Introduction
Distinguished ladies and gentlemen, on 27 July 2005, I had the privilege of speaking to you about corruption. My paper then, was entitled "Corruption is Africa's greatest Enemy – the Nigerian Example". In introducing the subject, I discussed the concept of corruption as being a general term covering the misuse of authority; outright theft, embezzlement of funds and other appropriation of state property, nepotism and the granting of favours to personal acquaintances and their abuse of public authority and position to exact payment or privileges.
We examined, on that occasion why it happens and discussed, in particular, perverse and chronic poverty; extremely high levels of material deprivation and inequality in the distribution of state resources as some of the end products. We also examined the consequences of corruption in that its direct effect is manifested in the form of exacerbating poverty, retarding infrastructural developments; the "brain drain" and the debt charge. We then considered solutions which included engendering political will; increasing aid and repatriating the proceeds of corruption.
A few months down the road, the problems are inherently the same, but the geography of the entire discussion of corruption has changed as a consequence of recent developments. The common features of corruption remain intact and are particularly reflected in some of the concepts that I have described previously. On that occasion, I used a jocular illustration to explain its practical existence. I will ask you to permit me to make similar reference in illustrating how the corrupt mind works as a demonstration of the size of the task that developing nations such as Nigeria encounter in dealing with this problem.
This example comes from the Nigerian/Benin border. A Nigerian, Joseph we shall call him, comes up to the Cotonou border on his brand new bicycle. He has draped over his shoulders two large bags. Immigration and customs officials at the border stop him and ask him what is in the bag he is carrying. Garri, he answers. The officials, indignant about the response, decided to teach him a lesson. They ask him to get off the bicycle, take the bags from him; rip them apart; empty the bags and find nothing in the bags other than Garri. They are even more irritated by his effrontery. They decide to detain him overnight and have the Garri analysed. When the result returns from the laboratory, they confirm that the substance is nothing other than Garri, staple food in many parts of Nigeria and produced in such abundant quantities that make the idea of importation almost laughable. With egg all over their faces, they release Joseph. He puts the Garri into new bags, hoists the bags unto his shoulders and makes his way into the Nigerian part of the border. A week later, Joseph returns in exactly the same form. The process is repeated, this time, following a thorough examination, but in a bid to minimise the embarrassment of the previous experience, the customs & immigration officials let him by. Joseph repeats this sequence every week for two years. One day, Joseph does not show up as usual. By chance, the customs & immigration officials meet him in a beer parlour beyond the Nigerian border. They are adamant that he is smuggling something into Nigeria, but were unable to identify what it was over the period. The customs official says to him – "my friend, I know you are smuggling something, it is driving me crazy. It is all I think about. Just because of that I can't sleep. Just between you and me, what exactly were you smuggling?" Joseph sips his beer and says with a smirk on his face – "bicycles".
Ladies and gentlemen, this little example demonstrates the astuteness of some of the participants in the execution of some of the intricate concepts of corruption that you are likely to come into contact with. Some of the examples you are likely to come across involve some of the most profound schemes capable of being conceived to siphon public money which will remain incapable of detection even by the most forensic examination. However, those that make the news are some of the most audacious, ill-planned and brazenly executed schemes which demonstrate the most utter disregard of the possibility of detection and sanction that makes us commoners wonder, aloud, upon what this kind of confidence can be based.
