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Money laundering and terrorist financing: Who should regulate lawyers?

Abattle is brewing between the regulatory authorities and legal practitioners over a recent directive mandating lawyers to register with the Special Control Unit against Money Laundering (SCUML) pursuant to the Money Laundering (Prohibition) Act 2011 (MLPA) and the Terrorism (Prevention) Act 2011.

Apparently poised to tighten the noose on Designated Non-Financial Institutions (DNFIs) to check money laundering and financing of terrorism, the regulatory authorities seem to have gone into high gear to compel compliance of DFNIs with these laws. In fact, some employees of DFNIs (including accountants) were arrested by the EFCC/SCUML for failing to comply with the AML/CFT laws. Head of SCUML Angela Nworgu reportedly said the arrest of the company executives “marks a turning point in the enforcement of the anti-money laundering laws.”

She added that the days of impunity and non-compliance by DNFIs were over, and promised that more arrests would be made. Legal practitioners are concerned that the dragnet may soon be extended to them. Further, Section 5(6) MLPA 2011 prescribes a daily N250,000 fine for failure of any DNFI (including legal practitioners) to comply with some aspects of the law as well as suspension, revocation or withdrawal of the DFNI’s licence “by the appropriate licensing authority as the circumstances may demand.”

But legal practitioners are kicking against the enforcement, saying the Anti-Money Laundering and Combating of the Financing of Terrorism (AML/CFT) laws are too onerous and would cripple professionalism and client-lawyer confidentiality. Legal practitioners are, however, not alone in this face-off with governments and regulators. The American Bar Association (ABA) has been engaged in a cat-and-mouse tussle with Congress to dissuade it from passing what is termed the “Gatekeeper Initiative” aimed to check money laundering and terrorism financing through the so-called “gatekeepers.”

The Gatekeeper Initiative is a plan by the government to impose stringent AML/CFT obligations on “gatekeepers” to the domestic and international monetary systems, such as lawyers, civil law notaries, trust and company service providers, real estate agents, accountants and auditors. These “gatekeepers” act as intermediaries in transactions where the identity of the underlying clients or the ultimate beneficiaries may not be disclosed. The regulators argue that customers introduced by such gatekeepers may pose higher risk to financial systems given that the regulatory authorities may place unreasonable reliance for Know Your Customer (KYC) and AML matters on the gatekeepers.

Lawyers however contend that such laws that compel them to disclose even routine transactions with their clients do grievous harm to client-lawyer privilege. According to ABA, these AML/CFT laws which are styled after the Financial Action Task Force (FATF) models “would undermine the traditional role of state courts in regulating lawyers, erode the attorney-client privilege and interfere with the confidential attorney-client relationship, impose excessive new federal regulations on lawyers engaged in the practice of law, and impinge on the delivery of legal services in general.”

ABA further asserts that though it “supports the enactment of reasonable and balanced initiatives” designed to detect and prevent money laundering and terrorist financing, “the ABA opposes any law or regulation that would compel lawyers to disclose confidential information to government officials or otherwise compromise the attorney-client privilege, including any mandate that lawyers file SARs on their clients. Such a requirement would directly conflict with numerous state bar ethical rules that require lawyers to maintain client confidentiality and to provide their clients with competent representation and undivided loyalty. Lawyers should not be subject to federal regulation in this area. Rather, lawyers should continue to be regulated primarily by state supreme courts (and their state bar agencies) that license the lawyers. Although lawyers should take reasonable steps to combat money laundering and terrorist financing, these actions should only be conducted in a manner that is consistent with applicable state bar ethical rules and standards.”

Accordingly, the prevailing trend in the United States is to adopt an AML/CFT model which does not target specific professions. Thus while the scope of the major money-laundering laws excludes lawyers, criminal laws prohibiting the laundering of money or terrorist financing apply to all individuals, including lawyers. Lawyers involved in money laundering, terrorist financing or facilitating either by their clients are subject to existing criminal and civil laws regarding money laundering and terrorist financing.

In Canada, lawyers have won a 10-year-old legal tussle against the regulatory authorities which attempted to enforce such draconian FATF-style laws on them. The court had granted injunction restraining the authorities from implementing the laws pending determination of the matter. In that celebrated case {RE: Federation of Law Societies of Canada v. Canada (Attorney General), 2011 BCSC 1270 (CanLII)}, the Federation of Law Societies of Canada, which represents the 14 self-governing bodies that oversee Canada’s legal profession, fought against the application of the rules to lawyers. Ottawa then also backed off a proposal to force lawyers to report “suspicious transactions.” The court held that compelling lawyers to collect and keep information about the identity of their clients (which investigators could later review) or allowing the AML/CFT regulatory agencies to search law offices without a warrant would violate the Canadian Constitution by jeopardizing the liberty of lawyers, or their clients, in a way that offends the “principles of fundamental justice” because it would override client-lawyer privilege.

