Injunctional Bias: Like Sanusi, Like Diezani?

 

With conflicting media reports, it is unclear whether or not the minister of petroleum resources, Diezani Allison-Madueke actually did it. However, there was news of her obtaining an injunction against the federal house of representatives, restraining them from investigating allegations that she spends considerable sums of state funds maintaining private jets for her personal use.

 

Now, mainstream social media (perhaps mainstream Nigeria, even) has a slight but very palpable anti-federal government bias. This may or may not be justified, but that is hardly the point. So, news of her having obtained this injunction has been greeted with derision at Diezani and frustration at the Nigerian judiciary. Watchers on the pro-government side of things have however pointed out what they perceive to be inconsistent criticism, as ousted/suspended/retired governor of the Central Bank, Mallam Lamido Sanusi, was congratulated when he obtained a similar injunction a few weeks ago. Are the Sanusi and Allison-Madueke injunctions one and the same? I do not think so. Why?

 

Well, according to information on its own website, the FRC “is a federal government agency established by the Financial Reporting Council of Nigeria Act, No. 6, 2011.  It is a federal government Parastatal under the supervision of the Federal Ministry of Industry, Trade and Investment. The FRC is responsible for, among other things, developing and publishing accounting and financial reporting standards to be observed in the preparation of financial statements of public entities in Nigeria; and for related matters.” The enabling Act also suggests that the FRC is strictly concerned with developing, setting and enforcing accounting financial reporting standards.

Does the FRC have the power to investigate for financial misappropriation? [CORRECTION] Hmmm. The enabling Act entitles the FRC to investigate “any complaint or dishonest practice, negligence, professional misconduct or malpractice, made against any professional.” The FRC also has the power to summon the professional being investigated. Who then is a “professional” for the purposes of the FRC Act? The Act seems to use “professional” interchangeably with “professional accountant” (see the sections on registration), so I would suggest that the FRC’s power to investigate is limited to professional accountants who have not conducted themselves properly in their audit/financial reporting. I do not think its powers of investigation of the FRC, as drafted, extend to investigating financial misappropriation. In any event, the courts will rule on whether the CBN governor’s suit against the FRC on the 12th of May.

 

So, in my opinion, Sanusi’s injunction was ostensibly to stop a federal agency from arrogating questionable powers to itself or overreaching itself. At the very least, the FRC’s power to investigate a CBN governor is questionable. Agreed?

 

On the other hand, the constitution establishes, unequivocally, that Houses of Assembly have the power to investigate (a) any matter over which it has power to make laws; (b) the conduct of affairs of any person or agency charged with administering its laws or disbursing money it has appropriated.

 

But the constitution does not stop there. It goes on to say that the foregoing powers are only exercisable for the purpose of enabling the National Assembly to (a) make or amend laws; and “(b) expose corruption, inefficiency or waste in the execution or administration of laws within its legislative competence and in the disbursement or administration of funds appropriated by it.”

 

Dear friends, does the National Assembly have the power to investigate allegations of corruption or misappropriation of funds against a minister of a federal government ministry in respect of which the Assembly makes laws and appropriates funds? I think so.

Is there any basis for courts to grant an injunction to restrain the National Assembly from investigating a minister? Oh yes! If their investigation is neither for the purpose of aiding the legislative process nor for exposing corruption, etc., then yes, the National Assembly would be acting outside its constitutional bounds.

 

Is this investigation concerned with exposing corruption and waste? The answer, my friends, is blowing in the wind…

 

 

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Aereo and the Disruption of Public Broadcasting

Aereo Logo

Startup and tech buffs love disruption, and for good reason too. Technology has intervened, over the course of human development, to change existing business models and sometimes make them obsolete. Usually, after some initial resistance, the market follows the disruption and old businesses either [try to] adapt, like Blockbuster or close shop and move on, like Kodak Film.

