Premium Times and Finance Uncovered offered yesterday a glimpse of the lucrative business of asset recovery for hire. A story posted on the websites of both the Nigerian paper and the London NGO (here and here) reports that the Nigerian government has hired Johnson & Johnson, a small Lagos-based law firm, to recover as much as several hundred of millions of dollars stolen from it through corrupt oil deals. In return the firm will be paid five percent of whatever is recovered. Johnson & Johnson, which apparently “won” the contract through an unsolicited proposal, has partnered with an investor who will pick up the firm’s cost to recover the money in return for a 300 percent return on its investment. UPDATE: The Premium Times reports a coalition of civil society groups has asked Nigeria’s justice minister, Abubakar Malami, to release details of the agreement with Johnson & Johnson.
The Johnson & Johnson deal is not the first time the Nigerian government has turned to a private firm to recover stolen assets. To recoup what General Sani Abacha stole while head of state in the nineteen nineties, it hired Geneva lawyer Enrico Monfrini. His take of the recovery was only four percent, not Johnson & Johnson’s five, but he still came out rather well. For the 3,000 hours per year he told Swiss journalist Sylvain Besson he and his colleagues put in to recover $600 million of Abacha funds, which works out to roughly one lawyer working full-time and one-half time each year, his firm was paid $24 million (4% x $600 million).
Ever since UNCAC put the recovery of stolen assets on the international agenda, private contractors have been lining up to help developing country governments recover assets. While there have been some successes, they have, as the Abacha case shows, come at a very high price. Are they worth what the governments are being charged? Are there better, cheaper alternatives? Continue reading