Today’s guest post is from Dr. Matthew Ayibakuro,director of research and policy at the Africa Network for Environment & Economic Justice (ANEEJ).
On Tuesday, 11 September 2018, Nigeria’s Foreign Minister, Geoffrey Onyeama in a speech delivered at the opening of the 2nd International Conference on Combatting Illicit Financial Flows organized by the Presidential Advisory Committee Against Corruption (PACAC), called out Switzerland for being an accessory to the looting of the country by the former Head of State, Sani Abacha.
He further decried the difficulties faced by Nigeria in repatriating the infamous Abacha loot from Swiss authorities, referring to the process as “daylight robbery”. For stakeholders working on issues of asset recovery from Nigeria and in foreign jurisdictions, these comments give room for some concern. The potential impact of statements like this in the short and long-term can impede the progress made by the asset recovery regime in Nigeria over the last couple of decades. There are obvious reasons for this.
Irrespective of the issue in question, no good can come from the manner of the expressions used by the country’s top diplomat. One does not have to be a career diplomat to understand the importance of tactful communication in diplomacy. According to Sir Isaac Newton, diplomacy requires the “ability to assert your ideas and opinions, knowing what to say and how to say it without damaging the relationship by causing offence”.
The way the Minister of Foreign Affairs expressed himself couldn’t be farther from these fundamentals and could easily alienate a country that has been a partner and proved instrumental in achieving the most repatriations of stolen wealth to Nigeria since 1999. The cooperation between both countries was demonstrated with the signing of an MoU and subsequent repatriation of the recent tranche of $322.5 million of Abacha loot within the last nine months. This brings the total amount of Abacha loot returned to Nigeria by or through the Swiss Government to over $1billion. The Swiss Ambassador to Nigeria also recently hosted a Forum in June 2018 for officials of Switzerland, Nigeria and other donor organizations and stakeholders to dialogue on ensuring transparency and accountability in asset recovery and utilization in the country.
For civil society organizations like the Africa Network for Environment and Economic Justice (ANEEJ) that have been involved throughout these processes, the continued cooperation between Nigeria and countries like Switzerland is essential to build on the progress made so far by the country in recovering looted assets to finance development efforts.
Admittedly, there is a point to be made about the role of Switzerland’s financial secrecy regime in encouraging money laundering. This an issue that has been reiterated by most countries and actors globally as the country struggles to introduce reforms. Moreover, the frustrations expressed by the Foreign Minister with regard to the difficulties faced by countries in the global South in the repatriation of looted assets is evident in the huge gap that exists between funds stolen away from such countries and those returned successfully.
A 2014 report by the Stolen Asset Recovery Initiative (STAR) found that between 2010 and 2012 for instance, only $147 million was returned to countries in the global south by OECD countries, representing a fraction of the $20-40 billion estimated to be stolen from these countries annually. There are therefore broader issues that need to be addressed to ensure that asset recovery processes, especially between countries in the global north and global south, are made easier and more effective. This has to go beyond political expressions and requires a considered and strategic approach.
Furthermore, the words of the Foreign Ministry echoed the sort of rhetoric used by countries in the Global South in the 1960s and 1970s when there was a push for Import Substitution Industrialization and a New International Economic Order. Whilst these movements ultimately proved unsuccessful for a wide variety of reasons that cannot be covered here, most countries using such rhetoric did so in collaboration with many other countries. They also had experience and confidence in their ability to thrive within such Order. We live in a very different reality today where globalization and neoliberal predominance mean that countries require interdependence and cooperation to thrive.
By all considerations, the rhetoric used here detracts from the tact and diplomacy required to leverage the gains made by the country in the area of asset recovery. Whilst much still needs to be done, this escalating situation is immensely counterintuitive. It has the potential to jeopardize the efforts of dedicated professionals on both sides and those in civil society and the private sector who have worked hard to get us to where we are now.
