Grand corruption, money laundering and need for POCA in Nigeria. By Akin Ogunlola ESQ

Grand corruption occurs at the highest levels of government in a way that requires significant subversion of the political, legal and economic systems. In the Nigerian context, millions, billions and sometimes, trillions of Naira are usually involved in grand corruption. Petty, bureaucratic, or administrative corruption takes place on daily basis at the implementation end of politics where members of the public or private citizens meet public officials like at the police station, the customs, ports of entry, ministries, and other government departments. While petty corruption usually involves smaller amounts of money, the damage may be significant in social term as it can quickly erase public confidence in the government. It is the grand corruption however that substantially deprives Nigeria of needed development.

The truth is that grand corruption more than petty corruption deprives Nigeria of needed development. For example, according to the Civil Society Legislative Advocacy Center (CISLAC), Nigeria losses between $15 – $18 billion annually to illicit financial outflows. Despite this disturbing revelation, the Nigeria’s political elite which has institutionalized grand corruption in the country lacks the interest and political will to eradicate grand corruption in the country. Grand corruption involves very sophisticated skills and means for its execution as well as advanced financial and economic arrangements to keep its proceeds.

When the Nigerian political elite steals public funds, amass wealth through corrupt practices, or engage in other forms of large-scale financial impropriety, they find ways to clean up, or launder the stolen money in order to make it appear to the people that the money is made through legitimate means. Many use the stolen money to engage in legitimate businesses, thus making it appear that the source of their wealth is the profit from such businesses. Corruption and money laundering are interwoven because corruption offenses like bribery, embezzlement or theft of public funds often generate significant amounts of proceeds that need to be laundered or cleaned up in order to enter the financial system without the stigma of illegality (The incestuous relationship between corruption and money laundering by Nadim Saad, Gianluca and Nadine Schwarz).

The Oxford dictionary therefore defines Money Laundering as the concealment of the origin of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses. It is the process used by criminals to hide the illegal source of their money or wealth. By passing illegal or stolen money through complex transfers and transactions, or through a series of businesses, the money is “cleaned” of its illegitimate origin and made to appear as legitimate business profits.  Under the US law, money laundering is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally obtained money. In the UK on the other hand, it is defined as “taking any action with property of any form which is either wholly or in part, the proceeds of a crime that will disguise the fact that the property is the proceeds of a crime or obscure the beneficial ownership of the said property” (Wikipedia).

As an outcome of the 2016 Anti-Corruption Summit hosted by the United Kingdom, the Global Forum on Asset Recovery (GFAR) was established. The GFAR thereafter held its first meeting in Washington DC in December 2017 which meeting focused on needed assistance to four priority countries of which Nigeria was one. The other three countries were Sri Lanka, Tunisia and Ukraine. At the 2016 London Anti-Corruption Summit, Nigeria undertook to strengthen through legislative action, the powers and autonomy of the Nigerian Financial Intelligence Unit (NFIU) so that the Unit can operate in line with the globally acceptable standards as recommended by the Financial Action Task Force (FATF) and Egmont Group. This was why Nigeria finally established NFIU in 2018. It will be recalled that prior to the creation of Nigeria’s Financial Intelligence Unit (NFIU) in 2018, the EFCC (Establishment) Act 2004 had sought to vest the roles of a Financial Intelligence Unit on the Commission by providing in its Section 1 (2) (c) that the EFFC “is the designated Financial Intelligence Unit (FIU) in Nigeria, which is charged with the responsibility of coordinating the various institutions involved in the fight against money laundering and enforcement of all laws dealing with economic and financial crimes in Nigeria”. The insistence of the Egmont group and FATF on having a separate Financial Intelligence Unit to perform the functions the roles of gathering,analyzing and disseminating financial intelligence reports as is the case in other countries, led in part to the amendment to the EFCC Act and the ultimate creation our NFIU in 2018.

Another critical commitment which Nigeria made at the 2016 Anti-Corruption Summit in London was to pass a legislation for non-conviction-based asset recovery and transparent management of repatriated stolen assets with a national data base of all recovered assets to allow for transparency and accountability in the recovery and management process of recovered assets. This law is popularly known as the Proceeds of Crimes Act (POCA). When passed into law, this anti-corruption legislation is important for two major reasons. Firstly, it helps with the recovery and repatriation of stolen funds locally or internationally especially those already taken overseas through complex and sophisticated financial arrangements back into the country, and secondly its passage will greatly complement existing anti-corruption laws in the area of seizure, confiscation and forfeiture of stolen assets because it is essentially a non-conviction-based forfeiture legislation which is desperately needed in Nigeria.

