The Federal High Court in Abuja has stopped the Federal Government from executing its plan to deduct $418 million from the bank account of the 36 states of the Federation.
Justice Inyang Ekwo issued a restraining order against the Federal Government on Friday following an ex parte application brought by the counsels to the 36 states, Jibril Otukepa and Ahmed Raji.
While moving the application, Okutepa who led the legal team of the states told the judge that the states would be completely crippled if the federal government should go ahead to deduct the huge amount from the bank accounts of their clients.
In 2006, Nigeria paid $12 billion to get a $18 billion debt write-off by the Paris Club of international creditors.
States and local governments that did not owe the Paris Club, according to reports, later asked for a refund after it was discovered that the payment was made directly from the revenue accruing to the entire federation.
Reports later emerged that some consultants, who claimed a percentage of the refunds as payment for services they said they rendered to the states and local governments, went to court in a bid to get their pay.
The sum of $418 million was agreed as a judgment debt after the Federal Government opted to negotiate an out-of-court settlement with the contractors.
But this move was rejected by the states who sought redress in court after the Federal Government said it would commence the deduction.
The Attorneys-General of the 36 states were listed as plaintiffs in the suit filed by their lawyers on October 27.
Joined as respondents included the President, the Attorney-General of the Federation, the Accountant-General of the Federation, and the Ministry of Finance.
Others were the Central Bank of Nigeria, the Debt Management Office, the Federal Account Allocation Committee, and various commercial banks in the country.
The states, among others, had also sought an order of interim injunction restraining the Federal Government, any of its agencies, or any other person from deducting any money due to the states for the payment of any judgement debts arising from contracts and suits in relation to the Paris Club Refund.
They requested the refund of any money deducted by the government from the Federation Account so far in relation to the issue in dispute, without the express consent of the states.
The states based the application on 13 grounds, which included that the plaintiffs were the attorneys-general and chief law officers of their respective states as created by the Constitution.
“Part of the deductions in the FAAC summary is for the liquidation of judgement debts in favour of persons who neither had any contractual relationship with the plaintiffs/applicants nor obtained any judgement against any of the plaintiffs/applicants,” the fourth ground of the application read.