There are indeed significant indications of the progress made by the country in recent times. For instance, civil society organizations like ANEEJ were included in the processes leading up to the signing of the MoU between Switzerland and Nigeria for the repatriation of the recent tranche of Abacha loot. The MoU which was finally signed during the Global Forum on Asset Recovery (GFAR) in December 2017 in Washington D.C contains a clause clearly recognizing the role of civil society in monitoring the use of recovered assets. On the strength of this, civil society in the country is now actively engaging government and other stakeholders to ensure transparency and accountability in the use of the returned funds.
Hence, rather than engaging in confrontation and mixed messaging, the long-term interests of the country right now will be best served by leveraging these gains through a focus on strengthening the internal regime for asset recovery. The passing of the Proceeds of Crime Bill is particularly essential in this regard to establish the requisite institutional framework and introduce vital reforms. Furthermore, more action is needed to plug all loopholes to prevent the looting of the nation’s resources in the first place, as a permanent panacea. There is also a need to demonstrate transparent and accountable utilization of recovered assets to allay concerns about re-looting of such assets and the impact of this on recovery efforts.
This will eliminate the need to call out external actors in the long run. And if a point must be made, our diplomats and officials must keep to the rudimentary principle of “making a point without making an enemy”. Successful diplomacy for asset recovery demands it.
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Dr. Ayibakuro, thanks for the interesting post. I’m wondering if you have a sense of why exactly Minister Onyeama called out Switzerland when he did, especially in light of all the recent cooperation. Your post seems to suggest it may have been merely due to frustration, but it’s hard to imagine a seasoned diplomat making a decision like that without thinking carefully about the repercussions. Has something happened recently in the bilateral relationship? Could the condemnation of Switzerland be meant for a domestic audience? Your points about the negative consequences of such a condemnation are persuasive and so I wonder if there might not be something else going on. If it’s possible to identify that, it’d then be easier to counter such potentially counterproductive impulses in the future.
Additionally, the statistics you cite for STAR are stunning. It seems as if Minister Onyeama would attribute the low asset recovery rate to intransigence among governments in the global north, but I wonder what Aneej’s view is. Specifically, you speak of a “considered and strategic approach” to getting governments in the global north to repatriate wealth to the global south. Besides strengthening the internal anticorruption regime, which you discuss in the post, I’m wondering what other policy solutions you advocate for—perhaps among states in the global north—as part of the considered and strategic approach. Thanks!
You raise a number of interesting points. The comments of the Minister were also quite surprising to us, especially in the light of the history of cooperation between the countries. If there is a recent development that instigated this, we are not aware of it. In fact, there was a forum just a couple of months ago hosted by the Swiss Ambassador – which I referred to in the post – where all stakeholders in the asset recovery domain in Nigeria came together to tackle all issues in the spirit of transparency, accountability and cooperation. Nothing seemed specifically out of the ordinary throughout the process.
I would not want to speculate on whether this was meant for a domestic audience or some other reason. If there is any such reason, the MInister would have made it known, so all stakeholders around the issue can also interrogate and take same into consideration.
In any case, we are working with what we know at the moment and the analysis is based on the facts as we know them.
In terms of approaches going forward to deal with the challenges of asset repatriation to the global south, it would be more helpful to use fora like GFAR to operationalise the framework provided by UNCAC and other global instruments to enhance asset recovery processes. Right now, it is often just bilateral with the involvement of institutions like the World Bank in certain instances. Considering the relative imbalance in bargaining power between these countries and other economic and financial interests that would generally impede asset recovery processes, a broader multilateral mechanism would be invaluable in providing a more balanced and effective framework for asset recovery.
Thank you for providing the background for this. I would not be surprised if among the reasons for the frustration was the fact that Switzerland is applying a very strict and regulatory approach towards this – which means a long process, a lot of documents, procedures, etc. Given the different regulatory contexts of the two countries, what one country perceives as regulatory procedures, the other might take for unnecessary burdens designed to impede the process. This is of course only my speculation which may be as far from the truth as anything, it’s just that I know that quite often such differences, if not communicated properly, might lead to frustration.
What I wanted to share here are my suggestions about additional policy solutions that might help with asset recovery to build on what you are suggesting. That is nothing new and revolutionary, but I have been thinking about that a lot and would like to hear your opinion about it too.
