Tag Archives: Nigeria

Combating Money Laundering in Africa: John Hatchard’s Latest Guide for African Corruption Fighters

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The war on corruption is being fought on many fronts. One where victory is especially critical is the battle to prevent leaders of poor countries from robbing their citizens blind, and nowhere will a victory be more welcome or more hard-fought than in Africa.   Seventy percent of the world’s poor live on the continent while, thanks first to colonialism and then to Cold War machinations, Africans are saddled with governments ill-equipped to keep greedy leaders in check.  Courts, legislatures, and other accountability institutions are weak; the media and civil society hobbled by repressive, non-democratic measures.

Not that in recent years there have not been promising developments. South Africa’s once powerful leader Jacob Zuma was forced to resign the presidency over corruption allegations for which he is now on trial.  Former Guinea Minister of Mines Mahmoud Thiam forfeited $8.5 million and was sentenced to seven years in prison for corruptly granting virtually the whole of his nation’s mineral sector to a Chinese conglomerate.  The son of former Mozambique President Armando Guebuza is one of over a dozen members of the country’s ruling circle facing trial for his role in the “hidden debt” scandal.

What will be required to continue this progress is the theme of John Hatchard’s latest book,  Combating Money Laundering in Africa: Dealing with the Problem of PEPs. Like his earlier ones on African anticorruption laws and institutions (here, here, and here), it’s a must have for African corruption fighters.

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Suspended EFCC Chair Answers Anonymous Charges

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Opponents of Ibrahim Magu, suspended chair of Nigeria’s powerful anticorruption agency the Economic and Financial Crimes Commission, are doing their best to convict him of corruption in the court of public opinion.  While Chairman Magu patiently waits for a chance to clear his name before a special panel investigating charges levelled against him by Abubakar Malami, Minister of Justice and Attorney-General, stories of his supposed corruption appear daily in Nigeria’s raucous media. In response, his counsel Wasab Shittu has begun responding.  Below are excerpts from his July 26 letter.

Alleged Questions Over [the Chairman’s] Asset Declaration.

Our client has NEVER been confronted with any such allegations purportedly arising from the Panel’s proceedings. The story attributed to the panel, which has become a recurring decimal, is a dangerous attempt to discredit the work of the honorable panel.

Funds recovered from indebted NNPC marketers for the NNPC.

Contrary to the misleading media reports, EFCC under our client’s watch NEVER misappropriated any funds recovered for NNPC [Nigeria National Petroleum Corporation]. The truth of the matter is that well over N329billion recovered by EFCC under our client’s watch was remitted directly in10 NNPC dedicated accounts via REMITTA under a special arrangement endorsed by NNPC, EFCC and the affected NNPC’s indebted marketers.

Suspended Nigerian Anticorruption Agency Head Rebuts Charges

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As this blog has reported, Ibrahim Magu, the Acting Chair of Nigeria’s Economic and Financial Crime Commission, was detained July 7 by the state security service on vague charges involving corruption and misfeasance in office.  Since then, in what would appear to be an orchestrated campaign to discredit him, the Nigerian press has been awash with allegations of Magu’s wrongdoing.  They range from a claim that he secretly owns property in Dubai to charges he has embezzled millions from the Commission to an assertion he has paid off Nigeria’s sitting Vice President.

A point-by-point rebuttal of the allegations, issued by Mr. Magu’s counsel Wahab Shittu, is below.  An interview with Mr. Shittu on the public affairs program “Law Weekly,” is here, and a discussion of the issues raised by Magu’s treatment and their implications for Nigeria’s fight against corruption is here.

Many Nigerians fear that the real reason Magu was detained and subsequently suspended from office is that he has been far too effective a corruption hunter (examples here and here). Let’s hope the Presidentially appointed panel investigating Magu acts promptly, fairly, and decisively.  Nigeria needs an strong, effective Economic and Financial Crimes Commission to fulfill President Buhari’s pledge to fight corruption.

THE CHAIRMAN                                                                                                                               The Presidential Investigation Committee on The Alleged Mismanagement Of Economic and Financial Crimes Commission (EFCC)                                                                               Federal Government Recovered Assets and Finances From May 2015 to May 2020.

