This past February, the United States signed a trilateral agreement with Nigeria and the British dependency of Jersey to repatriate to Nigeria $308 million in funds that the late General Sani Abacha had stolen from the Nigerian government during his time as Head of State from 1993-1998. This enormous sum was a mere fraction of the estimated $2-5 billion that Abacha had laundered through the global banking system. Back in 2013, the U.S. Department of Justice (DOJ) filed a civil forfeiture complaint against more than $625 million that could be traced as proceeds from Abacha’s corruption. Shortly afterwards, in 2014, a U.S. federal court entered a forfeiture judgment against over $500 million of these assets, including the $308 million held in Jersey bank accounts. Appeals of the forfeiture judgment in the United States were finally exhausted in 2018, at which point the United States, Jersey, and Nigeria entered into negotiations to repatriate the recovered assets. The February 2020 trilateral agreement represents the culmination of those negotiations.
Back in 2014, when DOJ first froze Abacha’s assets, Raj Banerjee asked on this blog an important question, one that has come up in several other asset recovery cases too: Who will get Abacha’s assets? Would the United States simply give the money back to the Nigerian government? Or would the United States, out of concerns that the repatriated assets would be stolen again, insist on attaching conditions to the returned funds, or even create or empower a non-governmental nonprofit entity to allocate the funds (as the United States has done in some other cases)? Now, six years later, we finally have an answer. Under the terms of the trilateral agreement, the repatriated funds will be used to help finance three infrastructure projects that had already been approved by the Nigerian legislature and President Muhammadu Buhari: the construction of the Second Niger Bridge, the Lagos-Ibadan Expressway, and the Abuja-Kano road. These projects aim to better connect people and supply chains in Nigeria’s impoverished Eastern and Northern regions to the developed Western region. Additionally, the agreement declares that the Nigeria Sovereign Investment Authority (NSIA) will oversee the funds, that a yet-to-be-determined independent auditor will conduct a financial review, and that a yet-to-be-determined independent civil society organization with expertise in engineering, among other areas, will have a monitoring role.
There is much to admire about the agreement. Using these assets to fund critical infrastructure projects that Nigeria’s legislative and executive branches had already approved demonstrates a respect for Nigerian sovereignty and democratic institutions, while at the same time directing the money to projects that would tangibly benefit the Nigerian people, particularly in some of the country’s poorest areas—the people who were most victimized by Abacha’s looting of the national treasury. Yet while the governments of the United States, Nigeria, and Jersey all heralded the trilateral agreement has a landmark, some voices, particularly in the United States, have expressed skepticism. Most notably, U.S. Senator Chuck Grassley sent a letter to DOJ questioning whether the returned funds will truly be protected from misuse. Senator Grassley suggested that senior officials in the Buhari Administration, including the Attorney General, could not be trusted to ensure that the Nigerian government would face consequences if it misappropriated the returned funds, and he questioned why DOJ would return the money without “proper safeguards” to prevent misuse a second time. Unsurprisingly, Nigeria took issue with Grassley’s accusations. But his concerns have some merit.
As noted above, the agreement explains that an independent auditor will conduct a financial review of the funds’ disbursement. The agreement authorizes the NSIA to select an independent auditor pursuant to Nigerian law and its public procurement procedures. Along with the NSIA, the United States and Jersey will have the opportunity to review all bids during the procurement process and to prevent an applicant’s selection by submitting a Notice of Disapproval to the other parties to the agreement. Once hired, the independent auditor will have access to quarterly and annual technical reports prepared by the engineering firm for the three infrastructure projects, as well as quarterly reports prepared by the NSIA on anticorruption due diligence measures implemented by the project’s contractors and subcontractors. The independent auditor will use these reports to prepare quarterly and annual reports on the NSIA’s designated account for the disbursement of recovered funds for these projects. The United States and Jersey will be able to review these reports, and may raise any issues of concern with the NSIA and the Nigerian Attorney General. If the United States or Jersey does not believe that Nigeria has adequately addressed any issues raised by the audit reports, the agreement provides that the three governments are to convene, but the agreement does not further specify how this convention is to resolve the disputes.
Similarly, the agreement also declares that one or more independent civil society organizations (CSOs) will help monitor the implementation of the infrastructure projects until the recovered funds have been fully spent and accounted for. Like the independent auditor, CSOs will be selected pursuant to Nigerian law and public procurement procedures. Bidding will be open to national and international organizations, and applications will be reviewed by a specially established Procurement Panel convened by the Nigerian Attorney General. Again, the United States and Jersey will consult throughout the procurement and selection process and can disqualify an applicant from selection by submitting a Notice of Disapproval to the other parties. The combination of CSOs must have experience with large infrastructure projects, civil engineering, anticorruption compliance, anti-human trafficking compliance, auditing, and procurement. As part of the monitoring program, the CSOs will review the technical engineering reports, financial audit reports, and anticorruption due diligence reports discussed above. The CSOs will be authorized to conduct regular site visits, including unannounced visits, and will also produce their own quarterly reports, though the contents of CSO reports is left unclear. The CSOs are supposed to establish mechanisms that will ensure immediate discovery and reporting of any instances of corruption, criminality, or misuse of the recovered funds, though what theses mechanisms will be or how they will function has been left to the discretion of the selected CSOs. Finally, the CSOs will be responsible for monitoring overall compliance to the terms of the agreement in a manner that is transparent and accessible to the public.
Even with these detailed oversight mechanisms, Senator Grassley is right to be concerned about a lack of appropriate safeguards. Nigeria has long suffered from successive governments looting its coffers, and while President Buhari was elected on an anticorruption platform in 2015, five years later his administration is widely perceived as having failed to combat the country’s systemic corruption. More specifically, Nigeria’s public procurement system does not have adequate rules, procedures, and enforcement mechanisms. The effectiveness of the trilateral agreement’s safeguards depends in large part on the public procurement process awarding independent auditor and CSO contracts to capable and ethical groups. However, a recent report from Nigeria’s Independent Corrupt Practices and Allied Offences Commission found that 60% of corruption cases are related to procurement. And for the last few years, 75% of all cases brought against public officials by Nigeria’s Economic and Financial Crimes Commission have involved procurement abuses.
Another worrying sign is what (almost) happened with another recent effort to repatriate Abacha assets: The United States and United Kingdom had arranged to return approximately $155 million in looted assets that Abacha had hidden in the UK, but Nigeria had planned to hand over nearly $100 million of those funds to Kebbi state Governor Abubakar Bagudu. According to DOJ, Bagudu was himself involved in Abacha’s corruption schemes. Back in 2003, Bagudu reached his own settlement with Nigeria to return $163 million of allegedly laundered money to the government in exchange for all corruption charges against him being dropped. Buhari’s government insists that the 2003 agreement also entitles Bagudu to these recovered funds, as he is no longer accused of corruption in Nigeria. The United States opposed Nigeria’s plan, and so the $155 million remains frozen in the UK while the case makes its way through the UK courts.
Given this history, there is reason to worry that some of the funds returned to Nigeria pursuant to the February 2020 trilateral agreement might again find their way into corrupt pockets. On paper, the trilateral agreement seems to provide for robust monitoring by independent financial auditors and civil society groups, but it is less than assured that the monitoring will be effective. If the monitoring and oversight mechanisms turn out to be too weak or easily evaded, particularly during the procurement stages, the February trilateral agreement may not end up being the landmark victory against corruption that Nigeria, the United States, and Jersey would like it to be.