The Presidency of Muhammadu Buhari may pass on at least $715.86m judgment debts to the next administration.
The judgment debts were listed as 18 promissory notes in a document titled, ‘Schedule of Promissory Notes Issued by Category as at March 2022’ by the Debt Management Office.
According to Investopedia.com, a promissory note is a debt instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on-demand or at a specified future date.
Section 4 of the Government Promissory Notes Act states that government promissory notes are paid from the general revenue and assets of the federation.
It read in part, “The principal sums and interest represented or secured by any Government promissory notes are hereby charged upon and shall be payable out of the general revenue and assets of the Federation.”
Out of the 18 promissory notes to judgment creditors, one matured on August 11, 2022, while the second matured on October 15, 2022.
The remaining 16 promissory notes will mature at different times between October 15, 2023, and October 15, 2031.
It was recently reported that the Federal Government was facing several court cases over alleged breaches of contracts. A compilation of suits filed against the government by local and foreign entities in the past two years may see Nigeria parting with about N7.58tn if the nation loses the cases.
In September, the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, disclosed that the Federal Government had agreed to pay a foreign investor $496m to settle a long-standing $5.26bn contractual dispute.
The government said the mediation proceedings were under the alternative dispute resolution framework of the International Chamber of Commerce led by Phillip Howell-Richardson.
According to the government, the settlement agreement came into effect on August 19, 2022.
The new $496m settlement, when added to the $715.86m promissory notes to judgement creditors, would push the total figure to $1.21bn.
Olu Daramola, SAN, from Afe Babalola’s Chambers recently said that the government was not in the habit of defending cases.
He stated, “Most cases against the government are due to negligence and poor handling, leading to judgment against the government even where there could have been no judgment because it has been poorly defended. But unfortunately, the tragedy is that when you file a case against the government, they may not bother until you get a judgment.
“When you already have a judgment, negotiations become difficult because if you win your case in court and the person is now negotiating with you to take a smaller sum than the one that was awarded in court, definitely you won’t be willing.”
The SAN added that the careless signing of contracts was creating problems for the government.
On his part, Prof Sam Erugo, SAN, said that it should be disturbing to citizens that the Federal Government continuously faced threats and imminent penalties or liabilities for alleged breaches of construction contracts.
A senior legal practitioner, Matthew Burkaa, said, “Nobody will be happy to see that funds that are supposed to be used for other things are being used for settlement of litigation expenses.”
It was also reported recently that the Federal Government was expected to pay off five promissory notes worth N311.73bn, which would all mature in 2022.
While payment for three promissory notes will be made to state governments, the remaining two will be made to judgement creditors.