 

The US Supreme Court is about to rule on the legality of the attempt of a company named Aereo to disrupt conventional free-to-air television broadcasts. Aereo offers its users a service through which they can watch live TV online for a monthly subscription of $8-$12. The TV broadcasters, whose content Aereo offers, are upset because Aereo has not obtained licenses to rebroadcast their content and they are convinced that this is clear piracy. Their sentiment is underscored by the existing lucrative situation, where cable and satellite companies pay huge sums to TV broadcasters to retransmit/rebroadcast popular shows. This is where the impact of the disruption will be felt, should the Supreme Court rule Aereo’s business to be legal.

 

Aereo's Antennas. Photo Credit: Washington Post

Aereo’s Antennas. Photo Credit: Washington Post

The case turns on whether or not Aereo’s transmissions to subscribers are “public performances” or “private performances” of the TV broadcasts. If we revisit our Copyright 101 notes, we will remember that broadcasts are eligible for copyright protection and one of the implications of this is that the copyright holder has the exclusive right to control how they are transmitted/communicated to the public. What is the difference between public and private performances? Well, there isn’t a rigid distinction, but generally, private performances fall within the realm of family, home viewing, of a non-commercial nature. Anything outside that would probably be a public performance.

 

There is also a judicial precedent (i.e. a previous decision of the Court of Appeals) which will come into focus during the presentation of arguments at the Supreme Court; the Cablevision case. “Cablevision involved a cable company that held licenses to transmit live copyrighted programs, but also sought to offer subscribers an unlicensed service known as a “Remote Storage Digital Video Recorder” (RS-DVR).” [Quote is from the US Solicitor-General’s amicus brief (opposing Aereo) to the Supreme Court, in the Aereo matter. Full brief can be found here.]

Aereo AntennaAereo2

The RS-DVR allowed subscribers to record programs for later viewing, with the recordings stored in central servers housed and maintained by Cablevision. The courts ruled that the RS-DVR transmissions were private, rather than public performances, for various reasons, including that the transmission from the RS-DVR could only be received by one subscriber.

 

That factor, the capability of reception by a sole subscriber, is central to Aereo’s business model and legal arguments. The US Solicitor-General in fact suggested in his brief that Aereo engineered its business model around the Cablevision decision. So how does Aereo work?

 

Aereo has a central hub of “thousands of dime-sized antennas that are rented to individual users.” [See more in article from Time here.] The antennas capture live free-to-air TV signals, with each antenna serving no more than one subscriber at a time, depending on what program the subscriber chooses to watch. Aereo believes that a ruling that its business is piracy would have serious implications for cloud computing and would throw the Cablevision precedent out of the window. The District and appeal courts have agreed with Aereo so far. However, one of the judges at the Court of Appeals dissented.

 

According to the judge, Judge Denny Chin, in his dissenting opinion, [full judgement available here) Aereo’s technology platform is “a sham”. He says the system has been “over-engineered in an attempt to avoid the reach of the Copyright Act and take advantage of a perceived loophole in the law.” To my mind, he provides a great example of how the system is a sham. In spite of Aereo’s seemingly innocuous position that it provides users with a technology platform to make and access unique private recordings, Aereo’s antennas broadcast the Superbowl live (and simultaneously) to 50,000 users. It would indeed be curious for this not to be held to be public broadcasting.

 

The Judge goes further to distinguish Aereo’s case from Cablevision, with the key point that Cablevision involved a company that already paid license fees, while Aereo pays none. The subscribers in Cablevision already had the ability to view the recorded transmissions; Aereo’s do not. Aereo is functionally a cable company, doing what cable companies typically do, except for its attempt to avoid getting licenses to rebroadcast programming.

 

However, many legal scholars support Aereo, according to the previously referenced TIME piece. One such scholar is quoted as saying “Aereo simply provides an antennas for viewers to privately transmit free over-the-air broadcast television signals. It does nothing more than make it easier for viewers to access already free broadcast service.” But, I would counter, this (i.e. that the broadcasts are free-to-air) is irrelevant to the underlying intellectual property rights and what non-copyright holders have the power to do.