Current Developments
I believe that we are all familiar with the recent developments involving one of Nigeria's Governors, Chief Diepreye Alamieyeseigha of Bayelsa State. Bayelsa is one of the newer states in Nigeria in the middle of the Oil producing Niger Delta Area. The relevant facts, already in substantial circulation in the public domain, are that Governor Alamieyeseigha was arrested on 15 September 2005 in London by the Metropolitan Police and shortly thereafter appearing in the Bow Magistrates Court on charges for breach of money laundering regulations. These allegations assert that he was involved in the lodgement in different bank accounts in London between 2001 and now, two sums of £425,000 and £475,000 respectively and the discovery at his home of sums of money quoted in the neighbourhood of between £1-£1.8 million pounds, in cash! The proceedings have continued and are believed, at this stage, to have led to the assets amounting to over £10 million ostensibly belonging to him. The Governor, following earlier detention, was granted bail following his formal arraignment on 28 September 2005. He was originally remanded in prison, but was admitted to bail by the Southwark Crown Court, to which the case had been remitted, on 4 October 2005. He was formally granted bail on the 11 October 2005 with six conditions, namely that he must live and sleep each night at an address known to the Court; that he must report daily to the police station known to the Court; that there must be three sureties in the sum of £250,000 together with securities lodged with the Court amounting to a total of £500,000; that he is not to leave the jurisdiction of the Court nor apply for any travel documents; and that he is not to go within 3 miles of any port or airport. Subsequently, he made an application for the release of his travel documents. The application was supported by an Affidavit deposed to by the Attorney General of Bayelsa State in which he vouched for the Governor's integrity, stating his readiness to return to London each time if required for trial or if required by either the Court or the police. That application was, understandably, opposed by the prosecution whose position was given added verve by the presence, by affidavit, of the Attorney General and Federation Chief Bayo Ojo SAN whose views were inherently to the contrary. The application, heard by Mr Justice Rivlin, was dismissed and bail conditions were maintained. On or about 21 November 2005, Governor Alamieyeseigha reappeared in Nigeria. The manner of his departure from the United Kingdom and arrival in Nigeria shall remain a matter of some conjecture but the British Authorities are known to confirm that Governor Alamieyeseigha has breached his bail conditions. The matter remains sub judice and its consequences on Nigeria's anti-corruption posture and drive will be discussed for many months, if not years to come. For now, it is important, without prejudice to Alamieyeseigha's innocence or guilt, to note that as a matter of law, there is an indefensible, certainly irrebuttable presumption that he has breached his bail conditions, a situation that will have a profound effect on his guilt or innocence. The EFCC has written to the Bayelsa State Legislature who, in a bold move, has instigated impeachment proceedings, albeit in "exile". Determination of that guilt or innocence is now, surely, beyond the courts in the United Kingdom unless the impeachment proceedings succeed or 2007, whichever is earlier. Alamieyeseigha addressed the citizens of Bayelsa State on 22 November 2005. Ironically, he does not protest his innocence about the charges brought against him; deny vehemently as one would expect in an extra-judicial setting, the truth of the allegations or even more, deny that he breached the bail conditions, legal or not, imposed on him.
On a different and perhaps more encouraging note, two Nigerians were convicted in Nigeria's biggest international fraud trial. Both were found guilty of working with an official of Banco Noroeste of Brazil to steal the sum of US$242 million over a 7 year period in relation to a fraud relating to promised kick backs on a bogus Nigerian airport contract. The Brazilian bank had collapsed as a consequence of the force. Frank Nwude received 5 sentences of 5 years each, all to be served concurrently and was ordered to refund the bank US$110 million as well as a US$10 million fine to the state. Nzeribe Okoli was sentenced to 4 years imprisonment. The third defendant, Amaka Anajemba was found guilty in the same case in a separate trial in August; sentenced to 2 years in prison and ordered to give up US$25.5 million in cash and other assets located in Nigeria; the United States; Britain and Switzerland.
Former Inspector General of Police (IGP), Mr. Tafa Balogun was, on 21 November 2005, sentenced by a Federal High Court, Abuja to a six months imprisonment for concealing vital information to the Economic and Financial Crimes Commission (EFCC) over his alleged business concerns and interests in some companies amounting to over N17.7 billion. The former police boss who pleaded guilty to eight of the 56 count-charges directly affecting him was convicted for six months in each of the charges, which is however to run concurrently. He was directed by the court to pay N500, 000 on each of the eight counts charges totalling N4 million
By these latter developments, Nigeria has now divested itself of the yoke of the inglorious and dubious distinction of being a country where there have been prosecutions but no successful conclusions of crimes arising from corruptions.