Although we have some provisions dealing with forfeiture, or non-conviction-based forfeiture cases in some of our existing laws such as the Independent Corrupt Practices and Other Related Offences (ICPC)Act 2000, the Money Laundering (Prohibition) Act 2011, the EFCC Act 2004 and the Customs and Excise Management Act, Cap. C45 Laws of the Federation of Nigeria, 2004, these provisions are grossly inadequate to comprehensively address forfeiture cases in the country. Furthermore, under most of the present ant-corruption laws in Nigeria, stolen funds, assets or instrumentalities used to facilitate corruption cannot be forfeited to the government unless the accused or suspect is first tried and convicted of an offense. Virtually all the sections dealing with forfeiture of assets in the EFCC (Establishment) Act talk about prior conviction as pre-condition to forfeiture of assets.

For instance, Section 20 (2) of the EFCC Act provided that “the Court in imposing a sentence on any person under this section shall order, in addition to any other sentence imposed pursuant to section 11 of this Act, that the person forfeit to the Federal Government all properties described in subsection (1) of this section. In the same vein, Section 21 of the Act stated that “For the avoidance of doubt and without any further assurance than this Act, all properties of a person convicted of an offence under this Act and shown to be derived or acquired from such illegal act and already the subject of an interim order shall be forfeited to the Federal Government”. Finally, Section 30 of the same Act provides that:

                   “Where a person is convicted of an offence under this Act,

                    the Commission or any authorized officer shall apply to the

                    Court for the order of confiscation and forfeiture of the

                    convicted person’s assets and properties acquired or obtained

                    as a result of the crime already subject to an interim order

                    under this Act”.

Notwithstanding the provisions of sections 306 and 396(2) and other innovations by the Administration of Criminal Justice Act (ACJA) 2015 to ensure speedy trial, the corrupt suspects are still able to avoid the forfeiture of their stolen assets by making sure that they evade trial altogether, not to mention being convicted. Since most of the laws on forfeiture are conviction-based, this means that without trial, there cannot be conviction, and without a conviction, there cannot be forfeiture of stolen properties. To avoid trial and conviction, corrupt people often relocate to another country for a period long enough to see a change in government in Nigeria or wait outside until a more friendly government with no political will to fight corruption comes to power. These corrupt people therefore become fugitive economic offenders in foreign countries while still retaining their ownership of stolen assets.

With the passage of POCA bill into law, the above loophole will instantly become a thing of the past. The objectives of the Proceeds of Crimes Law are to provide an institutional framework for the seizure, confiscation and forfeiture of the proceeds of crime or benefits derived from unlawful activities as well as make provisions for the custody, preservation, management and disposal of seized, confiscated and forfeiture of any property derived from unlawful activities as well as any instrumentality used or intended to be used in the commission of such unlawful activities. This Law, in addition to creating a management Agency to regulate, supervise and ensure the effective administration of recovered or forfeited property, and management of repatriated assets or other proceeds of crime in the country, will also establish non-conviction-based forfeiture procedures where it is no longer necessary to secure the presence of the suspect in courts before forfeiture proceedings could be commenced against the properties of the corrupt person or before the Courts can lawfully order forfeiture of ill-gotten wealth.

The United Nations Convention Against Corruption (UNCAC), of which Nigeria is signatory and member state, and which came into effect in 2005, is the only legally binding anti-corruption multilateral treaty. It is presently made up of over 180 countries. Article V of UNCAC recognized the need to return proceeds of corruption to their rightful owners. Article 57 established that proceeds of embezzled public funds should be returned to the country of origin. Furthermore, Article 54 of UNCAC dealing with mechanisms for recovery of property through international cooperation in confiscation provides in Subsection C (Article 54 (c) that:

        “Each state party shall, in accordance with its domestic law consider

          taking such measures as may be necessary to allow confiscation of such

          property without a criminal conviction in cases in which the offender

           cannot be prosecuted by reason of death, flight or absence or in other

           appropriate cases”.

The non-conviction-based forfeiture actions are civil proceedings against an asset or property, not against a person. It is therefore “in rem” proceeding. Furthermore, the action is not intended to determine the guilt or innocence of any person. The defendant in the case is therefore not the owner of the property but the property or asset itself which is suspected to be proceeds of unlawful activities. Public notice is given about the intent to confiscate of forfeit a particular item (a car, a house, a private jet, jewelries, money in banks accounts, etc.) which are suspected to have been acquired through corrupt practices or other illegal means. After the public notice of intent to confiscate or forfeit the asset by the Government, the owner may choose to show up either in Court or before appropriate Agency with proof of how he/she have lawfully acquired the particular item being suspected to be proceeds of crime. Alternatively, the owner may simply elect not to show up and simply allow the property to be forfeited. Either way, the person is not tried for any offense. With detailed provisions on non-conviction-based forfeiture that POCA brings to the table, it is irrelevant whether an economic refugee runs away from the country or not. We can easily go after his wrongfully acquired assets.