 

I am not an American qualified lawyer but I believe that Aereo’s business should be held illegal. It is clear that their thousands of dime-sized antennas, rather than a single large receiver, is a less-efficient way to structure the business. And, while taking advantages of loopholes in laws is legal and loopholes are in fact the bread and butter of many wealthy lawyers around the world, I agree with Judge Chin that there are enough differences between Aereo and Cablevision to hold that Cablevision does not apply here.

 

We watch and observe.

 

The Limericks of David Moyes (from August 2013)

 

Moyes2

Dave Moyesey ‘s been aging since May

His white hair is turning to grey

Though used to the boos

Can’t walk in those shoes

And can’t make his footballers play.

 

Moyes1

The fearful Manchester United

Now managed by Scotsman un-Knighted

Is down in a rut

A stagnancy glut

And Arsenal fans are delighted!

 

Moyes 3

A thought for the reds of Manchester

Because them again we must pester

Fourth home loss in six

Can Moyesy still fix

Or does Alex need a de-rester?

 

MoyesMeme1

Since Alex chose David on bias

Each challenge’s been the Himalayas

Each foe David’s seen

Has busted his spleen

Has been the proverbial Goliath

 

Moyes4

The tactic today is to cross

Tis what they’ve been told by the boss

They haven’t yet scored

Their fans’ ox is gored

Let’s hope won’t be another loss.

 

Moyes5

A farewell to poor David Moyes

Took over Sir Alex’s boys

Transformed them from winners

To Merseyside’s dinners

And leaves them without any poise

The Judgment Banning Tolling on the Lekki-Ikoyi Bridge

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On the 27th of March 2014, the Federal High Court, sitting in Lagos, held that “there was no existing law in Lagos State, permitting the collection of toll on the newly constructed Lekki-Ikoyi Suspension Bridge in Lagos.” Now, lawyers are usually wary about commenting on a judgment that they have not read in its entirety, but various newspapers quoted the judge’s ratio (i.e. the thinking behind the court’s ruling) extensively. This commentary will be based on the quoted excerpts and the provisions of the Lagos State Public Private Partnership Law of 2011.

 

The PPPL establishes an Office of Public Private Partnerships and gives it powers and responsibilities. It sets the framework for entering into Concession Agreements and states that they must be ratified by the House of Assembly before implementation. Good, so far? Okay then. Let us return to the court’s judgement briefly.

 

Justice Saidu is reported to have held as follows:

“The third respondent [i.e. the Attorney-General of Lagos State] tried to justify the collection of such toll in paragraph 26 of their counter affidavit, by stating that when the bridge is erected, its proceeds will be applied to the consolidated revenue fund of the LASG.

“The question now is, has the LASG made the appropriate law to enable her collect such toll on the bridge? The third respondent only cited sections 27, 28, and 29 of the Lagos State Public Private Partnership Law 2011 as making provision for the collection of revenue. There is nothing before me to show that the subject matter in this case was as a result of any Public Private Partnership law, to enable the law of 2011 be extended.”

 

–       (See more at: http://www.vanguardngr.com/2014/03/lekki-ikoyi-link-bridge-law-backs-tolling-says-court/#sthash.iy4mkUCe.dpuf)

 

The thrust of His Lordship’s judgement therefore appears to be that toll cannot be collected on the bridge pursuant to a provision in the PPPL because the bridge was constructed with funds from the public purse and is therefore not a PPP project.

 

Is this a correct position to hold? Does the title of a law limit the scope of the law? Let us examine the referenced sections of the PPPL and then discuss the rudiments of statutory interpretation.

 

Section 27: Notwithstanding the provisions of any Law [of Lagos State], the [Governing] Board [of the Office of PPP] may designate any public infrastructure or public asset, any road, bridge or highway within the State as public infrastructure[i] or public assets[ii] with respect to which user fee or toll shall be payable for the purpose of this Law subject to the approval of the House of Assembly.

