Sofunde Osakwe Ogundipe & Belgore
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White Collar Crime
The Asset Tracing, Recovery and Management Regulations 2019 recently came into effect, replacing the existing Proceeds of Crime Regulation 2012. The regulations set out procedures for all law enforcement and anti-corruption agencies – which are supervised by the Attorney General's Office – to ensure the effective coordination of the investigation of illegally acquired assets and the proceeds of crime, among other things.
The High Court of England and Wales recently granted claimants in an arbitration leave to enforce an award against the Nigerian Ministry of Petroleum Resources. The media attention surrounding the decision prompted the Nigerian government to respond in a manner that has been described as unusual. One thing is clear: allegations of involvement in fraudulent conduct in matters relating to government contracts in Nigeria should not be unexpected.
Throughout August 2019 the Nigerian media heavily reported on the US government's actions against Nigerian nationals who have been accused of committing various acts of fraud. Of particular note is the arrest of a successful Nigerian entrepreneur and the US Department of Justice's recent federal grand jury indictment against 77 named and three unnamed individuals reported to be Nigerians.
During Federal Attorney General Abubakar Malami's recent confirmation appearance before the Senate he was asked why the administration had failed to comply with court orders and responded that they were not in the public interest. Although heavily criticised, Malami's statements are unsurprising, given how he used Executive Order 6 in his first term to indiscriminately prevent persons not accused of wrongdoing from accessing bank accounts without recourse to the courts.
After years of inaction and many questions as to why the Nigerian authorities have done nothing to pursue Nigerian wrongdoers in a 21-year corruption case involving oil giant Shell Nigeria Ultra Deep Limited and Italian company ENI SpA, it appears that the Nigerian authorities have finally decided to pursue criminal proceedings against Nigerian parties. In April 2019 the Abuja High Court issued orders for the arrest of former Petroleum Minister Dan Etete Etete and Attorney General Mohammed Bello Adoke.
Recent reports about developments in an ongoing corruption case in Italy, which alleges corruption in Nigeria by oil giants Royal Dutch Shell and Italian company Eni, have increased speculation as to whether any meaningful proceedings relating to the matter will ever be brought in Nigeria. There appear to be numerous issues in respect of which inquiries might be undertaken.
In 2014 $321 million which had been amassed in Luxembourg by Nigeria's former head of state was frozen. Although the government did not need to enlist external counsel to recover the money, the federal attorney general engaged local lawyers, whose only qualifications were alleged to have been that they had both worked with the attorney general while he was legal adviser to President Buhari's political party. This is just one in a series of embarrassing situations involving Buhari's government.
Although corruption in the ranks of Nigerian judicial officers has long been considered an issue, the authorities have been accused of lacking any genuine desire to address the problem. Although the National Judicial Council occasionally penalised judges, no judges were prosecuted. All that changed in 2016, when a number of Nigerian judges were arrested on suspicion of corruption. More recently, the Court of Appeal dismissed corruption charges against another Federal High Court judge.
When the Federal Ministry of Finance's new whistleblowing programme was announced, an issue was identified with regard to the lack of clarity around how rewards will be calculated. Following this, there has recently been significant controversy surrounding a reward which may have been paid to an informant following the recovery of approximately $43 million under the programme. If the matter proceeds to litigation, it may provide some indication as to how the programme is actually being implemented.
Following media reports accusing the Nigerian Securities and Exchange Commission director general and two other senior officials of serious financial impropriety, the Federal Ministry of Finance recently announced the suspension of the accused officials pending investigations into the accusations. Regardless of whether the allegations are true, the commission has come under pressure in the past two years due to an increase in the number of market crises, which critics have attributed to failures in oversight.
President Buhari recently signed a number of agreements with the United Arab Emirates concerning extradition, the transfer of sentenced persons and mutual legal assistance. This is one of the first concrete steps that Buhari has taken to combat corruption and money laundering since taking office. According to reports, the government is seeking to use these agreements to effect the seizure of real estate in Dubai which allegedly belongs to the former petroleum minister.