Under the Money Laundering Act 2011, legal practitioners, chartered accountants as well as dealers in jewellery, cars, luxury goods, hotels, casinos and supermarkets are designated as DFNIs (Section 25). The minister may enlarge the list to bring in other professionals or operators. Compliance obligations for DFNIs under the MLPA are broadly categorised into customer identification and due diligence, preservation of transaction records, obligation to report transactions above statutory thresholds, creation of awareness about AML/CFT, and establishment of internal control policies and procedures. Accordingly, DFNIs/legal practitioners are required to register with SCUML, comply with transaction threshold requirements, designate AML/CFT compliance officers, and report transactions above statutory threshold to regulatory authorities.

For instance, MLPA 2011 provides in Section 1 that no person or body corporate shall, “except in a transaction through a financial institution,” make or accept cash payment of a sum exceeding N5 million or its equivalent, in the case of an individual; or N10 million or its equivalent in the case of a body corporate. Further, Section 5(1) enacts that DFNIs whose business involve cash transactions shall submit to the relevant ministry “a declaration of its activities.” Crucially, Section 5(1)(b) enacts that prior to any transaction involving a sum exceeding $1,000 or its equivalent (about N150,000), the legal practitioner shall “identify the customer by requiring him to fill a standard data form and present his international passport, driving license, national identity card or such other document bearing his photograph as may be prescribed by the ministry.” The clincher is perhaps in Section 5(1)(c) which enacts that the legal practitioner shall “record all transactions under this section in chronological order, indicating each customer’s name, forenames and address in a register numbered and forwarded to the ministry.” Section 6 of the Act also directs legal practitioners to report suspicious transactions to the EFCC within 7 days, failing which they will be liable to N1 million fine for each day which the offence subsists {Section 6(9)}. These customer identification and transaction records shall be preserved by the legal practitioner for at least five years (Section 7) and communicated on demand to the CBN or NDLEA (Section 8). Curiously, the licence of legal practitioners may be suspended by the CBN for default in developing programmes to combat money laundering (Section 9 (2).

It is these onerous provisions that legal practitioners are battling to shrug off, even as they question the legality of SCUM, a body set up by the Federal Executive Council [Decision No. EC (2005) 286] in September 2005. SCUML has the mandate to monitor, supervise and regulate DFNIs. Given that the minister’s regulation-making duty under the Act pertains only to “occasional cash transactions” {Section 5(4)}, it is doubtful whether SCUML (which is set up under such regulation) can have oversight functions over other transactions or obligations of DFNIs under the Act.

Indeed, the trend elsewhere has been to assign the AML/CFT regulatory function as it relates to legal practitioners to their professional/regulatory bodies. This is equally recognized by the FATF which specifically declared in its “International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation: The FATF Recommendations” of February 2012 that lawmakers need not make laws targeting specific groups such as legal practitioners. On supervision, FATF has equally suggested in Recommendation No. 28(b) that compliance with AML/CFT requirements “may be performed by (a) a supervisor or (b) by an appropriate self-regulatory body (SRB), provided that such a body can ensure that its members comply with their obligations to combat money laundering and terrorist financing.” It remains curious why the governmental authorities insist that legal practitioners must be supervised by SCUML or indeed why legal practitioners were categorized by the Act as DFNIs.

Indeed, many SRBs have taken up the challenge of self-regulation. For instance, the American Bar Association and other bar and specialty law associations developed and adopted the “Voluntary Good Practices Guidance for Lawyers to Detect and Combat Money Laundering and Terrorist Financing (“Good Practices Guidance”) in 2010 modelled after FATF’s risk-based approach (“Risk Based Approach Guidance for Legal Professionals”). The Good Practices Guidance is designed to encourage lawyers to be more vigilant about combating money laundering and terrorist financing, thus making the enactment of gatekeeper laws regulating the legal profession unnecessary. Lawyers may also be subject to ethical considerations contained in the ABA’s Model Rules of Professional Conduct (“Model Rules”).

It was Louise I. Shelley who said that “Transnational crime will be a defining issue of the 21st century for policymakers — as defining as the Cold War was for the 20th century and colonialism was for the 19th.” Accordingly, the threats posed to our collective well-being by the twin evils of money laundering and terrorist financing cannot be ignored. However, the major challenge is in finding creative ways to bring all AML/CFT stakeholders within an inclusive framework that makes them real partners in the battle. It does not seem that the framework under the MLPA 2011 has achieved this all-important goal.

Most of the world’s legal systems regard client-lawyer privilege as one of the building blocks of modern society. It is, therefore, not surprising that most jurisdictions are not inclined to subject legal practitioners to onerous requirements under the AML/CFT regime. Although the National Advisory Council of Designated Non-Financial Institutions (an amalgam of professional bodies such as the NBA, ICAN, ANAN as well as the supervising ministry, EFCC and SCUML among others) was charged with “regulating, monitoring and supervising” DFNIs, the council has seemingly been sidelined, given that SCUML has effectively taken up this role.

All stakeholders must be encouraged to agree on a framework that will preserve the cherished values of the legal profession while ensuring that legal practitioners are not used as conduits for money laundering and terrorist financing.