 

Section 28: Notwithstanding the provisions of any Law, the Board may in the relevant concession or other agreement, authorise any person, in return for undertaking such obligations as may be specified in a concession or project agreement with respect to the design, construction, maintenance, operation, improvement or financing of public infrastructure or public assets, to enjoy specific rights as may be stated in the concession or project agreement including the right to levy, collect and retain service charges, user fees or tolls in respect of the use of the public infrastructure or public assets.

 

Section 29 is long and boring but can be summarised as providing for regulating tolls and conditions under which the public will access the infrastructure. You can view the full PPPL here.

 

In simpler English, section 27 says that regardless of what any other Lagos law says, the PPP Board has the power to designate public infrastructure or assets for tolling, subject to the approval of the state’s House of Assembly. Section 28 says that a person/company can be authorised to levy and collect tolls in return for fulfilling its (i.e. the authorised person’s) obligations under a concession agreement or other agreement, regardless of what any other law of Lagos State says.

 

Bearing the foregoing in mind, was the judge correct to hold that public infrastructure and assets may only be designated for tolling under PPPs? I would respectfully disagree with the honourable judge for the reasons that follow.

 

1. Long Title: Laws generally have a long title at the beginning, as well as a short title at the end. Both are aids for interpreting laws. The short title of the law we’re considering is The Lagos State Public Private Partnership Law. This might lead readers to think the law only legislates on PPPs but I think the long title suggests otherwise – A Law To Provide For Public Private Partnerships, Establish the Office of Public Private Partnerships, Enhance Infrastructure and Service Development in Lagos State and for Connected Purposes. The purpose of the law is four-fold, one of which is enhancing infrastructure and service development in Lagos State. It is not solely concerned with PPPs. My learning friends at the Law School would probably support me if I went further to say that the phrase “and for connected purposes” is added to the long title of every law specifically to avoid being put in a straight-jacket as the Federal High Court did here.

 

2. Sections 27 & 28: Even if the law were held to only apply to PPPs, sections 27 & 28 begin with the words ‘notwithstanding the provisions of any Law’. This expression recognises that laws overlap each other in practice, even if this is not the intention of the House of Assembly; laws do not exist in isolation to each other. This means that unless expressly excluded (as done here), other laws can impact on the PPPL. The inference is also thus that unless sections 27 and 28 limited their application to PPPs, courts should not impute this restriction unless not to do so would lead to an absurdity.

 

3. Section 27, again: Section 27 gives the power to designate public infrastructure and public assets for tolling. ‘Public Infrastructure’ and ‘Public Assets’ as defined by the PPL (and reproduced below) have not been defined as assets/infrastructure that were built/developed under PPPs. Now, it might scare us to know that the government can wake up and decide to toll any public facility or amenity but ratification by the House of Assembly has been inserted as a check on the executive (we know they’re more often than not the rubber-stamp of the executive but the principle can’t be faulted).

 

MATTERS ARISING

The Lagos State Government has filed an appeal against the judgement, though it continues to collect tolls in the interim. Did they apply for a stay of execution and if yes, was it granted? [UPDATE: I’ve just been informed that the hearing for the application for a stay of execution is fixed for April 25. With Senior Advocates of Nigeria as Governor and Attorney-General, it is somewhat surprising that toll collection continues.] The lawyer who brought the action against the government claims to have been the target of assassins. We pray for his continued safety and well-being.

 

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ENDNOTES

[i]Public Infrastructure is defined by the PPPL to include ‘public facilities and amenities including roads, bridges, highways, rail lines, water transportation facility, public water works, housing, electric power stations, hospitals, recreational parks, motor parks, waste disposal facility, amusement centres and any other infrastructure or amenities for public use.’

[ii]Public Asset is defined by the PPPL to include ‘the right of use of any property or economic opportunity of a public nature arising from the use of public property.’