The Economic and Financial Crimes Commission recently succeeded in obtaining two final forfeiture orders of property without there having been a prior conviction. It will be interesting to see how these orders are addressed if any contested applications for non-conviction-based forfeiture orders come before the courts, as neither case set out the grounds that empower the courts to make such orders.
The federal government continues to issue reports regarding the success of its whistleblower programme. As such, it was no real surprise when the Economic and Financial Crimes Commission recently reported the discovery of $43.4million, £27,800 and N23.2million in cash following a tip-off. However, despite the reports of seizures resulting from information provided by whistleblowers, no reports have suggested that anyone has received any part of the recovered monies.
In October 2016 a number of senior judges from all levels of Nigeria's superior courts of record (ie, the High Court, the Court of Appeal and the Supreme Court) were arrested. Of the seven judges arrested, only two have been charged to date. Of these two, one was recently discharged following a no case submission by his counsel. This reversal must have been embarrassing for the government, given the manner in which it conducted the operation to arrest the judge.
The whistleblower policy unveiled at the end of 2016 is already producing results. The government has recovered a significant amount of stolen funds, including the amount recovered from a property owned by the former group managing director of the Nigerian National Petroleum Corporation. This must have been embarrassing for the government, as money laundering charges against the official were withdrawn in 2016. The basis of the decision to withdraw those charges must now be examined.
The first convictions were recently handed down in a series of prosecutions commenced due to widespread fuel subsidy fraud, which reportedly cost the treasury more than $6 billion. Investigations into the fraud commenced at the start of 2012, following the discovery of a discrepancy between the amount of motor fuel subsidised by the government and the country's actual consumption.
The Federal Ministry of Finance recently released details of its new whistleblowing programme, through which it aims to obtain information deemed to be in the public interest concerning the violation of financial regulations, theft, the mismanagement of public funds and assets and financial malpractice and fraud. Although it is still early days, the likelihood of the initiative achieving any of its objectives is low.
A number of Nigerian judges, from the Supreme Court to the high courts, have been arrested on suspicion of engaging in corruption. Observers of the Nigerian judiciary will not be greatly surprised by the allegations: the corruption that the Goodluck Jonathan government has been accused of also includes allegations of serious judicial misconduct. The president of the Nigerian Bar Association has condemned the arrests as a "Gestapo-style operation".
The Economic and Financial Crimes Commission is reportedly investigating around 250 companies and individuals in connection with the alleged misappropriation of funds by Sambo Dasuki. Under Nigerian money laundering legislation, the banks through which the funds were moved were obliged to take a number of steps to enable law enforcement agencies to monitor the movement of funds and prevent misappropriation.
The Criminal Justice Administration Act came into force in May 2015 and was intended to introduce a criminal justice system that promotes efficient management of criminal justice institutions and protects society from crime. However, the media continues to be dominated by stories involving the prosecution of prominent political members that demonstrate that the act has – at least until recently – had no significant effect.
President Buhari's election in 2015 was followed by what appeared to be a spike in enforcement activities relating to alleged corruption, misfeasance in public office and capital market and related infringements. While most of this renewed activity was connected to proceedings and investigations that were ongoing, some was undoubtedly a consequence of the election results.
Since the results of the recent federal elections were announced there has been a spike in enforcement activities relating to alleged corruption, misfeasance in public office and capital markets and related infringements. Most of the action relates to proceedings and investigations that were previously ongoing, but some investigations have presumably been reinvigorated by the election results.
The UK and Nigerian media have reported the arrests of two UK businessmen on suspicion of having bribed a Norwegian official who was allegedly involved in the sale of six ex-Norwegian navy vessels to a private security company in Nigeria. The men are alleged to have paid more than $150,000 to a Norwegian civil servant in order to help secure the sale of the decommissioned vessels by disguising their eventual destination.