Counting the Cost
Corruption is Nigeria's most debilitating disease. It has affected every facet of Nigerian life. Many social commentators do not believe that corruption exists other than in the highest level. This is an unsustainable fantasy. The reality of the position is that every Nigerian is exposed to the consequences of corruption, no matter how lowly placed. Its practice is such that its effect is influencing decision making even at the lowest level. Nigerians have now imbibed and come to accept what is now commonly referred to as the "settlement culture". Settlement is understood to be the manner in which progress is achieved, the absence of which leads inevitable failure. Given its prevalent spread, its influence on business and trade is, perhaps, one of the most enduring effects. I discuss this effect as follows:-
1. Raising Transaction Costs:
Corruption has single-handedly created detestable concepts of common usage in Nigerian accounting and economics. "Double-invoicing (this being a process where more than one invoice or financial statement is generated in relation to one transaction); "Over-invoicing (this being the process by which actual jobs are front loaded with unsustainable estimates and quotations) are all practices that are common place within the Nigerian business environment. The consequence is that operational budgets are exceeded disproportionately because various interests are factored into end prices in a manner that ensures unavoidable compromise quality and delivery in order to maintain profits or profitable margins. These interests are represented by payments to Government officials and private "middle men".
2. Distortion of Public Spending
The biggest business client in Nigeria is the Federal Government of Nigeria. Nigeria's economy has been heavily dependent on oil. Income generated from oil is alleged to have exceeded $320 billion since 1970's. Nigeria produces oil at an average of 2.2 million barrels a day and this continues to account for more than 95% of our export earnings. The Federal Government's role in the economy is omnipotent, only qualified by the limited implementation of the comparatively recent policies of privatisation. It is well documented that over 60% of the money generated by Nigeria since the discovery of oil has been looted or diverted from the people by the consequences of corruption. It is inevitable that the consequence of this corruption has severely arrested development and this is mostly manifested in the distortion in public spending. This distortion arises in three ways, namely, by shaping the official priorities of Government; by deflecting allocated resources away from their original destination or purpose and by undermining the tax or fiscal base of Government . The fortunes of public interest no longer represent the key basis for determining public expenditure because resources are located where corrupt officials and politicians decide it best suits them.
3. Discouraging Investment:
Potential investors are wary about corrupt environments. Progress can only be guaranteed by bribes or enforced extortion. This causes investment managers to rearrange their investment policies to accommodate payment of bribes. Profit margins are squeezed by bigger bribes. Corruption inevitably creates an uncertain terrain which goes to the very root of investment integrity. The consequence of this assault on integrity is bigger than is considered. Many refuse to do business in environments that are inherently corrupt not only because they need to pay more in order to secure their interest, but some times, as has been evident, the payments do not even ensure or guarantee a return of their capital, never mind profit. Those who, despite the uncertainty of the terrain, take the plunge, expose themselves to difficulties that are presented by corruption even for the purpose of recovering their initial investment. Legitimate investors are despatched with impunity. Indeed, it is this impunity that is the foundation of some of the initial approaches that are made in a standard 419 transaction. These expression of interests allegedly emanating from Nigeria are audacious in the extreme and would be laughable were it not for the effect that 419 - Advance Fee Fraud in sophisticated language - has had on business relations with Nigerians over the last 20 years. Let me provide you with a typical example of such an invitation which runs as follows:-
"FIRST, I MUST SOLICITATE YOUR STRICTEST CONFIDENCE IN THIS TRANSACTION. THIS IS BY VIRTUE OF ITS NATURE AS BEING UTTERLY CONFIDENTIAL AND "TOP SECRET". I AM SURE AND HAVE CONFIDENCE OF YOUR ABILITY AND RELIABILITY TO PROSECUTE A TRANSACTION OF THIS GREAT MAGNITUDE INVOLVING A PENDING TRANSACTION REQUIRING MAXIMUM CONFIDENCE.
WE ARE TOP OFFICIALS OF THE FEDERAL GOVERNMENT CONTRACT REVIEW PANEL WHO ARE INTERESTED IN IMPORTATION OF GOODS INTO OUR COUNTRY WITH FUNDS WHICH ARE PRESENTLY TRAPPED IN NIGERIA. IN ORDER TO COMMENCE THIS BUSINESS, WE SOLICIT YOUR ASSISTANCE TO ENABLE US TRANSFER INTO YOUR ACCOUNT THE SAID TRAPPED FUNDS.
THE SOURCE OF THIS FUND IS AS FOLLOWS; DURING THE LAST MILITARY REGIME HERE IN NIGERIA, THE GOVERNMENT OFFICIALS SET UP COMPANIES AND AWARDED THEMSELVES CONTRACTS WHICH WERE GROSSLY OVER-INVOICED IN VARIOUS MINISTRIES. THE PRESENT CIVILIAN GOVERNMENT SET UP A CONTRACT REVIEW PANEL AND WE HAVE IDENTIFIED A LOT OF INFLATED CONTRACT FUNDS WHICH ARE PRESENTLY FLOATING IN THE CENTRAL BANK OF NIGERIA READY FOR PAYMENT.
