Seeking a Political Solution After the Supreme Court Ruling SEBASTINE HON explores the political option to Resource Control

Seeking a Political Solution After the Supreme Court Ruling
SEBASTINE HON explores the political option to Resource Control

Dateline: 06/06/2002 11:08:01

The full court of the Supreme Court of Nigeria had, in a landmark judgment delivered on 3rd April, 2002, [sic 5^th APRIL] fundamentally effected changes in the revenue sharing formula of the federation. Of importance is the fact
that the onshore -offshore dichotomy, which had been abolished since 1991, was again introduced by the Supreme Court decision. Thus, a state like Akwa Ibom, which used to rely heavily on offshore oil revenue was robbed of the constitutionally-guaranteed 13% derivation fund from mineral resources. Also, the federation account (income and expenditure) was fundamentally restructured.

Before the epochal decision, the Federal Government had, through the Revenue Mobilisation Allocation and Fiscal Commission, submitted a bill proposing a revenue sharing formula to the National Assembly. By this
proposal, 46% of the total revenue of the Federation was to go to the Federal Government; 30% to the states; 16% to the local governments, 10% to F. C.T Abuja and 6% as "special fund" But even before this bill could
be passed into law by the National Assembly, the Federal Capital Territory, Abuja, was already enjoying its 1% derivation. The Federal Government was also unilaterally drawing large chunks of money from the Federation account for itself, for the funding of the judiciary and the N.N.P.C. and the servicing of external debts. All these practices, the Supreme Court declared, were unconstitutional. The Supreme Court further directed the Federal Government to pay in arrears all derivation funds, which it ought to have started paying from May 29th 1999, when the 1999 constitution came into force. Revenue from gas was also ordered to be part of derivation and the non- payment of derivation on capital gains tax and stamp duties was declared unconstitutional, null and void.

The net result of these fundamental changes in the revenue derivation and sharing formula of the Federation have considerably rubbed on the polity, heating it, as it were, to near explosion. The depleting of
monies accruing to the Federal Government has led to three sharp reactions from that end. First, the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, has withdrawn its bill on revenue sharing from
the National Assembly. Secondly, owing to serious financial squeeze at the National Assembly, the Senate, on 16/5/2002, passed a motion calling on the Presidency to approach the Supreme Court once again for a "stay
of execution" of its judgment. The propriety of this motion shall be discussed hereinafter. The Federal Government has also ordered for the full commercialisation of the N.N.P.C., which it was hitherto funding.

From the South-South, reactions have been very sharp, with Akwa-Ibom State which is worst hit, taking the front roll. At a recent public gathering christened " Akwa Ibom Consultative Forum", prominent Akwa-Ibom indigenes, led by the Governor, Victor Attah, slammed the Supreme Court judgment and publicly withdrew support for the
Obasanjo-led government. Also, legal and non-legal brains from the South-South, like Professor Itse Sagay, the Hon. Justice Atake (rtd.) Senator David Dafione, etc. have strongly criticised the Supreme Court decision, citing foreign decisions and treaties to which Nigeria is a signatory, in support of their contentions. With all these pressures, the Federal Government has announced that it will find a political solution to the outcome of the judgment, for which see the ThisDay of 20th May 2002.- Now, how should the Federal Government go about this?

There is no doubt that the April 5th, 2002 decision of the Supreme Court is a final decision which, by section 235 of the 1999 Constitution is final in the real sense of it.

Thus, fine prose or legal arguments submitted on the pages of newspapers, pointing how wrong the Supreme Court was in its decision, is neither here nor there. In the case of ' Ibero V. Obioha (1994) 1 SCNJ 44, after the Supreme Court had given a final judgment in a suit, the respondent who lost the appeal filed a motion asking the Court to review its said judgment and to "order the hearing of the appeal in this court or the rehearing of the appeal in the Court of Appeal or the retrial of the case itself". It was the contention of the applicant that the Supreme Court had erroneously failed to take notice of the two additional grounds of appeal filed by the respondent in his appeal to
the Court of Appeal. Further, that the Supreme Court had acted beyond it powers to pronounce on the correctness vel non of the decision of the Divisional Officer's Court. The Supreme Court was, therefore, called
upon to 'correct' those errors and overturn its judgment. The Supreme Court dismissed the application, saying that by section 215 of the 1979 Constitution which is in pari materia with section 235 of the l99 Constitution, its decisions are "final" in the real meaning of the word. Belgore, J.S.C., who read the lead judgment, held at page 53 thus:

"Once the Supreme Court has entered judgment in a case, that decision is final and will remain so forever. The law may in future be amended to affect future issues on same subject, but for the case decided, that is
the end of the matter" Emphasis mine.

From the above, the Supreme Court provided a way out of this current legal grid lock, that is, by the authorities concerned amending the law. Thus, instead of the Senate adopting a motion that the Supreme Court be
approached for a stay of execution, a bill can emanate from either the National Assembly or the Executive, amending all the relevant sections of the 1999 Constitution and all other relevant laws the Supreme Court
considered before reaching that decision, to reflect the mood of the South - South, the National Assembly and the Federal Executive. This is more so because a stay of execution can only be granted when there is a
pending appeal in court, for which see Martins V. Nicanner Food Co. Ltd. (1988) 2 NWLR (Pt. 74) 75 and Mobil Oil V. Agadiagho (1988) 4 SCNJ 174. But there being no further right of appeal from a decision of the
Supreme Court, it will be otiose to approach that court with just a motion for stay without an appeal.

The second way the government can wriggle itself out of this economic, political and constitutional logjam is by promulgating a law ad hominen-through the National Assembly, nullifying the Supreme Court judgment. Such a law which, should be comprehensive, should therefore, go ahead to define the revenue sharing formula as it affects all the component parts of the federation. Thus, the panicky measures of commercialising the NNPC or withdrawing the revenue sharing formula bill from the National Assembly should not arise. The best thing is to amend
the bill in such a way that it will have a nullifying effect on some of the sore points of the Supreme Court decision. This was done in Nigeria before. In Lakanmi V. Anorney - General, Western Region (1970) 6 N. S. C. C. 143, the Supreme Court of Nigeria had held that the 1966 coup de'tat was not a revolution but an illegal hijack of power. This angered the then Federal Military Government, headed by General Yakubu Gowon, which then promulgated Decree No. 28 of 1973. By section 1 (2) thereof, the Decree nullified the Supreme Court judgment in Lakanmi's case. While Decree No. 28 ousted the Courts' jurisdiction of inquiring into why it was promulgated, the present National Assembly does not need to do that, as we are now in a democracy; but the same result would be achieved.

The Supreme Court confirmed, in a recent decision, the effect of Decree No. 28 on its decision in Lakanmi's case. In Attorney - General of the Federation V. Guardian Newspapers Ltd. & Ors. (1999) 5 SCNJ 324 at 347 -
348, Uwaifo, J. S. C., delivering the lead judgment of the Supreme Court, had this to say:

"The learned Solicitor- General has made copious reference to the decision of this Court in Lakanmi V. Attorney - General (West 1970) 6 N. S. C. C. 143 and Decree No. 28 of 1970 made to nullify it. He has relied
on the effect of the said Decree which he says has been enacted in Decree No. 12 of 1994. Chief Williams has also quoted extensively from the decision in Lakanmi case. One cannot run away from the fact that the decision in Lakanmi's case was nullified by Decree No. 28 of 1970". Emphasis mine.

It must be noted that the framers of Decree No. 28 of 1970 were the relevant arm of the military government then, which was the Supreme Military Council. Under a democracy, as we are now, the National Assembly is the law-making organ of the government. Section 4 (2) of the 1999 constitution stipulates thus:

"The National Assembly shall have power to make laws for the peace, order and good government of the Federation or any part thereof with respect to any matter included in the Exclusive Legislative List set out
in Part I of the Second Schedule to this Constitution."