The Central Bank of Nigeria's Bank Verification Number (BVN) project requires all bank customers to complete biometric registration (fingerprints and photographs) and obtain a BVN, through which all transactions by that particular customer may be verified. Despite this, however, law enforcement agencies in Nigeria continue to experience serious challenges in dealing with financial crime.
An individual who is currently a member of the federal legislature and had ambitions of becoming the governor of Delta State has reported to the Economic and Financial Crimes Commission that certain "high-ranking members of the ruling People's Democratic Party" demanded bribes in order to arrange for his nomination as the party's candidate for governor of Delta State.
Recent months have seen fraud and bribery return to the headlines. Reports emerged of alleged corrupt payments in a case involving a former oil minister; the High Court cast doubt on the ability of a Nigerian bank to enforce an English fraud judgment obtained against a former bank chief executive; and a former House of Representatives committee chairman on trial for extorting a bribe succeeded in further delaying his trial.
A former speaker of Nigeria's House of Representatives, Dimeji Bankole, was recently acquitted of charges of improperly awarding contracts and embezzling funds while in office. When criminal cases end in this fashion, it is usually because the case was either poorly investigated, poorly presented to the court, or both.
The Supreme Court recently reversed a decision affirming the conviction of a high-profile political appointee for improprieties while in office. The decision has been condemned as "perplexing", likely to "encourage corruption in the country" and "the latest in a long line of judicially orchestrated set-backs for the fight against corruption in Nigeria".
Several significant developments in anti-corruption actions related to Nigeria have occurred outside the country. A prominent case involves four British nationals charged with conspiring to bribe Nigerian officials. However, frustration remains that none of the Nigerian officials who are alleged to have taken bribes have been charged with any offences in Nigeria. In addition, many corruption cases have stalled in the court system.
The Court of Appeal recently overturned the convictions of two former members of Sani Abacha's entourage, who had been accused of involvement in the murder of an enemy of the Abacha regime. This ruling reflects what many consider to be the two biggest obstacles to the adequate investigation and prosecution of criminal cases: lack of capacity in law enforcement agencies and lack of political will to empower such agencies.
In two recent decisions the Federal High Court has held that although the Economic and Financial Crimes Commission has the power to seize assets and seek interim forfeiture orders, it is not entitled to appoint an agent to manage forfeited assets without an express order of the court. However, the validity of these decisions has been questioned and clarification from the Court of Appeal is now awaited.
There have been mixed signals about Nigeria's ability and willingness to address corruption. However, public outcry in response to the lenient punishment handed down to an individual accused of embezzling from the police pension fund seems to have provided impetus for change. The Judicial Council has dismissed corrupt judges and the Bar Association has initiated a challenge to the anti-money laundering law.
The shadow of foreign anti-corruption and anti-money laundering enforcement actions continues to hang heavily over Nigeria. The past few months have witnessed new enforcement activity, all heavily linked to previous action taken in the United Kingdom and the United States and by the Organisation for Economic Cooperation and Development.
The government's fuel subsidy system caused a public outcry when issues of inherent corruption came to light. An investigation was launched, but no one was prosecuted. However, individuals accused of involvement in the fraud - including family members of high-profile politicians - were recently arraigned before the Lagos High Court. Could this indicate an increased effort to address corruption?
It is more than three years since the Central Bank of Nigeria moved to take over a number of banks. Several bank executives were subsequently brought before the courts. Of the seven prosecutions commenced, only one has been concluded. Two such pending cases have generated interest recently, demonstrating the problems encountered by judges, prosecutors and defence counsel alike.
An English court's recent conviction of James Ibori, former governor of Delta State, on charges of fraud and money laundering is just one of several instances in which fraud committed in Africa has resulted in convictions outside Africa. The case adds justification to the perception that the Nigerian authorities – for whatever reason – are content to leave fraud and corruption prosecution to other jurisdictions.