February 19, 2013
CBN moves against money laundering

Account opening forms for all commercial banks have been unified by the Central Bank of Nigeria (CBN).

In a circular to all banks and Other Financial Institutions (OFIs), the apex bank said it took the step to forestall the use of the accounts for money laundering and financial terrorism by bank customers.

The circular signed by CBN Director, Financial Policy and Regulation, Obot U.A said the absence of uniformity in account opening procedure and documentation for prospective customers has continued to hinder the effectiveness of Know Your Customer requirement in banks and OFIs.

He said, the apex bank has prepared a draft copy of the proposed form, and directed banks and OFIs to make inputs to enable it approve the final copy for implementation by the lenders.

The Director said that the adverse effect of this on the fight against money laundering and combating of financial terrorism cannot be overemphasised.

Obot explained that the apex bank, in conjunction with the Committee of Chief Compliance Officers of Banks of Nigeria, has said developed draft uniform account opening forms for adoption by banks and OFIs in order to increase the effectiveness of customer due diligence, comply with anti-money laundering /combating the financial terrorism (AML/CFT) standards.

Such plan, he added, will also facilitate quick investigation of financial crimes by relevant agencies. For review therefore, are all account opening form for individuals, companies, partnership and sole proprietorship, and for designated nonfinancial businesses and profession.

The banking watchdog said implementation of risk-based supervision to combating money laundering and terrorist financing depends on a sound understanding of the threats and vulnerabilities of the menace to each financial institution in particular and entire financial industry in general.

The apex bank has commenced full implementation of its anti-money laundering /combating the financial terrorism (AML/CFT) risk-based supervision framework, it issued in 2011.

The CBN said the measure is further supported by the importance the Financial Action Task Force (FATF) attached to the risk-based approach to AML/CFT supervision in its revised recommendations issued last February.

October 8, 2012
Letter to CBN Governor

Whoever amongst you sees something abhorrent let him change it physically; but if he is incapable, then, let him change it verbally; and if he is still incapable to do so then let him change it wishfully; however the last option is an evidence of a very weak faith”. Hadith of Prophet Muhammad (SAW).

Dear Governor of the Central Bank of Nigeria, Ordinarily, this open letter would not have been necessary if some other avenues were available for public servants like you to rob minds with the ordinary citizens of Nigeria. Similar letters had been written in the recent past through this column to some other prominent public servants in Nigeria including Mr. President. Though you are being surreptitiously labelled unjustifiably by the Press as the most controversial CBN Governor ever in Nigeria, it is a matter of delight for reasonable Nigerians who follow your focused direction that you are calmly weathering the storm despite unwarranted heat being maliciously generated from certain quarters to ensure your failure.

You would have probably noticed that ‘The Message’ as a column takes a special interest in your office. This is not because you are a Muslim and in charge of money but because your courageous and patriotic performance so far deserves public cooperation and support. And, by winning the World Banker of the year 2011 award, you have put the malicious sceptics to shame. Ever since you became the CBN Governor in 2010, this column has followed your track record very keenly and has randomly commended or admonished you as the situation warranted. Yet, we have never met one on one.

By and large, as the 10th Governor of the Central Bank of Nigeria you have wonderfully proved your mettle by showing that administrative prowess is surely a property of intellect with which only the Almighty Allah endows whoever He wishes. The very quantum of your impeccable achievements in that exalted office in the past two years conspicuously stand you out of the pack. In a sane country the citizenry should be proud of you.

However, there are moments in the life of a leader when it may become necessary to look over his shoulder and see if the foot soldiers are still there to man the rear effectively. Perhaps for you this is one of such moments.

Going down the memory lane, you will recall that though the British Colonialists first brought monetary coins and currency notes to Nigeria in 1892 such monies were not in public circulation until 1912 when the West African Currency Board was established to issue currency notes for the sub-region. Nevertheless, the history of Nigeria’s Central Bank did not take root until 1952 when the report of an enquiry into banking practice in Nigeria was submitted. That enquiry led by G. D. Paton a Briton appointed by the Colonial Administration paved the way for the first Banking Ordinance designed to ensure orderly commercial banking and to prevent any establishment of unviable banks that year. Subsequently, a draft legislation for the establishment of Central Bank for Nigeria was presented to the House of Representatives in March 1958 which became fully implemented on July 1, 1959 when the CBN officially came into existence.

Since then, the Central Bank Act, 1958 (as amended) and the Banking Decree 1969 (as amended) have constituted the legal framework within which the CBN operates and regulates banks. Also, the wide range of economic liberalization and deregulation measures which began in 1986 with the adoption of a Structural Adjustment Programme (SAP) resulted in the emergence of more private banks and other financial intermediaries. The Banks and Other Financial Institutions (BOFI) Decrees 24 and 25 of 1991, which repealed the Banking Decree 1969 and all its amendments were, therefore, enacted to strengthen and extend the powers of CBN to cover the new institutions in order to enhance the effectiveness of monetary policy, regulation and supervision of banks as well as non-banking financial institutions. Unfortunately in 1997, the General Sani Abacha led Federal Government enacted a new CBN (Amendment Decree No. 3 and BOFI (Amended) Decree No. 4 to remove completely the limited autonomy which the Bank had enjoyed since 1991.