First, I believe that there are still way too many instances where the flows of illicit assets are not traced properly, because we still have too many mechanisms across the globe that allow for secrecy to prevail and too little political will to actually investigate such sensitive cases from which many industries (and probably even countries) benefit. Investigative journalists and CSOs are doing a great job uncovering them, but I have a feeling that many countries in the world still do not prioritize this in their national investigations. At a risk of sounding too naive (because I am aware of the inevitably limited resources countries have), I would like to suggest that a lot of governments in the world that are known for being safe havens to hide illicit assets, should up their game in investigating suspicious transactions and acquisitions. I find it very ironic that it is the independent journalists and NGOs (The Sentry or the International Consortium of Investigative Journalists come to my mind as examples – and there are many more) that seem to be constantly uncovering stories of illicit assets and even “conflict assets” being hidden safely away in countries where the law enforcement institutions never even started a real investigation on the issue prior to publications. I simply refuse to believe that all of those law enforcement institutions in those countries never identified suspicious leads – it seems that there is way too much influence, money and politics at play preventing countries from genuinely wanting to investigate. I have no magical pill to suggest here, but I think that every time such investigations are published by NGOs and investigative journalists, there should be very legitimate questions raised as to why the official law enforcement in those countries had never noticed anything. After all, in most cases, those countries have not only law enforcement institutions, but also specialized units for AML and CTF investigations. This would raise questions of why some of these countries are actually interested in protecting the secrecy of illicit assets flowing into their financial institutions and could maybe even trigger a conversation about who is responsible for that.
Second, I think that the AML and CTF current regulatory framework in most countries is simply not good enough and it is time for a serious review. We keep expecting the financial institutions to do the work that not even the governments themselves want / know how to do. In most countries, there are no public PEP (or even politicians!) databases, but we expect the financial institutions to apply enhanced due diligence on PEP and political clients. The ultimate beneficiaries of the companies are still very much secret in almost all countries in the world, but we expect the financial institutions to not only identify who the UBOs are, but to also apply enhanced due diligence to them in case they are related to PEPs. It is very comfortable for the governments in these cases to sit back and say that all those cases of hiding illicit assets happened for a lack of enforcement of laws in the financial institutions. I am not saying that in all cases the financial institutions are blameless (by far – as the Panama Papers proved), but I just do not see a genuine will of most governments in the world to ensure that financial institutions in their countries actually KNOW where the assets are coming from or who is funding acquisitions of real estate, etc. It seems it is way too comfortable for them to pretend that the laws they have are supposed to somehow work and then act surprised every time a bank in the Baltics is caught in a money laundering scandal for laundering money of corrupt public officials or when it is revealed that corrupt heads of states from African countries have been secretly buying luxurious villas on the seasides of countries that proudly call themselves democratic. I think it is high time we either review the existing framework from the core and agree that we need additional tools to make them work – or just agree that they are not working and look for modern ways to ensure that AML and CTF actually works.
Sorry for going to such an extent with my comment – I personally get easily upset by the subject, having myself tried to advocate to at least open the companies registry in a small country. I would really like to hear your thoughts on this.
Dr. Ayibakuro, thank you for this post! Much like Jason, I wonder if there was a domestic reason for doing so. While this departure from the norm might strain relations, I wonder how Nigerian citizens responded to his remarks. While I can’t speak to Nigeria specifically, I feel as though diplomacy is often criticized as slow and unproductive, and perhaps this was a form of shaking things up. Further, I wonder if this is a sign of a shift towards nationalism above globalization?
I cannot discount the possibility of this being intended to gain political points with a local audience. The reaction from participants at the event where the speech was made suggested a degree of support for the position of the Foreign Minister. And as I have noted in the post, there are rational reasons why countries in the global south should be seriously concerned about asset repatriation processes and the results achieved so far.
However, from the perspective of diplomacy and the context of power structures in international relations, it is difficult to see how a nationalistic approach would achieve better results in terms of getting countries in the global north and their financial institutions to return funds domiciled with them. Moreover, the lack of an established global mechanism to compel countries in the global north to do this means that the best prospects lie in cooperation.
From a purely academic point of view, however, I am also curious to find out the broader impact of the words of the Minister and any approach built on them going forward
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