Appeal Court Rules that A Private Company Paid with Public Funds is Subject to FOI Act

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Ms Chioma Nwaodike,
Coordinator of MRA’s Network of Freedom of Information Lawyers

In a landmark judgement, the Court of Appeal in Lagos has ruled that a private company is deemed to be a public institution under the Freedom of Information (FOI) Act, 2011 if the company, even in a single transaction, has received public funds from a government agency as payment for goods it supplied.   

Delivering the lead judgment in the appeal lodged by Coscharis Motors Limited against the April 28, 2015 judgment of Justice Mohammed Yunusa of the Federal High Court in Lagos, Justice Onyekachi Aja Otisi of the Appeal Court held that “a private company that is not at all funded by public funds and that does not provide any form of public services nor perform any form of public function may, for purposes of the FOI Act be deemed to be a public institution or body within the meaning of the Act, if that private company walks that path even for a single transaction.”

According to Justice Otisi, “Contrary to the postulation of the Appellant (Coscharis Motors), it is irrelevant if it is a one-off and never-to-be-repeated occurrence or incident. For that one-off and never-to-be-repeated occurrence or incident, the private body or company would be as accountable as a public institution or body under the Act if it has provided any form of public services or performed any form of a public function or utilized public funds.”

The Appeal Court’s judgment arose from Coscharis Motors’ appeal against the Federal High Court’s decision in which Justice Yunusa held that the FOI Act applied to the company and directed it to disclose to Enough is Enough (EIE) Nigeria information requested by the organization on the 2013 purchase of two bulletproof cars for then Aviation Minister, Princess Stella Oduah by the Nigerian Civil Aviation Authority (NCAA).

Although the Appeal Court ruled that the appeal by Coscharis Motors was partially successful and set aside the Federal High Court’s decision on the ground that the company was justified in withholding the information requested by EIE as there was an ongoing criminal investigation by the Economic and Financial Crimes Commission (EFCC) surrounding the purchase of the vehicles, it noted that “Clearly, the vehicles purchased by the NCAA, a Federal Government agency, were purchased with public funds.”

Justice Otisi said further: “Thus, public funds were employed or used as payment for the two BMW bulletproof vehicles purchased from the Appellant (Coscharis Motors) by NCAA. Stretching this further, it means that the Appellant made use of or had recourse to public funds, which were given by NCAA as payment for the vehicles in the issue. To the extent that this path was walked, the Appellant was a public institution within the meaning of the FOI Act, 2011 and thereby subject to an enquiry or request pursuant to the Act. It was not of any relevance that the path was walked only once.”

He stressed that “In my view, therefore, these facts brought the Appellant within the meaning of public institutions under Sections 2(7) and 31 of the FOI Act. On that basis, the Appellant ought to have provided the information sought.”

The Court appeared to have been split on the issue of whether the FOI Act was also applicable to Coscharis Motors since the company received import duty waivers in the importation of the vehicles.

Ms Chioma Nwaodike, Coordinator of Media Rights Agenda’s Network of Freedom of Information Lawyers, who represented EIE in the appeal, had argued that the fact that Coscharis Motors enjoyed an import duty waiver in the importation of the vehicles constituted utilization of public funds, an argument which was upheld by Justice Yunusa of the Federal High Court.

However, in his lead judgment, the Appeal Court’s Justice Otisi said:  “An import duty waiver means exactly what it says. That import duty on any item has been waived simply means that the import duty due to be paid on the item was intentionally ignored or forgiven by Government and, fundamentally, not paid by the importer. It was not disputed that the import duties were waived for the two BMW bulletproof vehicles purchased by NCAA from the Appellant. As rightly contended by the Appellant, public funds were not received for the import duty waiver enjoyed. Per contra, the import duty was not paid at all on the said vehicles.”

He insisted that “even by the showing of the First Respondent (EIE) and contrary to the finding of the learned trial judge, it must be emphasized that no public funds were expended for the purpose of import duties waiver on the two vehicles, that is to say, Government voluntarily chose to forgive or waive the import duty due on the said vehicles. I do not see how the Appellant can receive any blame or be held responsible for any loss of income that ought to have accrued to Government from the import duty that Government itself chose to waive.”

The judge restated that “Rather, public funds were utilized in the sale and purchase of the vehicles in issue, which brought the Appellant (Coscharis Motors) within the meaning of public institutions under Sections 2(7) and 31 of the FOI Act.”

Although Justice Joseph Shagbaor Ikyegh agreed with the finding in the lead judgment and the consequential orders made by Justice Otisi, in his contribution, he noted that Coscharis Motors “was normally expected to pay N10,133,505 on import duties for the importation of the two BMW bulletproof vehicles” but that the waiver of the import duties meant that the Federal Government had to forgo public revenue of N10,133,505.

According to him, “Ordinarily, the waiver of import duties in the circumstances shortchanged the Federal Government. It lost the N10,133,505 import duties on the importation of the two BMW bulletproof vehicles. While the Appellant benefitted by not parting with the N10,133,505 import duties. Public funds were therefore affected by the transaction.”

Justice Otisi noted that Coscharis Motors had argued before the Federal High Court that under Section 12 of the FOI Act, it was justified in withholding the information requested by EIE, but that this contention was not addressed by that Court, a fact conceded by EIE.

Justice Otisi said he had no reservation in affirming that Justice Yunusa failed in his duty to address and resolve the contention of Coscharis Motors that it was justified in withholding the information requested by EIE as the fact that there was an ongoing criminal investigation by EFCC surrounding the purchase of the vehicles by NCAA from Coscharis Motors was not in dispute.

He stated that if Justice Yunusa had considered this contention, he might have been inclined, having regard to the unchallenged affidavit evidence on the ongoing investigation surrounding the purchase of the vehicles, to rule differently, adding that by ignoring the contention of Coscharis Motors, the lower Court rendered no decision on the issue.

Justice Otisi held that the failure of Justice Yunusa to expressly resolve whether or not Coscharis Motors was entitled to rely on Section 12 of the FOI Act to withhold the information requested by EIE disadvantaged the company.

He ruled further that a decision that has been made without a fair hearing is a nullity and void, adding that the Federal High Court’s decision ought to be set aside on this basis, especially as Coscharis Motors was entitled to seek cover under the exceptions provided in Section 12 of the FOI Act.

In the judgment which Coscharis Motors appealed against, Justice Yunusa had granted EIE’s prayers for:

  • A declaration that the failure and/or refusal by Coscharis Motors to disclose or make available to EIE the information requested in the organization’s letter to the company dated October 28, 2013, is a violation of EIE’s right of access to information guaranteed by Section 1(1) and Section 4(a) of the Freedom of Information Act, 2011;
  • A declaration that the failure and/or refusal by Coscharis Motors to give EIE a written notice that access to all or part of the information it requested would not be granted and stating reasons for the denial and the section of the FOI Act upon which the company relied to deny EIE access to the information it requested amounts to a flagrant violation of the Act and is therefore wrongful; and
  • An order of mandamus compelling Coscharis Motors to disclose the information requested in EIE’s letter dated October 28, 2013, namely the invoice(s) and landing documents for the two BMW vehicles acquired by the Nigerian Civil Aviation Authority (NCAA) with chassis numbers WBAHP41050DW68032 and WBAHP41010DW68044; and details of the payment for the vehicles, including whether they were paid for in full or hire purchased as reported by the media.