The National Assembly can, under items 1 and 39 of Part I of the Schedule and item I of Part II of the Schedule to the 1999 Constitution, make a law ensuring that there is "peace, order and good government" in Akwa-Ibom State or the Niger Delta and even the Federation itself as salaries are presently being owed, oil companies are crying for money, as none is coming from NNPC, etc. (by amending or annulling the offending portions of the Supreme Court judgment). The National Assembly should, as a matter of real national urgency, rely, apart from the
decisions of the Supreme Court above, on the other reported case of A. R. C. O. N. V. Fassassi (1987) 3 NWLR (Pt. 59) 42 at 46, where Eso, J. S. C., provided this escape route:

"In the Supreme Court, the decision of that Court, in so far as-that case is concerned is final in all ages...it is final in the sense of real finality. It is final forever. Only a legislation ad hominen can alter it". Emphasis mine.

The third way out is for all the parties to the Supreme Court decision to sit down (as is being proposed by the Federal Government), find a solution thereto and settle amicably. This may sound awkward or even impossible, but then it has the sanction of the law. In Abbey V. Alex (1999) 11 & 12 SCNJ 234 at 246 - 247, Uwaifo, J. S. C., had this to say:

"--The power to settle or compromise 'at any stage of pending proceedings' extends even to that of compromising judgments in certain situations. This is so because under note 1 to para. 383 Halsbury's Laws of England (supra), it is remarked that proceedings remain pending until satisfaction of the judgment. For this opinion, the observation of
Jessel M. R in Re Clagett's Estate, Fordham v. Clagett [1882l 20 Ch. D. 637 at 653 is there relied on. There, he stated inter alia:-

'A cause is said to be pending in a court of justice when any proceeding can be taken in it. . . If you can take any proceeding it is pending. 'Pending ' does not mean that it has not been tried. It may have been tried years ago. In fact, in the days of the old Court of Chancery, we were familiar with cases which had been tried fifty or even one hundred
years before, and which were still pending Sometimes, no doubt, they require a process which we call reviving... but nevertheless they were pending suits.... "

I think the emphasis should be that if a judgment remains not executed but can still be by the proper procedure being taken, then it might be said to be a step taken at any stage of a pending proceeding. In that sense and with that status, a judgment may be compromised by the parties to it. I can see nothing unusual or unlawful about this. - That was what in effect happened to the judgment in the consolidated Kalabari Native Courts suits No. 321/46 and No. 352/46 when the parties entered a compromise as per exhibit B". (Emphasis mine).

It can safely be concluded, therefore, that while the Supreme Court decision in the famed resource control suit is final, the Federal Government, if at all it is serious about finding a political solution thereto, has several legal and constitutional means of the doing so. And if that is to be done, it should speedily be so done, to avert a looming
national calamity of immeasurable proportions. The Federal Executive and the National Assembly have both the knife and the yam; they can cut it
anyhow they feel. But let it be fast.

Mr. Hon is a Port Harcourt - based Legal Practitioner and Chairman of the Movement for the Emancipation of the Middle - Belt, (MEMB)

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ALUKO COMMENTARY

Mr. Hon, Esq. elegantly, very eruditely states the obvious: rather than asking for a "stay of Supreme Court execution", what we need in the country - and very fast - is indeed a political solution to the present "logjam" that has sent Akwa Ibom and some other states a-begging.

Only a part of the real question is "how": however a CONSTITUTIONAL AMENDMENT is out of the question, because it is SIMPLY too tedious according to our 1999 Constitution. Consequently one way to go will
be through normal "ad hominem" legislation as can be provided through the RMAFC.

However the National Assembly still needs to approve RMAFC proposals. But there is a catch: the Finance Commissioners and Attorney-Generals of ANY states worth their salt - and I have my own Ekiti State in mind - are probably out with their calculators adding and subtracting numbers to see how they would fare under different so-
called "political solutions". Any “yeye” political solution(s) backed by any nonsense "ad hominem" legislation that so adversely affects them AND then proves down-right UNCONSTITUTIONAL - well, Supreme Court here we come again!