Thus, the 1997 amendments brought the CBN back under the supervision of the Ministry of Finance an opportunity that opened the gate for reckless looting of the national treasury. The Decree made CBN directly responsible to the Minister of Finance with respect to the supervision and control of banks and other financial institutions, while extending the supervisory role of the bank to other specialised Banks and Financial Institutions. That amendment placed enormous powers on the Ministry of Finance while leaving the CBN with a subjugated role in the monitoring of the financial institutions with little room for the Bank to exercise discretionary powers. In 1998, another CBN (Amendment) Decree No. 37 which repealed the CBN (Amended) Decree No. 3 of 1997 was enacted. The Decree provided a measure of operational autonomy for the CBN to carry out certain traditional functions which enhanced its versatility.

However, the current legal framework within which the CBN operates is the CBN Act of 2007 which repealed the CBN Act of 1991 and all its amendments. The Act provides that the CBN shall be a fully autonomous body in the discharge of its functions under the Act and the Banks and Other Financial Institutions (BOFI) Act with the objective of promoting stability and continuity in economic management. In line with this, the Act has widened the objects of the CBN to include ensuring monetary and price stability as well as rendering economic advice to the Federal Government.

Besides, the regulatory powers of the CBN were strengthened by the Banks and other Financial Institutions (Amendment) Decree No. 38 of 1998 which repealed BOFI (Amendments) Decree No. 4 of 1997. By this Decree, the CBN’s powers on banks, especially those relating to withdrawal of licenses of distressed banks and appointment of liquidators of such banks, including the NDIC was restored. Through those amendments, the CBN may vary or revoke any condition subject to which a license was granted or may impose fresh or additional condition to the granting of a license to transact banking business in the country. This is the Act that gives you as the CBN Governor the enormous powers which you now wield within the banking sector albeit to the great advantage of Nigeria and Nigerians.

Now that we have a controversy at hand over the desirability or otherwise of introducing a new denomination of Nigerian currency it may become pertinent to also look if briefly at the history of Nigerian currency from colonial times. You will remember that the West African Currency Board was initially responsible for issuing currency notes in Nigeria from 1912 to 1959. Hitherto, the various tribes in Nigeria had used various forms of money including cowries and manilas.

But on July 1, 1959, the Central Bank of Nigeria issued the first Nigerian currency notes and coins thereby forcing the West African Currency Board to withdraw its notes and coins from circulation in the country. It was, however, not until July 1, 1962 that legal tender status was changed to reflect the country’s new status. The notes were again changed in 1968 as a war strategy following the misuse of the country’s currency notes in certain circumstances.

And on March 31, 1971, the then Head of State, General Yakubu Gowon announced that Nigeria would change to decimal currency on January 1, 1973 in line with the modern monetary policy in the world. He said the major currency unit to be called Naira would be equivalent to ten shillings of the British currency of Pound Sterling while the minor unit would be called kobo 100 of which would make one Naira. The decision to change to decimal currency followed the recommendations of the Decimal Currency Committee set up in 1962 which submitted its report in 1964. But for the January 1966 military coup that led to a civil war, the Nigerian decimal currency would have been in use since 1966.

The change that took place in January, 1973 was a major one which involved both currency notes and coins. The major unit of currency which used to be one Pound (£1) ceased to exist and the one Naira which was equivalent to ten Shillings (10/-) became the major unit. Yet on February 11, 1977 a new banknote denomination of 20 Naira value was issued as the highest denomination. This was special in two respects. Its issuance became necessary not only as a result of the growth of incomes in the country but also as a preference for cash transactions and the need for convenience. Thus, N20 note became the first currency note in Nigeria to bear the Portrait of a Nigerian citizen, in this case, the late Head of State, General Murtala Ramat Muhammed (1938-1976) who was killed in a February 13 1976 military coup attempt. He was declared a national hero on the 1st of October, 1978. The note was issued on the 1st Anniversary of his assassination as a befitting tribute to a most illustrious son of Nigeria.

Again, on July 2, 1979, new currency notes of three denominations: N1, N5 and N10 were introduced. These notes were of the same size: 151 x 78 mm as the N20 note issued in 1977. In order to facilitate identification however, distinctive colours similar to those of the current various banknotes were used. The notes bore the portraits of three other eminent Nigerians who had been declared national heroes on October 1, 1978. These were Herbert Macaulay; Sir Abubakar Tafawa Balewa and Chief Alvan Ikoku. The back of each of these notes was engraved in such a way as to reflect the cultural traits of the country. But by 1991, when the Structural Adjustment Programme (SAP), had terribly battered the value of the Naira rendering it almost valueless, both the 50k and N1 Notes were reduced to coins. Later, in response to the expansion in economic activities and to facilitate an efficient payments system, the N100, N200, N500, N1000 were introduced respectively in December 1999, November 2000, April 2001 and October, 2005. And on February 28, 2007, N50, N20, N10, and N5 banknotes as well as N1 and 50K coins were reissued with new designs, while a new N2 coin was introduced.

