Money laundering in Nigeria: HSBC, Standard Chartered named and shamed over ‘murky past’
05 Oct 2018

HSBC has found itself in political hot water in Nigeria, after President Muhammahdu Buhari launched an extraordinary public attack on the bank.

In a recently released statement to Nigerian media, the President’s office accused HSBC of helping to launder over $100 million on behalf of Nigeria’s former President, General Sani Abacha.

Abacha, who died 20 years ago, was known for both his brutal human rights abuses and rampant kleptocracy.

Decades later, the process of finding and returning the billions stolen by the Abacha regime is still ongoing.

In 2014 the US seized and forfeited $480 million linked to Abacha, breaking US records for the largest sum ever seized in a kleptocracy action.

In 2015, after 16 years of court battles, Switzerland also returned $380 million which the Buhari government said would be distributed to poor Nigerian families (although three years later, it is not clear that process has yet begun).

This followed the repatriation of $723 million from Switzerland with the assistance of the World Bank in 2005.

HSBC has indeed been implicated in helping to launder Abacha’s stolen loot in multiple jurisdictions, including the US, UK and Ireland.

Striking the wrong note

However, the source of Buhari’s umbrage has less to do with Abacha’s decades-old crimes (Buhari himself worked for Abacha as head of Nigeria’s Petroleum Trust Fund) than it does with a research note released by the bank in July.

In the note, HSBC researcher David Faulkner observed that if Buhari were to win a second term in the upcoming presidential elections, it would create a “risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil.”

The comment infuriated the President.

In a statement released to Nigerian media, the President’s office said: “The Presidency wishes to make clear to all Nigerians, and particularly the global banking giant HSBC which said the second term of President Muhammadu Buhari would stunt the economy, that what killed Nigeria’s economy in the past was the unbridled looting of state resources by leaders, the type which was actively supported by HSBC.”

The statement went on to demand that HSBC “return our stolen assets”, and suggested that the report might be an attempt to discredit the President out of fear that Buhari would impose fines on HSBC for its alleged role in facilitating historical corruption.

Hours later, Nigeria’s Economic and Financial Crimes Commission posted on Facebook that “Since inception, HSBC is synonymous with money laundering and has paid billions of US Dollars [sic] in fines across the world…  We shall not rest on our oars until every penny belonging to the FRN is repatriated to Nigeria as to improve the lives of the people.”

In addition to the money allegedly laundered for Abacha, the EFCC also accused HSBC of laundering dirty money for “over 50 Nigerians including a Nigerian serving Senator.”

Another senator, Shehu Sani, took to Twitter to accuse HSBC of being jealous and “angry that African Heads of States are now going to the Chinese restaurant and stopped going to the McDonald’s and KFC.”

StanChart feels the heat too

HSBC is not the only bank to have alleged decade-old wrongdoings come back to haunt them in Nigeria in recent weeks.

In late August the Central Bank of Nigeria (CBN) notified Standard Chartered that it was imposing $7.86 million in fines on the bank for violation of foreign exchange laws.

CBN has accused Standard Chartered and three other banks, including Standard Chartered’s subsidiary Stanbic, of helping South African telecommunications company MTN Group to illegally move over $8 billion out of the country in transactions dating back as far as 2001.

In addition to the fines, CBN has demanded that the banks return the transferred funds to Nigeria. Standard Chartered has refuted all allegations of wrongdoing.

Two weeks later, and just days before the public attacks by the Presidency on HSBC, a mysterious and not yet fully explained raid by EFCC officers took place on Standard Chartered’s offices in Lagos.

As the drama was unfolding, former Commissioner for Justice in Lagos Olasupo Shasore tweeted “Disturbing news 20 Efcc agents at standard chartered bank HQ to arrest MD Mrs Bola Adesola happening now!”

Bola Adesola is the Managing Director and CEO of Standard Chartered Nigeria.

Whatever happened at the bank that day, she was certainly not arrested.

Instead, the bank acknowledged in a brief statement on September 14th that officers from the EFCC had entered their Lagos office, but that “there was no basis for this entry” and the officers left shortly after.

The plot thickened further when EFCC spokesperson Wilson Uwujaren denied that the EFCC had been officially involved in the raid, claiming that it was not sanctioned by EFCC leadership and that the officers found to be involved would be sanctioned.

“The raid by operatives purportedly wearing the jackets of the commission might have been the handiwork of errant officers who acted without authorisation,” the spokesperson said.

“The Commission will investigate the circumstances leading to this illegal raid by errant officers and those found culpable would be subjected to the internal disciplinary mechanism of the commission.”

More twists ahead?

In yet another confusing twist, the CBN reportedly reconsidered the fine against Standard Chartered and Stanbic, and will not be debiting the bank for the billions transferred on behalf of MTN.

It remains unclear exactly what lies ahead for both HSBC and Standard Chartered in Nigeria.

Neither HSBC nor the EFCC responded by the time of filing this article to questions about the existence and current state of any formal investigations into the money laundering allegations made by the President’s office.

One thing is clear, however: the Buhari regime seems to have made sure that international banks know where the centre of power in Nigeria lies.

Race to cap explosive rise in UK’s suspicious activity reports

About the writer: Melbourne-based Elise Thomas has a background in international affairs and a strong interest in financial crime, data and technology issues.

 

 

 

 

 

Read more:

Analysis: The ‘stunning’ Criminal Finances Act, HSBC and the billion dollar fraud

Money laundering at Danske Bank: Lessons for financial crime professionals (Part 1)

Banking: Detecting tell-tale signs of human trafficking

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