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Kwara Govt Drags FG to Supreme Court Over $58.4M Debt

12/02/2015

Source: http://www.kwaranews.com/kwara-govt-drags-fg-to-supreme-court-over-58-4m-debt/

THE Kwara State Government has finally dragged the Federal Government to Supreme Court over an alleged refusal to pay up a debt of $58,505,759 owed the state since 1993.

The Federal Government was dragged before the apex court on the ground that the Presidency neglected to release the money to the state through the Central Bank of Nigeria (CBN).

The legal action with No SC1/2015 was instituted against the Federal Government by the Attorney General of the State and has the Attorney General of the Federation and Minister of Justice as sole defendant on behalf of the Federal Government.

Legal luminary and Senior Advocate of Nigeria (SAN), Malam Yusuf Olaolu Ali filed the court action on behalf of the state.

In the statement of claim, the plaintiff averred that sometime in 1983, it was a beneficiary of an external loan negotiated by the Federal Government on its behalf through the Paris Club assessed through Danski Eksporte Finanser Ingsfond (A Danish Export Finance Corporation).

The plaintiff averred that it was granted a loan of DKK 603,203,562.00 with interest in the sum of DKK 213,711,237.54, bringing the total involved in the loan to DKK 816, 914,799.09.

The plaintiff also stated that the loan which was obtained with the backing of the federal government was meant and used for the establishment of hospital projects all over the state.

It claimed that the agreement between the parties was that the loan was repayable in 16 equal installments with the first installment payable on or before 31st March, 1986 and that last installment on 30th September, 1993.

The plaintiff further averred that it duly paid all the installments but discovered that it had over-paid the loan to the tune of DKK 62,803,933.64.

This overpayment was duly acknowledged by the contractor Privatbanken vide their letter of 18th June, 1986 with ref. no. EF/VM/B28439. The letter is hereby pleaded.

The plaintiff averred further that Privatbanken vide its letter of 3rd July, 1986 with ref. No. JSH/db-96 informed the plaintiff that the sum of the overpayment had been deposited in an interest yielding account at the ruling rate of the 7.75% per annum.

The plaintiff further avers the said sum was deposited in the interest yielding account for 22 days and it yielded interest of DKK 297,441,67 thus bringing the total money due to plaintiff the sum of DKK 63,100,375.31 which at the then prevailing exchange rate of DKK8.06 to the dollar came to $7,821,552.52 American Dollars and this um was then transferred to an account with the Bank for International Settlement at Basle.

The plaintiff stated that vide a letter dated 9th September, 1986 with ref No. EF/AMA/B30497 the Danish Finance Corporation through its agent Privatbanken Copenhagen informed the plaintiff that the said sum of DKK 63,100,375.31 had been transferred to the Central Bank of Nigeria for the benefit of the plaintiff with the value date of 3rd July, 1986.

It also stated that the Central Bank of Nigeria as agent of the Federal Government through whom all the foreign transactions are conducted duly received the sum for the benefit of the plaintiff but failed, refused and neglected to pay over the said sum to the plaintiff up till date.

Plaintiff averred that it had entered into various correspondences with the Central Bank of Nigeria, Accountant General of the Federation, Director General of Debt Management Office, Minister of Finance and the Attorney General of the Federation on this sum which the Federal Government had and received on behalf of the plaintiff but which it refused and neglected to pay over.

The plaintiff averred and will show by evidence that all external loans for states are usually negotiated on their behalf by the Federal Government and also guaranteed by the Federal Government; and that such loans also rooted through the Federal Government through the Central Bank of Nigeria for the utilization of the beneficiary state and the payments are usually done through the Central Bank of Nigeria.

The plaintiff claimed that it shall show at the trial that at all times relevant in this transaction, no state of the federation could access any external loan without the sanction, authority and the backing of the Federal Government and the transaction in question was not an exception.

The plaintiff is therefore claiming the sum of $58,405,759.44 made up of the unpaid balance of $7,821,552.55 due to the plaintiff from the defendant with accrued interest at the rate of 7.75% from July, 1986 till December, 2014.

It is also claiming 7.75% interest on the total outstanding sum from January, 2015 till the date of judgment and 10% on the total judgment sum from the date of judgment till the final liquidation.

No date has been fixed yet for hearing of the suit.

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