Since 1991 when SAP rendered the Naira almost valueless, the coined denominations of Nigerian Naira has become moribund having been rejected by the populace thereby turning Nigeria into a country without coins. Despite this however, Nigerians had never queried any need for introducing new currency denomination as they are now doing in respect of N5000 note.

Now, many questions are begging for answers:

1. At a time when corruption is virtually at its crescendo in the country and you as the CBN Governor are calling for a cashless economy what informs the introduction of the highest currency denomination note of N5000?

2. Is there no contradiction in advocating for a cashless economy with one side of the mouth and campaigning for introduction of N5000 with the other side as you are now doing?

3. What is the logic in introducing N5000 note at a time when Nigerians have not been convinced on the need to return to the use of coins which you are now trying to reintroduce?

4. Why is such a delicate and highly controversial action being unilaterally taken with neither the involvement of the legislature nor the consent of the populace through a referendum?

5. In a democracy, who should have the way on a vital national policy as new currency? Is it the majority or the minority? Are you aware that an imposition of such a policy by you the CBN Governor, the Presidency and the pseudo politicians called business group may boomerang especially when the same group is seemingly responsible for the current national economic doldrums?

6. How economically reasonable is it to spend about N40 billion to mint new currency only to gain N7 billion as being claimed by your spokesmen?

Perhaps you need to be hinted that the general impression in the country about this new monetary policy and which is probably responsible for the overwhelming opposition to it is the suspicion that you may be inadvertently colluding with some corrupt politicians to ditch Nigeria economically. This impression is a direct opposite of the high esteem in which you were held before now by most Nigerians because of your marvellous performance in the banking sector. In the past one year, two Nigerian public officials have positively rendered the populace nonplussed by their wonderful actions. These are your esteemed self and the Inspector General of Police Muhammad Dikko Abubakar.

Mr. CBN Governor, you have done well so far. Please, do not allow these chameleonic politicians to use you for their own purpose because they will eventually dump you characteristically and turn back to laugh at you. A leader is known not by the power he wields but by his application of magnanimity in the use of such power. You are already considered by the populace to be a national economic hero. Do not allow any political charlatan to reduce you into a villain. Politicians are best known for doing that. You are not one yet but you know them. A word is enough for the wise. We shall meet again in a foreseeable future to exchange notes God willing.

•Historical facts in this article were culled from the internet.

September 20, 2012
Good earning forecasts sustain equities’ rally

The Nigerian stock market rounded off last week with a strong rally as several equities indicated they would make substantial profit in the fourth quarter.
The common value-based index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI) rose by 2.01 per cent to close the week at 25,337.18 points. Similarly, market capitalisation of all equities increased by N158.69 billion to close at N8.066 trillion.

The sustained bullish trading was strengthened by emerging forecasts from several companies, indicating positive bottom-line and considerable returns in the fourth quarter. Evans Medical Plc, which has just been recovering from a scandalous losing streak, indicated it could record net profit of N67.55 million on turnover of N1.62 billion during the fourth quarter ending December 31, 2012.

Stanbic IBTC Bank projected that profits before and after tax would be N3.06 billion and N2.47 billion during the three-month period just as gross income was estimated to hit N17.2 billion.

Presco is expected with net profit of N466 million on total sales of N2.5 billion while Berger Paints could earn N88.26 million in net earnings on turnover of turnover of N976.30 million.

Also, RT Briscoe projected that turnover would be N6.21 billion while pre and post tax profits would be N52.30 million and N35.57 million respectively.

Five out of the six group indices at the NSE trended upward last week, reflecting the widespread gains during the week. The NSE 30 Index, NSE Consumer Goods Index, NSE Banking Index, NSE Insurance Index and NSE-Lotus II Index rose by 2.32 per cent, 4.84 per cent, 0.94 per cent, 1.86 per cent and 2.52 per cent respectively. However, the NSE Oil and Gas Index declined by 0.30 per cent.

Nestle Nigeria led the pack of 40 gainers with a gain of N27.50. Nigerian Breweries Plc followed with a gain of N10. Dangote Cement Plc led the losers with a loss of N1.98 per share. It was followed by 7up Bottling Company Plc, which lost N1 per share.

A turnover of 2.224 billion shares worth N14.252 billion was recorded in 24,108 deals with the financial services sector accounting for 84.55 per cent of aggregate turnover. Financial services stocks recorded a turnover of 1.880 billion shares valued at N10.369 billion in 14,381 deals.

Banking sub-sector recorded a turnover of 1.153 billion shares worth N9.986 billion in 13,736 deals. Volume in the financial sector was boosted by activities in the shares of Cornerstone Insurance Company Plc, Zenith Bank Plc, and Access Bank Plc, which accounted for 919.542 million shares, representing 48.91 per cent and 41.35 per cent of the volume recorded by the sector and total turnover for the week respectively.

