Managing Partner of Synergy Attornies and Senior Advocate Of Nigeria (SAN), Abiodun Owonikoko, has said that the Nigerian government should create a legislation that will regulate the involvement of Nigerian states in foreign direct investment arrangements with other countries who have a Bilateral Investment Treaty (BIT) with Nigeria to avoid “onerous” clauses in those arrangements.
Owonikoko said this in an interview with ARISE NEWS on Tuesday, where he also said that the Nigerian government and the Economic and Financial Crimes Commission (EFCC), should further investigate and “beam their searchlight” on transactions that subnationals are involved in, to rule out any form of corruption or fraud.
The SAN, speaking on the need for Nigeria to monitor international agreements, said, “The Nigerian way of doing things is that once we escape one problem, we don’t draw the right lessons. I had then advocated that there should be an audit of all foreign related commercial transactions in which sub-nationals in Nigeria are involved, so that we can anticipate these possible areas of dispute, and the ones that we know are bad, we can negotiate our way out of them before they become enforceable judgements.
“And I remember, to be fair to the Honourable Attorney General, one of the committees he set up upon assumption of office was one where they were to review all our BITs, and then come up with a form of standard agreement… I believe that part of what should happen, if they already have that standard agreement now, they should use that to input into our BITs and review, because all the BITs normally have position for constant review.
“You request from the other side that you want to review based on either changes in your own legislation or the economic realities, and then you can negotiate yourself out of the onerous clauses in those agreements.”
He then added, “There is a need now, for more than just ordinary policy, there should be a legislation that will regulate involvement on state enterprises with foreign investments. I’m not talking about Mobil entering into contract with Oando, I’m talking about a state entity in Nigeria entering into a foreign direct investment arrangement with a foreign country with which Nigeria has a BIT, which means that we have an obligation to protect that investment, and we should give them equal treatment.”
He also said, “Any foreign investor in Nigeria that decides to take advantage of the BIT will be entitled to go after the federal government for any investment decision that prejudices its interest in Nigeria, so long as it’s covered under the BIT, and the BIT Nigeria has with China covers fairly a broad spectrum of businesses. Most of them – and that’s why I’m worried by it – the fact that we have proliferation of export processing zones, we have almost thirty something… Some of them are in Kano, some of them are in Kogi, some of them are in Kaduna, and you wonder what we’re exporting.
“A lot of businesses that are coming into those zones are protected by the BIT, and most likely, in an era where companies are exiting because they are not comfortable with our business environment, those that will remain are those who are protected in those zones, and they are likely to initiate dispute resolution through arbitration so that they can go after federal government for all kinds of liabilities that may arise.
“It’s not only state versus state, even liability arising between them and co-Nigerian investors can be subject of those proceedings.”
Owonikoko then further explained the legal dispute between the Ogun State government and Zhongfu, a Chinese firm whose contract was revoked under Amosun’s administration, which led to a Paris court ordering the seizure of three jets belonging to the Nigerian government over an arbitration award in favour of the Chinese firm.
He said, “Where a government, especially Nigeria in the 90s, 70s, up until 2000, was running a command economy, a lot of our businesses got entangled with government involvement. So, certain assets of government were classified as commercial assets, even though owned by government.
“The unfortunate thing is that the leading case on this matter actually generated out of a controversy between foreign investors and Nigeria in the 70s during the Armada Cement crisis…”
Owonikoko said where government dabbles into commercial transaction in such a way that it impliedly decided to engage in business, it cannot be immune from the consequences of breaching the contract.
“Now, in a situation involving the Chinese, people have forgotten that Nigeria and China have a Bilateral Investment Treaty, which was signed in 2001 and came into force in 2010. Under that agreement, foreign investors from China who latch onto that treaty are entitled to some form of protection for their investment, and so, if there is a dispute, there is provision that they either go to a Nigerian court, or they resort to arbitration.
“In this particular instance, the Chinese company decided to go to arbitration. Usually, it’s the safer bet for foreign entities in a country where they want to protect their investments.
“So where we are now, the assets reportedly attached in France are Federal Government public presidential jets, used for running government business. But if it was a CBN private jet being used for commercial transaction, it probably would not be as protected as the presidential jet. So I see the issue involving those jets as not really a matter of enforcement of judgement, but a diplomatic issue.”
Owonikoko was then asked if he believed fraud was involved in Ogun States agreement with China, as was claimed, which led to the breach of the contract, to which he replied, “From what we see here, really, it was a kind of political decision that led to this trouble. So, I’ve not yet seen evidence of corruption or fraud in what has happened, it’s purely politics, and you don’t try people for political mistakes. The only thing is if you dig deeper, what looks like ordinary political decisions may actually have some elements of fraud, in which case, when you leave office, immunity will not cover fraud.
“So, from governor Gbenga Daniel, Governor Amosun, and Governor Abiodun… maybe not themselves, maybe functionaries under them who advised and midwifed this transaction might…like nobody ever thought that in P&ID, people in Ministry of Petroleum, NNPC, were collecting money here and there. Some of them as ridiculous as £10,000.”
On this note, he said that further investigation may be warranted. going on to say, “But not only that, all those other transactions that the various sub-nationals are engaging in trying to get foreign exchange, government should beam its light, EFCC should beam their searchlight on them now. Once they know there is interest, I think there will be some form of deterrence.”
Ozioma Samuel-Ugwuezi
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