropriate to consider states’ requests for the refund of claimed over deductions on Paris and London Club debts.

(ii) “However in the light of the current lean resources and cash flow constraints of government. Long term approach should be adopted in addressing the matter, perhaps through the issuance of long dated instruments to states whose claims would have been authenticated through verification process.

(iii) “The states with genuine claims would be required to make their submissions to the Honourable Minister of Finance, attaching all relevant documents in support of the claims.

(iv) “All claims by all contending states of the Federation will be considered to establish the actual amount of the liability before the Federal Government would begin to settle them in a fair manner.

(v) “In order to bring the phenomenon of such continuous claims to a closure, all states will be communicated that any which has substantiated claim should submit their request for refund within a given time frame after which such requests will no more be entertained.”