HOWEVER, BY VIRTUE OF OUR POSITION AS CIVIL SERVANTS AND MEMBERS OF THIS PANEL, WE CANNOT ACQUIRE THIS MONEY IN OUR NAME. I HAVE THEREFORE BEEN DELEGATED AS A MATTER OF TRUST BY MY COLLEAGUES OF THE PANEL TO LOOK FOR AN OVERSEAS PARTNER INTO WHOSE ACCOUNT WE WILL TRANSFER THE SUM OF $US21,320 MILLION (TWENTY ONE MILLION, THREE HUNDRED AND TWENTY THOUSAND US DOLLARS). HENCE WE ARE WRITING YOU THIS LETTER. WE HAVE AGREED TO SHARE THE MONEY FIRST; 1. 20% FRO THE ACCOUNT OWNER; 2. 70% FOR US (THE OFFICIALS); 3. 10% TO BE USED IN SETTLING TAXATION AND ALL LOCAL AND FOREIGN EXPENSES. IT IS FRO THE 70% THAT WE WISH TO COMMENCE THE IMPORTATION BUSINESS.
PLEASE, NOTE THAT THIS TRANSACTION IS 100% SAFE AND WE HOPE TO COMMENCE THE TRANSFER AT LATEST SEVEN (7) BANKING DAYS FRO THE DATE OF THE RECEIPT OF THE FOLLOWING INFORMATION BY TEL/FAX; 234-1-7740449, YOUR COMPANY'S SIGNED, AND STAMPED LETTER HEADED PAPER. THE ABOVE INFORMATION WILL ENABLE US TO WRITE LETTERS OF CLAIM AND JOB DESCRIPTION IRRESPECTIVELY. THIS WAY, WE WILL USE YOUR COMPANY'S NAME TO APPLY FOR PAYMENT AND RE-AWARD THE CONTACT IN YOUR COMPANY'S NAME.
WE ARE LOOKING FORWARD TO DOING THIS BUSINESS WITH YOU AND SOLICIT YOUR CONFIDENTIALITY IN THIS TRANSACTION. PLEASE ACKNOWLEDGE RECEIPT OF THIS LETTER USING THE ABOVE TEL/FAX NUMBER. I WILL SEND YOU DETAILED INFORMATION OF THIS PENDING PROJECT WHEN I HAVE HEARD FROM YOU.
YOURS FAITHFULLY
DR CLEMENT OKUN
Note: Please quote this reference number (VE/S/09/99) in all your responses.
This letter has been reproduced in its exact form bearing all its typographical and grammatical errors.
The consequence of advance fee fraud on investment culture as it relates to Nigeria and the significant loss that it has caused the country will remain unquantified.
The Reform Agenda
1 Proactive Governance in eradicating corruption
The Government of Nigeria is and has been employed to assume a proactive role in eradicating. Although generally speaking, the response of Governments in developing countries, particularly in Africa, are usually designed to satisfy international communities, particularly those providing aid, there is evidence of the Nigerian Government's intention to lead the way. There are visible examples of the Nigerian Government's practice in this respect. For all the criticisms about the Federal Government's involvement in the Alamieyeseigha case, the appearance of the Attorney General exemplifies its stance. Whether or not that involvement is justified politically, on it's face, the Nigerian Government has called the question. What it needs to do is to deal with some of the criticism of its approaches and to factor these into the mechanics of the execution of its anti-corruption drive. Generally, however, given the nature of decay the corruption has brought about, it is commonly accepted that Government needs to do more.
2 Introduce and prosecute serious punitive measures for corrupt practices
The single biggest initiative by the current Nigerian Government is the promulgation, in 2002, of the Economic and Financial Crimes Commissions Act. This Act, re-enacted in 2004, creates a variety of economic and financial crimes and vests the enforcement of these crimes in one body. The Commission is responsible for enforcing the provision of the key economic and financial crimes legislation in Nigeria including the Money Laundering Act 2004; the Advance Fee Fraud (and other related offences) Act 1995; the Failed Banks (Recovery of Debts and Financial Malpractices in Banks) Act 1991; the Bank and Financial Institutions Act 1996; the Miscellaneous Offences Act 1985. Section 7 of the EFCC Act 2004 extends its powers to Economic and Financial Crimes in the Penal and Criminal Codes.