Looking at the votes on a state-by-state basis, it will be UNREALISTIC to expect to return to the status quo.
There is just no way we will return to the status-quo. There will have be some give-and-take all around: with a fixed pot of gold, some must lose and others must gain. It may be better, for example, for some states to get less allocation but it be required that ALL states carry their own debt burdens. In any case, what the Federal
government loses, all the states and local governments gain. What the littoral states lose, the non-littoral states gain. What the oil-producing states lose, the non-oil producing states gain.

It is virtually a zero-sum game.

One could ask: Why has the South-South not been clamoring the most for a Sovereign National Conference?

Very simple: What the South-South has been fearing is that because of their lack of "numbers" - their one-quarter-to-one-fifth legislative clout - they can bank on their historical Northern "friends" to "screw" (pardon the French) their Southern majority neighbours - that is the Igbo and the Yoruba - who they have traditionally suspected or feared like poison! However, what has now SERIOUSLY complexified the issue post-Supreme Court ruling is the bizarre overlay of North-South financial interests with littoral oil-producing to non-littoral states financial - as well as Minority v. Majority financial interests.

That is why the South-South is in a complete quandary as to how to get out of the present quagmire - because everybody is tapping away on their calculators - or they should be tapping on them.

I gave a Table 3 which showed a Profile of Subventions from Federation Account (In Billions of Naira) to various states. I give a summary of the same table below, but with the full 1999 Federal subventions now included, as well as debt estimates on a political zone basis:

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Notice that on a North-South basis, the South has done extremely well with respect to an income shift when compared to the North in 1999. This is part of the Northern angst against the Obasanjo regime, despite all other talk to the contrary. If the law is clear about an issue - as in 13% of derivation - Obasanjo can be expected to apply it strictly. It is where the law is a little bit vague - that is where he tries to dissemble; that is when the military (or human being) in him shows! :-)

However a closer inspection of the table above shows that the ratio increase of the South-South has been more than DOUBLE of that of almost every other region except of the South-East, with the South-West (Obasanjo's region) taking the rear in that department of all the six regions, with the North-West (the "core North") not too far behind. Until the Supreme Court ruling, the South-South should therefore not have had any reason to quarrel with Obasanjo. ON the other hand, though the SE has had a respectable ratio increase compared with other regions, yet the South-East has a reason to be not too happy: in absolute numbers of billions of Naira, it has consistently taken the rear among all regions, pre- or post-anything!

So any new revenue allocation that will make things a little bit "more equal" will make at least these three POWERFUL regions - SE, SW and NW very happy.

Now take at look at the debt profile: the debt of the NC region is almost the same as the ENTIRE SOUTH, and more than double that of the NW and NE put together! The NC is in big debt trouble! So why would the South so much subsidize NC's debt, or why should the NW and NE for that matter?

Finally, let us look at what would happen with respect to onshore/offshore dichotomy IF all the offshore revenue were returned to the Federation account and re-distributed among the Federal, state and local governments according to the formula 52:26:22. Recall my other essay:

MONDAY QUARTERBACKING: Revenue Allocation and the Nigerian State: OF Derivation, Dichotomy and Debt

The story is not complete, however, for the oil-producing states because of the on-shore/off-shore dichotomy Supreme Court ruling against them! At present, Akwa-Ibom has virtually 100% of its oil OFFSHORE; Ondo about 85% offshore, and Delta, Rivers and Bayelsa about 15%. What this means is that 22% + 0.85 of 7% + 0.15 of (30% + 18% + 18%) or about 41% of the total oil derivation money of N90 billion (that is N37 billion) should ideally be returned to the Federation account (not just to Federal government coffers), to be re-distributed in the putative 52:26:22 ratio.

Consequently, the post-Supreme Court dichotomy ratio would really be (473 + .52*37 : 237+53+.26*37 : 200 + .22*37 49.2) or the ratios 49.1: 30.0 : 20.8 Federal, state and local governments percentage split respectively.

In absolute naira figures, how do the oil-producing states fare? In a trillion-naira budget, instead of getting from derivation ALONE:

(i) 30% of N700 billion (N210 billion), Delta would get N178.5 billion; a N22.5 billion shortfall.

