Last week, the U.S. Department of Justice (DOJ) announced that it had frozen about $458 million in corruption proceeds that former Nigerian dictator Sani Abacha and his conspirators allegedly embezzled from Nigeria’s central bank, laundered through U.S. financial institutions, and deposited in bank accounts around the world. The freeze is a first step in the DOJ’s largest-ever forfeiture action under its recent Kleptocracy Asset Recovery Initiative (KARI). There is much to say about this development, but the question that most immediately comes to my mind (and likely many Nigerians’ minds) is: What will the DOJ do with all this money?
The DOJ has no legal obligation to repatriate seized assets. Nonetheless, it has declared its commitment, in Attorney General Eric Holder’s words, to using the assets seized under the Kleptocracy Initiative “to benefit the people of a victim country.” So far, that has resulted in at least two approaches to repatriation:
giving the money back to the government (as has happened with Peru, Italy and Nicaragua); and
giving the money to a local non-profit (as has happened in Kazakhstan).
What makes the DOJ pick one approach over the other? The U.S. State Department must concur with every act of repatriation, so foreign policy might be one factor. The continued presence of the kleptocrat in question–as with Nursultan Nazarbayev in Kazakhstan–might be another. Overall perceptions of corruption in that country might also affect the decision. According to Transparency International’s 2013 Corruption Perceptions Index, Italy (rank 69), Peru (83), and Nicaragua (127) are all perceived as corrupt–but at rank 140, Kazakhstan is worse.
I expect to see the U.S. return the forfeited assets to the Nigerian government. Yes, Nigeria (rank 144) is perceived as being more corrupt than Kazakhstan. The country is a byword for fraud in the West, and many Nigerians resign themselves to a deeply corrupt culture. (Brown University’s Daniel Jordan Smith captures Nigeria’s corruption culture in an excellent book.) The U.S. State Department is also rightfully alarmed by the recent violence and human rights abuses by security forces in the country,
Nevertheless, Abacha’s legacy has largely been wiped out, and Nigeria has spent over a decade now successfully recovering the dictator’s stolen assets (as Stephen Kingah notes in a 2011 paper). In 2006, Switzerland returned millions of Abacha’s dollars to Nigeria, and in 2009, a Swiss court ordered a freeze on $350 million in Abacha family assets held in Luxembourg and the Bahamas. In 2010, the UK agreed to repatriate a further 43 million pounds to Nigeria. Many of Nigeria’s asset recovery efforts occurred under former President–and Abacha opponent–Olusegun Obasanjo’s leadership.
Especially given this precedent, not returning the assets would smack of both paternalism and opportunism. Paternalism, because the U.S. would be holding onto a sovereign country’s assets essentially on the grounds that the country is unworthy of the stolen property. Opportunism, because Western economies have for too long benefited from the ill-gotten wealth of African kleptocrats. Not returning Abacha’s assets would incense Nigeria’s public, who would likely point out that Western financial institutions were complicit in Abacha’s money laundering scheme.
That said, the U.S. may attach some conditions on how the repatriated assets will be used. Earlier, Switzerland only agreed to release Abacha’s funds on the condition that the money would be used to provide social services. And in 2010, when the U.S. returned about $40 million in laundered assets to Panama, it directed that the proceeds be used to enhance law enforcement in that country. Given this precedent, and Nigeria’s ongoing corruption, human rights, and conflict issues, the DOJ might want to steer Abacha’s recovered assets towards socially constructive, peaceful uses.