At the Over-the-Counter (OTC) bond market, activities slowed down with decline in turnover to 187.87 million units worth N187.45 billion in 733 deals compared with 227.005 million units worth N227.196 billion traded in 1,034 deals two weeks ago.

September 17, 2012
Banking sector credit drops to N13tr

The aggregate banking system credit to the domestic economy stood at N13.09 trillion in July 31, the Central Bank of Nigeria (CBN) Economic Report has showed.
The data depicted a decline of 1.6 per cent , on month-on-month basis, in contrast to the increase of 0.5 per cent at the end of the preceding month.

Also, banking system’s credit to the Federal Government, on month-on-month basis, fell by 26.5 per cent to negative N1.7 trillion, compared with the decline of 13.1 per cent at the end of the preceding month. The development was attributed, largely, to the decline in banking system’s holding of Federal Government securities.

As at December 2011, aggregate banking system’s claims on the Federal Government fell significantly by 251.5 per cent. The Federal Government, however, remained a net lender to the banking system at the end of the review month.

The report said banking system’s credit to the private sector rose by 1.0 per cent to N14.8 trillion, compared with 1.5 per cent recorded at the end of the preceding month, but in contrast with a decline of 0.2 in the corresponding period of 2011.

The report said the banking system’s claims on the core private sector rose by one per cent to N14.2 trillion, above the level in the preceding month, compared with the growth of 1.5 per cent at the end of the preceding month. The development reflected, largely, the 1.9 per cent rise in DMBs’ claims on the sector. Relative to the level at end to December 2011, banking system’s credit to the private sector rose by 4.7 per cent.

At N7.8 trillion, foreign assets of the banking system rose by 3.9 per cent at end to July 2012, in contrast to the decline of 5.8 per cent at the end of the preceding month. The development was attributed to the 4.5 and 1.1 per cent increase in the CBN and banks’ holdings, respectively.

Also relative to the level at end of December 2011, foreign assets of the banking system grew by 9.5 per cent, reflecting largely, the 15.1 per cent increase in banks’ holdings.
At end of July 2012, quasi-money rose by 1.5 per cent, to N6.9 trillion, as against the decline of 2.6 per cent in the preceding month.

When compared with the level in the corresponding period of 2011, it showed an increase of seven per cent. The development was attributed to the increase in savings and time deposits components.

Other assets of the banking system, on a month-on-month basis, fell by 2.3 per cent to negative N7.5 trillion, in contrast to the 3.6 per cent increase at the end of the preceding month. The decline reflected, largely, the fall in unclassified assets of the CBN.

September 17, 2012
Kidnap…money making menace

Kidnapping can most accurately described as the crime of unlawfully seizing and carrying away a person by force of fraud, or seizing and detaining a person against his or her will with an intent to carry that person away at a later time. The law of kidnapping can be complex to define with precision because it can vary from jurisdiction to jurisdiction. Most of State and Federal kidnapping statutes define the term ‘kidnapping’ vaguely all over the world, and usually its left for the courts to clearly define it in detail.

The number of kidnapping cases in Nigeria has risen to a staggering level. Most of the kidnapping cases are attributed to ransom demands while others are linked to terrorist activities. The high risk potential victims of kidnapping were usually prominent members of the society from our artists and their family members but recently it was noticed that there has been a shift from that trend. In the past, kidnappings were fundamentally politically based and foreign workers within the Internal oil companies were the prime targets. Oil rebels in order to stress and highlight on their political stances and campaigns would seize unsuspecting foreigners in a bid to extort money.

So far the main motive for most of these kidnaps has been for financial gain, and a majority of security analysts attribute the rise in kidnapping cases to the severe poverty levels in some communities especially the problem in the rise of unemployment. The most alarming fact is that if the economy in the country gets worse; we would unfortunately witness the rise in killings in kidnap cases as the kidnappers become more dangerous, daring and desperate. The root cause of kidnapping would be unemployment. Youths should be engaged in numerous employment opportunities and be encouraged to enrol in vocational programs. It saddens me that the security situation in Nigeria today is unpredictable for there is an alarming risk of terrorism, inter- communal clashes, crime, armed robbery attacks, banditry and now a spate of kidnappings. Formerly, kidnappings were a particular threat within the Niger Delta Region but now kidnappings are synonymous all over Nigeria.

The statistics of kidnapping in Nigeria is simply appalling. On May 31st, 2012, an Italian citizen was kidnapped in Kwara State. On January 26th, 2012, a German citizen was kidnapped in Kano and then tragically killed on May 31st, 2012. A British citizen and an Italian citizen were kidnapped in Kebbi on May 12th , 2011, and brutally murdered by their captors on March 8th, 2012.

