Pursuing unexplained wealth in Nigeria

Despite the efforts of the incumbent President to fight corruption, Nigeria remains one of the countries that constantly top the world’s corruption rankings.

According to  Transparency International’s 2017 Corruption Perception Index, Nigeria is one of the most corrupt countries in the world, ranking number 148 out of 180 countries covered by the survey. It also scored 28 on the scale of 0 – 100, with 100 being highly clean and 0 being highly corrupt.

In Nigeria, corruption includes various financial crimes including bribery, which involves taking funds from public coffers and putting them into private pockets. After being laundered within the country or abroad through offshore companies, for example, those stolen funds resurface as unexplained wealth.

The need to tackle unexplained wealth

Removing unexplained wealth from the hands of corrupt public officials and business people, who in most cases induce or connive with the public officials to loot the country’s funds, is one way of fighting corruption.

In the latest move to pursue unexplained wealth, Nigeria’s President Muhammadu Buhari signed the Presidential Executive Order 006 of 2018 on 5 July 2018.

The order preserves assets under investigation by restraining the owners or holders of the assets from dealing in them, and it also empowers law enforcement to freeze assets suspected to be acquired using the proceeds of crime.

In addition, the order targets a total of 155 politically exposed persons (PEPs) including former governors, ministers, businessmen and corporate entities, most of them currently under investigation or already facing a criminal trial for their alleged involvement in corruption and money laundering.

The aim of the order is to stop owners and holders of proceeds of crime from using them to pervert the cause of justice or fund further criminal activities.

Reaction to the new rules

Critics condemned the order, but the executive arm of the government said it has come to stay.

One critic accused the executive of usurping the powers of the National Assembly and interfering with the work of the judiciary. The critic also condemned the order for duplicity and further expressed the view that it exposed the rivalry among the various law enforcement agencies responsible for combating corruption and money laundering.

Reacting to the issuance of the order, the National Assembly threatened to suspend the order and to remove the powers the President has on asset forfeiture and confer those powers on the High Court where judges can exercise judicial discretion in deciding whether or not to order a forfeiture.

To show solidarity with the executive, some of the legislators elected on the platform of the ruling party in the National Assembly staged a walkout during a plenary session in protest against a motion to suspend the order.

Responding to the criticism, the executive arm of the government defended the issuance of the order, saying it signifies a declaration of national emergency on corruption in the country.

Generally, the government sees the order as a powerful tool in pursuing unexplained wealth.

Citing section 5 of the Constitution of the Federal Republic of Nigeria, the government said it is vested with the power to issue Executive Orders and therefore issuing Presidential Executive order 006/2018 is not unconstitutional.

‘Ample’ enforcement framework

Nigeria is not short of legal and institutional frameworks for pursuing unexplained wealth.

The Nigerian Financial Intelligence Unit, the Code of Conduct Bureau, the Economic and Financial Crime Commission, the Independent Corrupt Practices and other Related Offences Commission, and the respective Acts that established these institutions, are an example of laws and institutions available to the government to pursue unexplained wealth.

Other legislation includes the Money Laundering (Prohibition) Act 2012 as amended, and the controversial Recovery of Public Property (Special Provision) Act 1984.

At the moment many politicians, mostly those who occupied offices as governors of their respective states, and former ministers from the immediate past administration, are currently facing trial and have had their assets seized or frozen.

Also, top civil servants, including military brass who were either retired or removed from office on an allegation of corruption, are within the net of the Economic and Financial Crimes Commission or other law enforcement agencies, and have had the assets they were accused of acquiring corruptly restrained.

According to the government in 2018, the criminal assets that law enforcement agencies were able to identify and seize in the 155 cases listed in the Executive Order 006/2018 have an estimated value of almost six hundred billion Nigerian Naira (N0.6 trillion). Converted to the pound sterling, this figure amounts to £1.3 billion.

The government asserts that this amount exceeds the budget for a social investment scheme in the 2018 budget and it has almost doubled the 2018 budget for the construction and rehabilitation of roads nationwide. By all standards, this is a huge amount of money even in a rich country.

Taking on the enablers

The question that needs to be asked is why corruption persists and why pursuing unexplained wealth is increasingly difficult in Nigeria? It is said that there would be no thieves if there were no handlers. Thus, it is the handlers of other people’s wealth that enable those in power to continue to loot the Treasury.

Before the implementation of the “Single Treasury Account”, commercial banks have had a public sector unit whose staffers compete for deposits from ministries, departments and agencies of the federal and state governments.

To continue looting public funds, banks facilitated the appointment of their staff as assistant directors, deputy directors and directors into the federal civil service without any public sector experience.

Also, top public officials have their proxies appointed as non-executive directors of the banks to represent their interest in the banks. This clearly shows the level of connivance between the enablers and kleptocrats.

Therefore, while prosecuting those suspected of stealing public funds and criminal confiscation is necessary, law enforcement should focus more on the enablers of corruption – mostly commercial banks and bureau de change.

This is also very important in pursuing unexplained wealth as stolen monies are laundered with the help of commercial banks and bureau de change.

In the course of their investigations, law enforcement traced stolen money into bank accounts and also discovered that some of the stolen money was handled by bureau de change who converted it into US dollars or other hard currencies.

The role of banks

Under Nigerian anti-money laundering (AML) law, banks and bureau de change have an obligation to report transactions above the threshold of USD 10,000 and suspicious transactions.

While complying with the AML reporting obligations is the right thing to do, conniving with the looters is a crime – at least they are either co-conspirators or accessories before or after the fact.

Rather than prosecuting the enablers, very often the prosecution uses them as witnesses in various cases before the courts.

While prosecution needs credible witnesses for a successful case, failure to prosecute the enablers themselves and have their assets confiscated appears to serve as a motivation to continue to connive with politicians and civil servants to milk Nigeria dry.

Unless banks and bureau de change suffer the same, or more severe punishment, as that meted to looters, corruption will persist in Nigeria.

Enablers of corruption must not be allowed to profit from their crime.

To strike a balance, while serving as prosecution witnesses, enablers must also be made to disgorge to the government all their share of the proceeds of crime and the profit they made by investing in those proceeds.

One way of achieving this could be to introduce the Deferred Prosecution Agreement regime in Nigeria.

Indeed, there would be no thieves if there were no handlers.

About the writer: Dr. Sirajo Yakubu is a researcher and consultant in the areas of Economic Crime, and International and Commercial Law (World Trade Specialist).