It is commonly accepted that Nigeria has a healthy array of laws regulating economic and financial crimes, almost to the point of being over-legislated. The key difficulty has been the failure in enforcement. There should be an aggressive approach to prosecute offenders and impose punitive measures on those found liable. Sustainable indictments should lead to political, social and then commercial ostracism, even in a society like Nigeria where money is "everything" and certainly, not the kind of shameless idolation that emerges from successful escapades in corrupt exploits. Suitability to hold positions, whether political or otherwise, should include disqualifications for any form of indictment arising from corruption.
3 Transparency: There should be no sacred cows. The biggest criticism of this Government and its anti-corruption posture is that only "its enemies" are snared. It is a difficult allegation to sustain but Government should ensure that in its pro-activity, it is not selective and that the laws provided will apply with equal force to all who are affected. The other criticism is that the quantum of prosecution is too little in that it is inversely proportional to the prevalence of acts of corruption in that the prosecutions represent only the "tip of the iceberg". This allegation goes to the very root of the transparency issue. The only way in which it can be addressed is by direct enforcement action against all concerned, without exception.
4 Upholding the Rule of Law:
Social, legal and political commentators all accept that there is a serious problem with regard to the respect for the Rule of Law of law in Nigeria. Regretfully, this disregard of the law exists at every level of society. Confidence in the legal system must be rebuilt and restored. An environment within which there are 100 corruption-related cases in Court and over 300 cases at various stages of investigations - with only a few concluded - is appallingly inadequate . There have been difficulties generally with achieving compliance with Court orders. Many blame the obsolete procedure and slow pace of proceedings for this attitude. There are other criticisms of the judicial system virtually all anchored on the poor infrastructural position. Others suggest that the judiciary is politically asphyxiated. There must be visible change by strengthening this arm of governance by an adoption of programmes of active, achievable and practical reform funded by resources made available by Government including, where available, recouped proceeds of crime. A comprehensive review of enforcement processes must be embarked upon. The profit of corruption is unjust financial enrichment. Deprivation of the proceeds, even at an interim stage of investigation by release, other than in freezing injunctions must be considered and designed. Only such debilitating consequences will deter those who prosper in corruption especially if the effect extends to assets other than those deemed to have been illegally acquired. Consideration should be given to creating an Economic and Financial crimes court out of the current Federal High Court armed with rules that will ensure comprehensive and speedy consideration of cases, at least at first instance. One of those rules is should be that all rights of appeal against all interlocutory decisions may be pursued only at appeal court, this recognising that the bulk of the delay in hearing cases at first instance arises from interlocutory appeals.
5 The Repatriation of Proceeds of Crimes
At a Commonwealth Parliamentary Association meeting in June 2002, the President, Chief Olusegun Obasanjo said
"...it is not enough to accuse developing countries of corruption. The Western world must demonstrate practical commitment to assist us in repatriating monies that have been stolen from our treasures and hidden in their financial institutions". (Underlining mine)
On the previous occasion when I last spoke to you, we discussed the Abacha situation. There are others who have been mentioned and discussed, yet NOTHING has happened. So long as the proceeds remain available to the perpetrators and those who profit from these funds (namely financial institutions holding them), African countries will continue to be frustrated as they will have been deprived of funds legitimately belonging to them.
Conclusion
Corruption has stolen from Africa huge reserves of funds that could have been used to properly address the equation of poverty and disease. Africa has, indisputably, some of the poorest neighbourhoods in the world despite over $300 billion dollars of aid made to Africa since 1980. The vast majority of those monies have vanished into a sinkhole of fraud, malfeasance and waste.
Nigeria, despite its huge wealth, remains plagued by the consequences of waste that have been occasioned solely by corruption. The biggest victim remains its people. Corruption is a crime against humanity, the large component of who have no role or choice in creating these circumstances. The necessity to heighten the profile of the campaign to eradicate corruption cannot be over emphasised. Corruption, not disease, threatens Africa with extinction. It is time to redress that imbalance.