Attention: Hon Justice Isa Ayo Salami (Rtd)

Gentlemen:

PUBLICATIONS PREJUDICIAL TO THE PROCEEDINGS OF THIS HONOURABLE PANEL Continue reading →

Undermining President Buhari’s Fight Against Corruption? Alarming News out of Nigeria

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Nigerian media have been filled with conflicting accounts (here and here) about whether Ibrahim Magu, Acting Chairman of the Economic and Financial Crimes Commission, was himself arrested for corruption Tuesday.  A press release issued by a member of the Presidential Advisory Committee Against Corruption meant to clarify the situation reveals highly disturbing ongoing machinations within the Nigerian government over President Buhari’s effort to curb corruption.  It is reprinted below. UPDATE: Since its appearance, other advisory committee members have said they do not endorse it.

Press Release: Professor Femi Odekunle, Member, Presidential Advisory Committee Against Corruption.

This is a preliminary reaction of the Presidential Advisory Committee Against Corruption (PACAC) to the alleged ‘arrest’ of Ibrahim Magu, Acting Chairman the Economic Financial Crimes Commission (EFCC). Of course, the real information reaching us is that he was only invited to appear before a Panel set up not long ago concerning some alleged memo by Malami, Attorney General and Minister of Justice, regarding some alleged malfeasance by Magu, along with nominations for his replacement.

It was just that those sent to invite him for whatever reasons best known to them invited some press along and made it look an arrest. That mischief has been confirmed by some apparent afterthought denial by the DSS [the Department of State Services, the domestic intelligence agency] that it was not an arrest. While PACAC has not had a formal meeting on this development, I have discussed with the Chairman and some other members and the following can be considered as PACAC’s preliminary reaction to this development.

The alleged originating Malami memo, up to the current “arrest “ seems an outcome of power-play by power blocs in the corridors of power in which Malami appears to be an arrow-head or major agent of a power bloc that is not really interested in, or in support of, Buhari’s anti-corruption fight.

  1. One can recall the earlier non-confirmation experience of Magu by the 8th Assembly, orchestrated by a power bloc and supported by the DSS ‘Security’ reports.
  2. One can also note the non-resubmission of Magu for confirmation since May 2019 despite the apparent willingness of the 9th Assembly to consider it this time around.
  3. Furthermore, one must take cognisance of the alleged memo referred to earlier i.e by Malami concerning alleged corrupt practices by Magu, along with his own nominations for Magu’s replacement.
  4. Again, we cannot forget Malami’s demand of certain high-profile case files from Magu which the latter has been resisting.

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World Bank Monitoring of Repatriated Assets Should Be Part of Major Settlements

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The issue of repatriating the proceeds of corruption to the countries from which they were stolen has attracted substantial commentary, including in multiple posts on this blog (see here, here, here, here and here). Much of the discussion focuses on whether and how to return funds to countries that still suffer from systemic corruption or outright kleptocracy. In these cases, the risk that the assets, if simply returned, will be stolen again is, in the view of some critics, unacceptably high. In some cases, despite these risks, the government that seized the assets nevertheless repatriates the seized funds directly to the government from which they were originally stolen; the US Department of Justice (DOJ) has done this in several cases, including asset returns to Peru, Italy, and Nicaragua. In other cases, by contrast, the seized funds have been funneled to a local NGO rather than to the government. This was done in the agreement among the United States, Switzerland, and Kazakhstan regarding the transfer of corruption proceeds to Kazakhstan (an agreement which created a new NGO called the BOTA Foundation). This mechanism was also included in the DOJ’s settlement with Equatorial Guinea over the disposition of assets stolen by the President’s son, Teodorin Obiang. Another approach, which we saw in this past February’s trilateral agreement among the United States, Jersey, and Nigeria regarding the return of $308 million in assets stolen by former Nigerian dictator General Sani Abacha (which I discussed at greater length in a previous post), entails the earmarking of the repatriated funds for specific infrastructure projects, coupled with oversight by a yet-to-be-determined independent auditor and yet-to-be-determined independent civil society organizations (CSOs), with both the auditor and the CSOs selected by Nigeria, but subject to a veto by the United States and Jersey.