The Shiny Roads & Bridges Will Not Build Themselves

A few weeks ago, I was at a lawyers’ mini confab on infrastructure and cross-border investments in Africa and learnt about Mauritius, the Netherlands and the UK being some of the most favourable countries through which to route your investment to Nigeria.

 

After the polite nattering was done and most of those in attendance, with sensitive stomachs had left, I was privileged to have drinks with some fine lawyers and one or two people representing heavy investments in PPP infrastructure in Nigeria. Experience has shown that the greatest benefit (and knowledge sharing) at these summits arise when the cameras have been turned off, the taps of the world’s greatest social lubricant, alcohol, have been turned on and people are free to speak and curse as they like. Coincidentally, the Lekki bridge judgement had just been announced, so it naturally featured in our conversation.

 

The following are some of the golden nuggets shared by the prestigious gathering. It’s all anecdotal, so it’s probably unsafe to quote any of this outside your watering hole.

 

There is a local demand for infrastructure that Nigeria on its own cannot afford to build. This is widely accepted amongst industry analysts and is the justification for public-private partnerships with the various levels of Nigeria’s government. The roads, bridges, tunnels, power stations, water and drainage networks, houses, hospitals, etc., that government should provide as basic amenities will need significant funding from private (and, usually, foreign) parties to happen.

 

The Government is sending out mixed messages on its vision for PPP. The first problem here, and this is my personal opinion, is that not enough of the decision makers know enough about the structure of PPPs, to not bungle it. The concessionaire for MMA2, for example, was frequently summoned by various committees to come and account for the money he was spending during construction! They would typically order work to stop and he would fly to Abuja at his own expense to explain that government did not give him a penny. The general aviation terminal was also supposed to be shut down and there was to be no further airport development within Lagos State. We all know how Arik refused to vacate the GAT and that a new airport will be built in Lekki. His lenders are circling.

 

Same with Lagos State and the Lekki-Ikoyi bridge. Everyone present at our soiree agreed that it was infrastructure that was needed, that it was world class and that it was properly delivered. The issue is that under the concession agreement with the Lekki Concession Company (of the Lekki-Epe toll road), reportedly, no further alternative route is to be built within 300 metres of the toll road.

 

Why the fuss? Well, when you approach lenders for project financing, it is understood that loan repayment comes from revenues generated by the project. The revenue projections determine the conditions for lending and even the slightest default could trigger significant penalties. It is estimated that 25,000 vehicles go through the Lekki-Ikoyi bridge daily and that traffic at the LCC Admiralty Toll dropped to 75,000 vehicles daily from about 90,000 after the bridge became operational. A 15,000 vehicle hit on your daily bottom line is not insignificant.

 

There are hoardes of potential investors at the gates. This conversation was had before our glorious week of rebasing, so it was not yet known for sure that we were twice as large an economy as had previously been thought. However, even with the old GDP figures, there were many people out there itching to come and invest. The snag is that most of the intended projects are not bankable. The issue with bankability is not that a healthy ROI does not exist – it is that political and local community risks are way too high. See for example, how the Chevron toll is yet to become active, then go back to the principle that a funded project repays its own debt. What happens to the deficit in actual revenue versus projected? Think also to how things can go pear-shaped if a different party/regime comes into office. We have the old Buhari and railways project as a reminder here too.

 

The Fix? The government has to decide whether it needs PPP help or not. If yes, then it should be doing all it can to boost confidence in the Nigerian PPP. Politicians and policy makers need to stop being so twitchy. Nigerians also need to decide if they’re happy with the status quo or want these new shiny roads and bridges. Yes, we pay taxes but if the 24% unemployment and 60% youth unemployment figures are to be believed, coupled with huge numbers of people either underpaying or not paying taxes at all, then it may be erroneous to think that the taxes and national income are enough to do everything.

 

There was debate on the propriety or otherwise of the Lekki-Ikoyi bridge judgement too, but that’s gist for another blog post.