The recent survey by the United States-based Global Financial Integrity which ranked Nigeria 7th among the largest exporters of illicit funds worldwide, in the view of analysts, portends serious danger for the nation’s socio-economic wellbeing. In this report, Ibrahim Apekhade Yusuf and Joe Agbro Jr. examine the issues
IF the result of the recent survey by the United States-based Global Financial Integrity which ranked Nigeria 7th among the largest exporters of illicit funds worldwide, is anything to go by, then it is correct to say that the nation’s image launderers sure have a lot of work to do to change the perception of the country in the eyes of the international community.
According to the report. Nigeria had lost $155bn to money laundering and other illegal outflows, representing 19 per cent of the total of $854bn outflow from Africa to the developed economies.
To the discerning public, the survey is a sad commentary on the supposed anti-graft war being pursued by the current administration.
While providing his own perspective, the president, Lagos Chamber of Commerce and Industry, Mr. Ismail Bello, said the report indicated that a lot has gone wrong with the war on corruption.
Bello, who spoke at a conference organised by the Chartered Institute of Bankers of Nigeria in Lagos, entitled, ‘Money laundering, terrorism financing and identity theft’, said it was disheartening to note that money launderers had made the United States-based Global Financial Integrity to rank Nigeria 7th “out of the 20 largest exporters of illicit funds worldwide with a total figure of $129bn from 2001 to 2010.”
Bello, who delivered a keynote address on ‘Global perspective on terrorists financing, money laundering and identity theft, pointed out that the Western world was paying lip service to the fight against money laundering.
He said, “If they were really against theft by government officials in developing countries, they would not readily accept stolen money in their countries.”
“However, while they rail against corruption, they create framework which permit them to receive stolen money with banks. Some of these monies end up in real estates; others are hidden in fake offshore companies and investment institutes.”
Describing money laundering as a major problem to the economy, the LCCI president noted that looting had reached an ‘epidemic proportion.’
This, he according to him, portends a bleak economic future for the country if nothing tangible and effective is done to arrest the cankerworm working against the nation.
To combat the vices, Bello said Nigerians must imbibe the practice of demanding for accountability from public officials.
In addition, he said banks must employ the use of modern technologies to establish second and third level links which identify transactions as potentially suspicious.
The LCCI boss, who regretted it was not possible for the Federal Government to police itself, however, recommended that in addition to normal anti-money laundering controls, banks must focus on the terrorist funding angle, using knowledge derived from the data bank of case studies.
He added, “The topic of this conference is so appropriate and timely in the face of security challenges we are facing as a nation and globally as human. The various insurgents around our country and the world at large with the kind of dimension and the consistency at which it is being pursued shows that it requires concerted effort both locally and internationally.”
In his own assertion, the president/chairman of Council, Chartered Institute of Bankers of Nigeria, Mr. Segun Aina, said money laundering, terrorism financing and identity theft could slow down the rate of the nation’s economic advancement.
Aina also said the economic crimes could hamper expected growth in the financial system, if not nipped in the bud.
While noting that the economic vices could negatively affect capital inflow into the country, the CIBN president said the illegal financial practice could also erode public trust in the integrity of the financial system.
These, he said could result to capital flight, destabilisation of financial institution and ultimately economic collapse.
Aina, who was represented by the deputy registrar, CIBN, Mr. Tade Fadare, said successful war against the economic crimes could only be achieved if the recommendations of the Financial Action Task Force, the global body for anti-money laundering and counter financing of terrorism, was implemented.
A fresh perspective
It is anybody’s guess why money laundering crime is still rampant in the country, given the offensive by the different law enforcement agencies like the Economic and Financial Crime Commission (EFCC), the Independent Corrupt Practices and other Related Offences Commission (ICPC), Special Fraud Unit (SFU).
Speaking in an interview with The Nation over the weekend, Dr. Chris Onalo, Registrar/Chief Executive, Institute of Credit Administrators (ICA), offered a plausible explanation as to why we the country has continued to witness an upsurge in money laundering crime in recent times.
In his view, at the centre of the problem of money laundering is lack of sincerity of purpose among all the tiers of government.
“Basically, if the government wants to win the war against corruption, it can win. Here and there you find cases where the big ones are caught for money laundering offences but they go scot free. The government is seen to be abetting and abating corruption in the country,” he said.
Waxing philosophical, he said: “As they say, a house divided against itself cannot thrive. So, it behoves the executive and judiciary to cooperate in real terms in full sense of honesty, love for the sovereignty of the country. Judiciary must cooperate with the executive.”
The ICA boss further observed that the anti-graft war seems to have hit a brick wall because the ruling class adopts double standard.
“The reason we have not recorded any success with the corruption was is simply because there are sacred cows. How do you explain a situation where top level personalities involved in corruption are given a slap on the wrist and you let them go?” he queried.
The judiciary, he stressed, “should not be seen to be abdicating its role and pretend that they love the citizen more than the law.”
Pressed further, he said: “It might interest you to know that in the eyes of the international community, Nigeria is not taken serious as far as the anti-graft war is concerned even though we claim to have established all manner of anti-graft agencies, they appear not to be doing their job as well as they should.”
Onalo was unsparing of the banks. “I also want to stress that the financial institutions are not helping matters because no money moves out of the country without the knowledge of the banks. But because some of the banks are desirous of reaping where they did not sow, they try to provide protection for the culprits because they want to keep the amount involved. I have said it before that we have appetite for making quick money.”
On the socio-economic implications, he said the effect on the economy is colossus. “International investors are scarred and the few honest ones are not happy too. Some of these money launderers are afraid to invest these money in job creating endeavour. So there is no input to invest that to create jobs. The toll on the economy is colossus, it is a very bad trend. In the eyes of global investors, Nigeria is still a troubled spots for business.”