The inclusion of these various conditions is understandable. Notwithstanding the sovereignty-based objections advanced by the so-called “victim countries”—which often assert that they have an absolute right to the unconditional return of assets stolen from their national treasuries—returning huge sums to corrupt or weak governments without any safeguards would be irresponsible. Nevertheless, there are many pitfalls involved with leaving oversight largely to the victim country government and local CSOs, and the ability of countries like the United States to monitor compliance with the terms of repatriation agreements in foreign countries is limited. The best way to address these concerns is to involve an international institution—such as the World Bank, or possibly one of the regional multilateral development banks—in monitoring the terms of repatriation agreements.

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The Murky Business of Asset Recovery for Hire UPDATE

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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 →

The Trilateral Nigeria-US-Jersey Agreement to Return Nigerian Dictator Abacha’s Assets: A Preliminary Assessment

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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.

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Will Hosting the UNCAC Meeting Prompt the UAE to Comply with the Convention?

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The largest, most important anticorruption conference of the year is underway this week in the United Arab Emirates. Formally known as the eighth session of the Conference of States Parties to the United Nations Convention Against Corruption, the 186 nations that have ratified UNCAC are convening to examine how they can strengthen the fight against corruption.  They have not said why they chose to meet in the UAE, a collection of seven tiny, wealthy monarchies.  Perhaps it is because the Emirates’ location on the eastern end of the Arabian Peninsula makes it an easy place to reach from anywhere on the globe. Or perhaps it is because of its top-notch conference facilities and first-rate restaurants and hotels.

Or perhaps something more subtle is at work.

It’s no secret that the UAE and the governments of its seven federated emirates, especially Abu Dhabi and Dubai, have repeatedly flouted their UNCAC obligations.  In researching The Despot’s Guide to Wealth Management, author Jason Sharman was told by staff from the World Bank/UNODC Stolen Asset Recovery Initiative, the IMF, and the governments of Switzerland and the United States that “the UAE and particularly Dubai . . . were the leading haven for international corruption funds,” a conclusion Susan Hawley confirmed on this blog, writing that an “increasing numbers of corrupt money trails lead” to the UAE. Mozambique’s Prosecutor General reports that the UAE has stonewalled her request for help in prosecuting the accused in the “hidden debt” scandal, and evidence presented in the recently concluded U.S. trial of one of the accused revealed numerous violations of its anticorruption laws that the UAE has ignored.

Perhaps the other 185 parties to UNCAC hope that holding the meeting in the UAE will persuade its government to finally meet the nation’s obligations as an UNCAC party. Five indicators of whether their stratagem is succeeding: Continue reading →

Fighting Police Corruption in Nigeria: An Agenda for Comprehensive Reform

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Nigeria has a serious problem with police corruption, at all levels. At the top, senior police officials embezzle staggering sums of public funds. To take just one example, in 2012, the former Inspector General of Police, Sunday Ehindero, faced trial for embezzling 16 million Naira (approximately US$44,422). Meanwhile, at the lower levels, rank-and-file police officers regularly extort money from the public, and crime victims must pay bribes before the police will handle their cases. As a 102-page report by Human Rights Watch documented, police extortion is so institutionalized that Nigerians are more likely to encounter police demanding bribes than enforcing the law. No wonder Nigeria’s police force was ranked as the worst of those included in the 2016 World Internal Security and Police Index, and that Transparency International’s Global Corruption Barometer survey found that a staggering 69% of Nigerian citizens think that most or all police officers are corrupt.

To combat such a deep-rooted and systemic problem, bold and comprehensive reforms are needed. What would an effective reform agenda look like? Here is an outline of the most important reforms that are needed, drawing on international best practices but also tailored to Nigeria’s particular circumstances: Continue reading →

New Podcast Episode, Featuring Cristina Bicchieri

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this episode, Nils Köbis interviews University of Pennsylvania Professor Cristina Bicchieri about her interdisciplinary work on corruption and anticorruption, which addresses a range of questions including why corruption can be so “sticky,” the role of social norms in shaping corrupt or non-corrupt behavior, how and why perceptions and attitudes toward corruption may differ between men and women, and what the implications of social norm theory are for effective anticorruption strategy.

You can find this episode, along with links to previous podcast episodes, at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.