Limits of the sacrosanct sovereign national asset (1)

BUSINESS A.M EDITORIAL

How far any sovereign national assets can be treated as sacrosanct or how immune they are to violation by external entities has been questioned, tested and faulted in Nigeria in recent times. The arguments on whether or not sovereign national assets can be seized in exchange for default on debt repayment, breach of contract or violation of implicit trust have so far revealed the level of naivety of those who either ignorantly, inadvertently or deliberately sign away Nigeria’s sovereign assets. 

In August, a fleet of three presidential jets, a Nigerian government’s guest house and an earlier confiscated aircraft — all outside Nigeria, in France, the UK and Canada respectively — were reportedly seized by a Chinese corporation on a court order as relief for a breached contract with a Nigerian sub-national government. This brought home the reality that was recently denied as a possibility, particularly by a top government official. 

There was a warning note about this prospect sometimes recently. The call for circumspection in Nigeria’s dealings with foreign entities in matters that could jeopardise Nigeria’s interests was made by this newspaper in its Monday, August 10, 2020 front page editorial comments. It was in the case involving the erstwhile Minister of Transportation, Rotimi Amaechi, during his encounter with the Nigerian House of Representatives. In Amaechi’s case with the lawmakers, the contractual agreements with China involved loans which Nigeria’s government hoped to receive from China then. Although this newspaper warned of the hidden risks associated with the loan prospects, the then minister expressed confidence that there was nothing to worry about. The concern expressed then was that Nigeria was operating from a weak bargaining position that could have negative repercussions. 

Specifically, considerations about the vulnerabilities of Nigeria led to the unease that it risked losing critical sovereign national assets to China in case of default. In the editorial comments titled “Nigeria: Living on foreign loans, borrowed time,” this newspaper argued in favour of circumspection to avoid being tied down by some fine lines of footnotes that have weighty implications. The legislative panel, set up by the House of Representative Committee on treaties, protocols and agreements, headed by Nicholas Ossai, raised objection over a clause conceding Nigeria’s sovereignty to China in two loan agreements, the first being the $400 million loan for the Nigerian National Information and Communication Technology (ICT) Infrastructure Backbone Phase II Project, signed in 2018. The second was on Railway expansion. The clause, described as “lethal” by the panel, is in article 8(1) of the commercial loan agreement between Nigeria and Export-Import Bank of China.

Attention was specifically drawn to a disputed clause which provides that “the borrower (Nigeria) hereby irrevocably waives any immunity on the grounds of a sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.” While the panel insisted on getting down to details, Amaechi casually  dismissed such concerns, raising the spectre of worries about the attitudes of Nigeria’s public officers concerning diplomatic agreements, particularly those involving financial transactions and the possible consequences of default or breach of contracts.     

While Ossai was emphatic that there are concerns about risks of breaching Nigeria’s sovereignty in some agreements signed by the ministries of Transportation as well as of Communications and Digital Economy, Amaechi thought differently. He even tried to educate the legislators and – by extension – Nigerians, affirming that contracts signed with China do not cede the country’s sovereignty, adding that the disputed clause was only a diplomatic agreement between both parties to ensure payment is made accordingly. Although this newspaper agreed that, in securing a loan of any kind, there must be an agreement which must contain some terms, we expressed unease then about the complacency in Amaechi’s assertion that “no country will sign out its sovereignty.” He even attempted to explain away what the Clause 8 meant in reality, but subsequently admitted that he was not aware that the immunity clause was inserted in the loan agreement with his ministry. This brought home the importance and desirability of a good working knowledge of international relations by government appointees and elected officials —  particularly on issues of treaties, agreements, contracts and loans.

Our concern then and now are about the practical cost of ignorance of public officers in dealings with foreign entities. Specifically and remarkably, Amaechi’s argument that the immunity does not relate to Nigeria’s sovereignty as a nation but refers to the country’s immunity from arbitration was misleading as the recent events in the last fortnight have just shown. Amaechi, at the time of the legislative panel, was too confident that the message from China was reliable enough. According to him: “The Chinese ministry of foreign affairs has issued a statement that there is no clause ceding the sovereignty of Nigeria to China. What is ceded is the commercial immunity which prohibits any country from taking us to court; that is the jurisdictional immunity.” But now, Nigerians have the opportunity of knowing better as the country’s sovereign national assets have just been confiscated on account of default on agreement between China and a sub-national entity in Nigeria.  

Now, we know that Ossai was right in his arguments as the panel chairman, that, “even the details embedded in those agreements are not forwarded to you when demanding counterpart funding… You don’t have the details, clause by clause, in line with the Act that established DMO. We need to know those details even before going to sign such agreements. But those details are not provided to the parliament. So, we have the right to question them.”  And so do Nigerians in general: they have the right to know.