As originally agreed, the Proceeds of Crimes Act will not only provide for non-conviction-based forfeiture, but it will also create an Asset Recovery Managements Agency for the transparent and efficient management of confiscated or forfeited assets including those repatriated from overseas in line with UNCAC and FATF recommendations. Furthermore, a critical component of the intended Proceeds of Crimes Law is to spell out in great details, priority projects on which recovered funds and returned assets are to be applied. While the use of returned assets remains the sovereign decision of country of return, the returning country (where the stolen money was kept, and the international community) would love to know the specific projects on which the returned looted funds are to be applied. Many countries apply recovered or returned assets towards eradication of poverty in line with the UN Millennium Development Goals, or for the development of infrastructures, compensation for corruption victims, improvement of health care services or reinvigoration of the fight against corruption in the country such as providing needed funding for anti-corruption Agencies etc.

Nigeria is a signatory and member state to UNCAC. We are also a member of the Egmont Group of Financial Intelligence Units, an international organization that facilitates cooperation and intelligence sharing between national intelligence units (FIUs) to investigate and prevent money laundering and terrorist financing. Despite our membership of these two international bodies, and notwithstanding having passed into law, some important anti-corruption legislations, our foot dragging and lack of political will to pass the Proceeds of Crimes bill into law continue to hamper the fight against grand corruption. It has also made our application for membership of the Financial Action Task Force (FATF) unsuccessful up till date. The FATF is an intergovernmental organization founded in 1989 on the initiative of the Group of Seven (G-7) to develop policies to combat money laundering. In 2001, its mandate was expanded to include terrorism financing (Wikipedia).  The FATF is therefore the global money laundering and terrorist financing watchdog whose recommendations are the internationally endorsed global standards against money laundering and terrorist financing. FATF recommendations increase transparency which enables countries to effectively and successfully take actions against illicit use of their financial system.

Despite Nigeria’s application and expression of interest to join FATF since 2014 however, we are probably not any closer to being admitted than we were several years ago. There are preconditions to FATF membership which up till today, we have not been able to fulfil due largely to lack of needed political will or genuine commitment to the fight against corruption and money laundering on our part. Although we have enacted the Mutua Legal Assistance law, the continued delay in passing the Proceeds of Crime bill into law, has the capacity to hinder international cooperation and quick return of looted or stolen Nigeria’s assets from foreign countries. It is noteworthy to mention that Saudi Arabia and Israel applied for FATF membership same year (2014) as Nigeria. Both countries have already become FATF members while Nigeria is probably not any closer to being admitted than she was in 2014.  

Notwithstanding the seeming stalemate over the passage of POCA into law, the National Assembly under the leadership of Dr. Bukola Saraki and Rt. Hon Yakubu Dogara (Senate President, and Speaker, House of Representatives respectively in the 8th Assembly) must be commended for passing into law, the comprehensive version of the Proceeds of Crimes bill which was sponsored by Hon. Kayode Oladele, (the House Committee Chairman on Economic and Financial Crimes) at the time. President Muhammadu Buhari however refused to give his assent to the bill due to the opposition mounted by a number Agencies who erroneously feared that that some of their powers were being diminished by the law. Some other opponents of the passed POCA bill also expressed their preference for a watered-down version of the bill which will create only a Proceeds of Crimes Management Agency instead of a comprehensive Proceeds of Crimes law which provides for non-conviction-based forfeiture process and creates the Proceeds of Crimes Management Agency for the effective management of forfeited assets. It is noteworthy that opposition to passage of the POCA bill comes mostly from the Executive branch of government.

Whatever the case, both the National Assembly and the Executive branch need to demonstrate stronger political will to genuinely fight corruption and money laundering by ensuring the prompt passage of this critical piece of legislation. Finally, in addition to the POCA, Nigeria must also hasten to enact a Fugitive Economic Offenders Act like the one in India (see India’s Fugitive Economic Offenders Act, 2018). Under this Act, the government seeks to confiscate the properties and assets of economic offenders who evade prosecution by fleeing the country or remaining outside the jurisdiction of the country’s courts. Once the court declares a person as a “fugitive economic offender”, his property could be confiscated. The combination of these two legislations will without doubt, boost the fight against corruption and money laundering in Nigeria.