Red24, the AIM-listed international security advice and management company, has named the world’s ten countries in which it says the threat of being kidnapped for ransom is the greatest. Their findings would alarm most Nigerians. They are: 1. Afghanistan 2. Somalia 3. Iraq 4. Nigeria 5. Pakistan 6. Yemen 7. Venezuela 8. Mexico 9. Haiti 10. Columbia.

Nigeria records a staggering 1,000 kidnappings for ransom cases annually. Many experts though believe that due to different incident classifications between countries and the reluctance of relatives to report incidents, for fear of retaliation by the kidnappers or because of concerns about police corruption and ineptitude; data on kidnappings can be complex to compile. However, Red24 stated that using official data in respect of Nigeria, Venezuela, Mexico and Columbia as well as piracy incidents off the Somali coast and non-governmental organization staff kidnappings in Afghanistan have discovered there was a 9% rise in kidnapping cases in 2011 compared with the previous year. Their chief executive, Maldwyn Worseley- Tonks remarked that kidnapping is a “growing, global threat.”

The Academic Staff Union of Universities had cause to accuse the federal government of its failure to properly curb the spate of insecurity and the high rate of crime in the country. On 13th August, 2012, on a meeting with reporters at the end of its National Executive Council meeting at the University of Nigeria, Nsukka, ASUU’s National President, Dr. Nasir Isa Fagge, said that, “The spate of insecurity in the country has continued unabated. On daily basis, the newsstands are awash with reports of bombings, kidnappings, assassinations, armed robberies, arson, and related acts of violence perpetuated against the Nigerian people and foreigners alike. There are also reports of spiral inflation and phenomenal increase in commodity prices leading to food insecurity and reduction in standard of living across the country. Joblessness, homelessness, and decreasing access to education and other indices of underdevelopment now characterize our national life.”

The fact that crime is on the increase in Nigeria is not breaking news these days, but the most challenging hurdle to cross would be that of the severe unemployment plaguing our nation. Various independent and authentic studies have revealed that unemployment is responsible for the largest portion of kidnappings in Nigeria today. It is a vicious chain of unfortunate events where poverty resulting from unemployment and a badly managed economy, increases criminal activities in Nigeria. The economic growth in this country has been severely stunted by decades of corruption and mismanagement of public funds. The depressing economic climate has taken its toll on Nigerians and the social effects of unemployment in Nigeria has increased the rate of kidnappings. Our youths are being lured by criminal gangs, warlords, illegal activities and terrorists. Amidst the extreme economic deprivation, the enticement of making fast money by snatching someone’s loved one seems just too tempting to resist.

The crimes in general are becoming alarming more violent as well. The horrendous use of human beings or their body parts for money making rituals has become common news. It used to be that in the 1980’s, sporadically reported acts of crime were of burglars silently and stealthily entering a house while all were soundly sleeping and going away with the family Betamax video. The robbers were too “polite” to even wake, talk less of confront any member of the family. Nowadays, poor wages, detrimental living conditions and lack of proper social morals have made money making ventures such as kidnapping the popular stock in trade for misguided youths. So the million dollar question remains, how safe exactly are any of us?

Apparently, no one is safe. We are all potential victims. The security in Nigeria can best be described as a prison of fear and uncertainty guarded by invisible walls. Even in traffic, robberies are common. People are snatched in broad daylight by kidnappers and witnesses are either too scared or cynical to try to help much less assist security agencies to apprehend the perpetrators. With kidnapping, these criminals involved resort to the cruelest, degrading and most inhumane treatment of another human being. How can this abominable trend be reversed? Employment can be generated by means of restructuring our educational system, a conducive economic environment devoid of staggering inflation, and rebranding our agricultural sector would almost certainly go a long way to discouraging youths from engaging in criminal activities. All good citizens of this country should take responsibility to an extent for the state of lawlessness in the country today; for it would be selfish and irresponsible to blame the federal government alone. These misguided youths were once our children before they grew up to be criminals, and until we all understand that we have a high stake in Nigeria’s future, we can only show chagrin and contempt for a worsening situation. The primary focus of the federal government and indeed all Nigerians is to empower our youths through sound educational and vocational programs; let us as parents is to give them hope for a brighter and more solid and secure future. These fundamental advantages I believe have already been laid by the great founding fathers of Nigeria.

In the meantime, all Nigerians and foreigners within the country should exercise grave caution and vigilance at all times. The next breaking news about the latest kidnap victim can be anyone of us and that’s the sad reality of Nigeria today.

September 15, 2012
TERMS AND CONDITIONS APPLY

Exhausted and thirsty from participating in the daily hustle for a living in the congested city of Lagos, Tolu, a motor-parts dealer begins his three hour journey home from Alaba International market.

In a bid to beat the traditional traffic-jam, he hurries to the bus stop. Sitting on a curb he waits in vain for the frantic call for passengers heading to Alagbado by a half dressed conductor. Each second added to his thirty minute wait at the bus stop heightens his growing head ache.

With a defeated spirit, Tolu decides to quench his raging hunger by purchasing a wrap of sausage roll from a hawker. He peels away the nylon wrap with the intention of devouring his make-shift meal. Suddenly he spots the life-less form of a house-fly lodged in his snack.