On the way forward, he said, the government must place the searchlight on itself.
International dimension
Nigeria is not alone. In the view of former South African president, Thabo Mbeki, African countries lose between $50 billion and $60 billion annually through illicit financial flows (IFF).
Mbeki was quoted by the News Agency of Nigeria (NAN) in Abuja while presenting the Progress Report of the High-Level Panel on IFF at the just concluded 7th AU-ECA Conference of Ministers of Economy and Finance.
Mbeki, who served as the Chairman of the panel that was set up by the Economic Commission for Africa (ECA) in 2012 to look into the nature of illicit funds in the continent, said: “In order to understand the impact of this phenomenon on Africa, we decided that we carry out a number of country case studies in Nigeria, the Democratic Republic of Congo, Kenya, Liberia, Mozambique, Algeria, Mauritius and South Africa.”
He explained that the huge sums did not include capital flight, saying it came from proceeds of commercial transactions through multinational companies, criminal activities and corruption.
He lamented that monies which would have been used to provide infrastructure and social amenities for poor African population were transferred to other countries, leaving the continent in poverty. Mbeki said the situation was occasioned by the weakened tax regime of some countries in the continent, adding that proper mechanism needed to be put in place to check the trend.
“In terms of the phenomenon of mispricing, the estimates are between $50 billion and $60 billion which the continent loses as illicit financial flows, with capital flight not included.
“From our study, it is quite clear that the continent is losing huge volume of capital which would have been used for investment and the process of industrialisation,” he said.
Mbeki said the study was conducted to enable the panel draw up a comprehensive report generally on the continent, as it was not possible for it to prepare a country-by-country report.
He added that the panel’s findings showed the main beneficiaries of IFFs from African countries were developed countries and emerging economies, which were Africa’s major trading partners.
According to him, illicit financial flow had posed developmental challenges on the continent, in terms of draining hard currency reserve, reduced tax collection, deepening income gap, depleting investment and weakened governance.
The Liberian Finance Minister, Amara Konneh, said IFF had drained the continent of hard currency and deprived her of resources needed for human capital development.
Konneh urged African leaders to put in place measures to stop further outflow as well as ways of recovering what had been taken away.
“Multinationals are responsible for the outflow, through trade mis-invoicing and tax haven, by taking advantage of some countries’ weak tax regime,” he said.
Elites to blame for upsurge in money laundering
The upsurge in money laundering which the country has been experiencing has been largely placed at the feet of top government officials and their cronies.
This was the view expressed by an Abuja-based lawyer, Barrister Segun Momoh, in an interview with The Nation.
According to him, graft in the country is multi-dimensional and it stems from the government as the largest spender.
“There is a saying that he who pays the piper dictates the tune,” Momoh said. “When you look at it from that angle, those that are in authority somehow are the ones that are really involved in all these things. In other words, they use some people as pawns. Some people will definitely pay the price for the crimes of other people. You’ll also discover that there are some situations where they make one or two people that are involved in money laundering into positions. And you see such people, immediately, they leave their positions, they are arrested. And somehow, they prepare their bail. And during the process of that bail, such person is appointed either a minister or Special Adviser or something.”
Being specific, he cited the issue of Ayo Fayose, former governor of Ekiti State who is currently facing graft charges for alleged fraud of over N736m in the Integrated Poultry Project which he initiated while he was governor.
“Fayose has a case to answer and he is already contesting (election),” he said. “And he has already approached the court to suspend his trial until after elections, knowing full well that if they are successful with the rigging and he comes into power, that (the case) will hold until the end of his tenure again.”
Despite the case he has to answer, Fayose was recently elected the governorship candidate of the Peoples Democratic Party in the state.
Recently, Fayose’s counsel, Ahmed Raji (SAN), had pleaded before Justice Hobon Adamu at the Federal High Court, Ado-Ekiti that the case against the former governor be adjourned to a date in July after the governorship election. His prayer was, however, not answered as next hearing was fixed for May 6.
As it is, the bulk of graft representing the hugest amount has the involvement of government officials. Some of the cases lingering before the EFCC include that of former Ogun State Governor Otunba Gbenga Daniel who is facing a 38 -count charge bordering on fraudulent conversion of land and diversion of public funds, former aviation minister, Stella Oduah, who spent N255m to buy two bullet-proof BMWs and the N4.7bn allegedly laundered by Wale Babalakin on behalf of convicted former Delta State governor, James Ibori. Another graft case involving top government officials is that of the $620,000 bribery allegation between lawmaker Farouk Lawan and businessman Femi Otedola.
Anti-graft agencies like the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) have been founded to tackle graft but these efforts have not suppressed graft in the country. Under pressure from the Financial Action Task Force on Money Laundering, FATF, which put Nigeria as one of the 23 non-cooperative countries in the international community’s efforts to fight money laundering, the EFCC was established in 2003. The ICPC had been established earlier in 2000.
On the EFCC’s website, there is a list of wanted persons by the organisation.
But, while the efforts of these two bodies have paid off, the gains remain at best marginal. And Momoh advised that a measure that could check money laundering is strengthening the existing security institutions like the police.
“The position of the IG (Inspector General) in Nigeria is political and it is not supposed to be,” he said. “If the institution is such that when it is time for the IG to retire, automatically, the next person in rank steps in and would only be acting pending when he is approved after screening from the Senate. I think that is what it is supposed to be. So, if the head is not appointed but earned it through hard work, then such a person cannot be easily bought over.”
Asked if he thinks the country can win the war against corruption, the lawyer replied; “We can if people like us refuse to be frustrated but it will take time.”