(ii) 22% of N700 billion (N154 billion), Akwa-Ibom would get zero allocation ; a $154 billion shortfall.

(iii) 18% of N700 billion (N126 billion), Bayelsa and Rivers would each get N107 billion; a N19 billion shortfall.

(iv) 7% of N700 billion (N49 billion), Ondo would get N7.4 billion; a N41.6 billion shortfall.

(v) Cross-River, Abia and Imo, with onshore (or creek) oil, would lose no derivation money.

(vi) States with on-shore gas deposits would add those appropriate proportion of the gas revenues to their income.

48% of this shortfall is however RETURNED to ALL of the states and local governments – ie on average each of these states would recover only N0.5 billion from derivation alone!

That 48% is because of 26% goes to the states and 22% to the local governments in the 52:26:22 split scenario.

A quick correction: the figure "N0.5 billion" return on average to each state that I gave above is not correct, and is about factor of seven too low! Note that the total shortfall listed above is N256.1 billion. 48% of that is N123 billion. If that is now divided equally among all of the 36 states, then on average each gets back N3.42 billion - not much comfort to any of those others states with shortfalls, but for Ekiti State which received N2.61 billion in the whole of 1999 from the Federation Account, N5.2 billion in 2000 and N8.6 billion in 2001, THAT IS A WHOPPING AMOUNT TO RETURN!

Now, also, bearing in mind the North-Central zone's whopping external debt estimate of N177 billion, even if it had to pay equal amounts over a concessionary 40-year period, it would need N4.425 billion annually. So why would it give up N3.42 billion without some fight?

What I am getting at is that the Supreme Court ruling has opened up a can of worms so smelly that the natural allies of the South-South in the North cannot be counted on any more - except of course they act dumb - and the already-shaky Southern solidarity is at best now more tenuous. [When is the next Southern governor's conference?]

The South-South must realize this, and come up with a formula of its own in which everybody wins something, even if they - that is the South-South - does not get all of what it wants. If they do not come up with their own acceptable formula from which we can all negotiate, then they will have only themselves to blame, particularly Akwa-Ibom.

This is why I am suggesting below a somewhat mathematical and rational formula for constructing offshore revenue allocation. Consider the following:

A: For oil revenue arising from the 12 nautical mile territorial Sea and 24 nautical mile continguous zone:

2. allocate 5% to the LITTORAL local governments based inversely on the distance of their headquarters to the center of the specific oil field yielding the revenue . [Any littoral local government that wants to relocate their capital to the edge of the Atlantic Ocean is free to do so.]

3. allocate 8% to the 8 LITTORAL states based inversely on the distance of their state capitals to the specific oil fields yielding the revenue. [Any littoral state that wishes to relocate their capital to the mouth of the Atlantic ocean is free to do so; that requires a Constitutional amendment though! :-)]

4. allocate 13% to the 9 non-littoral Southern States in a manner inversely proportional to the distance of their capitals to the oil fields yielding the revenues. [The Southern States used to be “littoral” before all the state creations.]

6. Put the rest of the 56% into the Federation Account and divide it 50:30:20 or 52:26:22 Federal:State:Local government; with equal amounts going to state and local governments that are specified in the 1999 Constitution.

B: For oil revenue arising from BEYOND the 36 nautical miles of Territorial Seas + Continguous Zone:

2. Put the rest of the 87% into the Federation account and divide it 50:30:20 or 52:26:22 Federal:State:Local government; with equal amounts going to state and local governments that are specified in
the 1999 Constitution.

Some of the percentages might change, but something for everybody is the spirit behind my suggestion, not business as usual, not the status quo.

Of course, we the South-South via Egbesu Boys may continue to threaten a violent capping of all oil wells onshore and offshore to protest the Supreme Court ruling. That, I fear would be absurd - but as the Yoruba would say, there are times when that boll weevil would rather waste the entire bag of beans than eat just a little of it.

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Seeking a Political Solution After the Supreme Court Ruling
SEBASTINE HON explores the political option to Resource Control

ALUKO COMMENTARY