Enraged by this discovery, he demands a refund from the ‘Oni sausage’ (sausage seller) but is met with a stumbling wall. ‘Oni sausage’ vehemently refuses to proffer a refund rather she posits “Once nylon don tear, notin (nothing) wey person fit do. The money don go be dat!”.

Confused, angry and defeated, he tosses the sausage roll into the bush and walks away without saying a word. After all, Terms and Conditions Apply!

The above cuts the picture of the level of awareness of the average Nigerian on his rights as a consumer. In a global economy bound by legal laws, a firm grasps of the terms of agreement upon which goods and services are exchanged or bought cannot be over-emphasized.

However, what has come to be a common source of grievance between the buying population and the goods or service providing company is the act of creating extreme non-liability claims made by these companies as well as consciously or unconsciously withholding the details of these ‘terms and conditions’ from the consumer before the transaction is made.

One of these clauses can be found in the rule book of an airline company which serves as a national carrier. It states “All claims for compensation for Damage to Baggage must be accompanied by an itemized list identifying each affected item by description, manufacturer and age, together with proof of purchase or ownership for all such items. Proof of purchase will not be required in relation to any item which costs less than US$5 (or local currency equivalent), or is more than five (5) years old and has a claims value of less than US$50 (or local currency equivalent). Depreciation will be deducted from claims, where we consider appropriate.”

Another typical case study is cited when Miss Fortune of Fabricare dry-cleaning service states that if while dry-cleaning, a cloth gets damaged, they do what they can to mend the dress. “If the tear is beyond repair, we beg the customer to accept the cloth like that. If the person is a Christian, he will forgive and let it go. It is only in extreme cases that we pay a small percentage of the amount the person is asking because many times these our customers tell lies about the cost of the dress. They will say they bought a N4,000 suit for N18,000 so that they will cheat us out of some extra cash”.

The refund or money-back system seems to have lost its meaning on the average Nigerian business man. Most of the people who conduct business on the streets of Lagos claim that once a legal tender, in this case – money, has been exchanged, there is virtually no hope of the buyer getting his or her money refunded. This condition stands even when the purchaser of the product is dissatisfied with the quality of service meted out.

Mr. Samson Olajide, a photographer, says “Normally, when I take a person’s picture, I will do my best to let it come out well. After I finish washing the picture and I give it to the customer and the customer did (does) not want to collect it because it is not fine, there is nothing I can do. I can never return the money because I have done my best”.

This manner of conducting business does not seem to be restricted to the small-scale business man as many of the multi-national companies fall into this category. In light of this situation, Barr. Amobi Agbara, a Lawyer who runs an activist group called The Consumer Rights Project says, “There’s something called Caveat emptor which simply means ‘buyer-beware’ which ideally should be made public before the transaction is carried out. However, there are some exclusion clauses (terms and conditions) which we consider unconscionable (unacceptable to the senses). These exclusion clauses tend to limit the liability of a supplier of a goods or service and are therefore detrimental to the user. If these clauses are not brought to the knowledge of a buyer before the transaction is made, the supplier cannot rely on it to disclaim liability. In such cases, the law will treat these exclusion clauses as unconscionable”. he states.

Invariably, this means that if the ‘terms and conditions’ are not conspicuously revealed to the buyer before a purchase is made and any form of damage occurs, the buyer has the right to demand money back and sue the company if his demands are rejected.

Even with the tide turned in their favour, some consumers still refuse to take the bull by the horn and stake their claim citing the unreliable judicial system as an excuse. Fatima, a 28 year-old nurse posits “It is not easy to say you want to carry a big company to court. They (the big company) can hire good lawyers who will defend them no matter what but people like us who are still looking for money to pay school fees, who will you run to for help and where will you see money to hire a good lawyer?”.

In response Barr. Agabara says “In Nigeria we do not have a legislative body per say that can enforce these legislations but we have snippets that tend to protect the rights of consumers like the National Agency of Food and Drug Administration and Control (NAFDAC) and the Standard Organization of Nigeria (SON). We do not yet have a compendium of legislation that relates to consumers except only recently that the Consumers Protection Council (CPC) was formed to protect the rights of consumers”.

Some blue-chip companies who are at the risk of facing legal squabbles are finally taking up the task of alerting the public to these exclusion clauses. A representative of the Nigerian Bottling Company had this to say, “We regularly announce the ‘terms and conditions apply clause’ in most of our adverts especially when we are running a promo because we are tired of being dragged to court over issues that could easily have been avoided.

“There are people out there who are just looking for an excuse to make huge sums of money whether they deserve it or not and so we try to do our part by letting people know that that these terms exist. If you still chose to do business with us then nobody can put the blame on us”, he stated.

Purchasers of goods and services are therefore encouraged to protect themselves by enquiring about and thoroughly reading through the ‘terms and conditions’ binding whatever product they purchase, in order to avoid a legal dispute.

July 24, 2012