Anti-Corruption & Money Laundering in Nigeria and the African Union

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In October 2018, the President of Nigeria, Muhammadu Buhari issued Executive Order No 6 of 2018.[1]  This article will assess the order, and will consider whether it is likely to be effective in the ongoing battle against corruption and money laundering faced by Nigeria and other African States. It will also consider whether it can be justified considering the difficulties that, developing States face in the ongoing battle against corruption.

 

Executive Order No 6 of 2018.

Corruption remains an endemic problem in many states and should not be described as being confined in any way to Africa.[2]   However, as a result of, amongst other things, poor governance and economic exploitation, efforts to curb corruption through regulation in many States continues to be a major concern.[3]  In many ways, as economic opportunity through globalisation has occurred, there has been potentially greater risk of corruption as the result present.  One of the ways in which this commonly occurs is when a corporation or individual from another State wishes to “launder” money that has been obtained through criminal purposes by investing it in a business or industry within a developing State.[4]  Criminal investors of this nature choose developing states because of the likelihood of lower levels of money laundering regulations being present in the State.  Furthermore, they are likely to be able to benefit from lower levels of effectiveness, transparency, and cross-border cooperation between intelligence services and anti-organised crime agencies in these States making the laundering of money in this way more effective.[5]  Finally, these investors are also likely to invest in States when they can be confident that there is a sufficient level of political corruption present which allows them to use bribery and potentially other tools such as blackmail to ensure that the regulatory framework remains friendly to their interests, and to ensure that investigations into their activities are hindered.[6]

For this reason, it appears as though efforts to reduce corruption and especially cross-border money-laundering are hampered by governance difficulties and by the inherently high levels of corruption already seen in some African States. For example, in the European Union, political integration allows the bloc to create a harmonised system of money-laundering regulations which are applicable across and between Member States.[7]  Furthermore, these anti money-laundering regulations are combined with enforcement activities and close co-operation between international anti-corruption task forces which share data between themselves, such as through the Europol agency for example.[8]  Unfortunately, these combined efforts are lacking in Africa.[9]  This can be seen with reference to Nigeria as an example.[10]  Nigeria is a signatory to the United Nations International Convention against Corruption,[11] and to the African Union’s Anti-Corruption Convention.[12]  However, these conventions do not entail the same level of co-operation as the EU’s efforts, meaning they have been less successful in combating corruption.[13]

As such, it is argued in this article, that, in order for corruption to be combatted more effectively within Nigeria itself, further efforts are required to establish and empower anti-money laundering regulations and anti-corruption and money-laundering agencies within the State.  This has been one of the primary aims of the Nigerian government in recent years, as is shown by the establishment of the anti-corruption agency and the Independent Corrupt Practices Commission (ICPC).[14]   In addition, the State has sought to grant further powers to agencies such as the Economic and Financial Crimes Commission under the Economic and Financial Crimes Commission (Establishment) Act 2002 (EFCC).[15]  Unfortunately, corruption has continued, and it has been suggested that more potent powers are required to be granted to law enforcement agencies such as the EFCC and the State.

It is in this context that the passing of Executive Order No 6 of 2018 can be seen.  The Executive Order grants significant and wide ranging powers to the Attorney-General of Nigeria, including granting executive power to freeze assets belonging to individuals on the grounds that they appear suspicious.  This is set out in s1(c) of the Order, which provides that the Attorney-General of Nigeria is empowered to “coordinate the implementation of this Order and to enlist the support of any Enforcement Authority…or any other person or entity as may be required or permitted by applicable law in order to give effect to this Executive Order”.[16]

 

 

 

 

 

 

 

 

 

This is likely to have a significant impact on anti-corruption practices. Whilst the power to freeze assets suspected of being the proceeds of crime or corruption are not new powers, and have not been absent from the Nigerian Federal Criminal Code’s provisions in the past, the Executive Order removes the requirement for these orders to be required to be granted only on the authority of a Court.  Instead, it now appears as though the Attorney-General has the power to take this action without independent scrutiny by a Court as an interim measure, pending an investigation and subsequent finalisation of the Order after a Court Order as was determined by the Federal High Court of Nigeria which ruled upon this recently.[17]  Regardless of the human rights implications of granting the Attorney-General this form of executive power, it must be said that such action will be likely to allow for a rapid and effective way in which suspect assets can be frozen and confiscated pending trial. This will be likely to inhibit the effective dissipation of such assets in many cases.

On the other hand, the Executive Order does nothing to increase or enhance co-operation between criminal agencies such as the Anti-Corruption office, the ICPC, the EFCC and the Attorney-General.  Therefore, the likely effect of the Executive Order is likely to depend on whether or not the Attorney-General’s office and these agencies develop an effective and integrated working relationship or taskforce within the Federal State as a whole, in a way similar to that seen in the European Union through the Europol operations. Without this enhanced co-operation between departments, it cannot be said that the Executive Order is likely to make a significant practical difference in terms of anti-corruption operations given the scale of the problems present in Nigeria.  In other words, requiring the Attorney-General to take action to freeze suspect assets is not likely, without further supporting legislation, to resolve the problems caused by both corruption and money laundering in Nigeria.  On the other hand, the fact is that the Executive Order represents a very strong statement from the Nigerian president regarding the ambition and attitude of the Federal Government towards tolerance of corruption within the State.[18]  Given that it has been shown that money laundering is more likely to operate in States where the launderer can be confident that levels of corruption are likely to be high, and risk of enforcement or confiscation of assets likely to be low, the Order might prove to be a useful deterrence aimed at those seeking to engage in money-laundering in Nigeria through fraudulent investing.[19]  This in turn is likely to impact positively on economic growth in the country, as investors who genuinely wish to engage in legitimate business activities should not be negatively affected by the Order, and may be reassured that the State is taking serious efforts to attempt to reduce corruption and enhance business opportunities within the State.

This however is only one possible interpretation of the likely impact of the provisions.  The converse might be true, and it could be the case that the Executive Order and the wide range of executive powers and lack of judicial oversight that is granted to the Attorney-General could prove to be counter-productive in terms of attracting foreign investment to Nigeria.  Businesses value stability and certainty very highly, and the executive power that is vested in the Attorney-General under the Order means that the State could confiscate assets belonging to an investor where the Attorney-General believes that they are “suspect”, without the investor being able to make representations against this.[20]  At present, should enforcement action be sought to be taken against them, the Attorney-General or other agency would be required to make an application for a Court order to freeze assets in this way.  Applications for freezing injunctions can in any event be made quickly in an emergency and can be made ex parte under the Nigerian constitution, but it is likely that many investors will consider the judicial oversight involved in such proceedings to be a vital safeguard of their rights and capital investment in the State.[21]

Conclusion

Whilst it is accepted that Nigerian authorities require significant powers to investigate and fight corruption, allowing the Attorney-General to take unilateral action to confiscate assets, even temporarily, without the oversight of a court, is likely to hinder the Nigerian State’s ability to attract genuine and legitimate investment in the State. Furthermore, the provisions do not appear to add significant effectiveness to the State’s ability to fight corruption, as ex-parte applications for freezing orders could in any event already be made. The Executive Order adds little encouragement that the State will finally be likely to succeed in stamping out corruption and money-laundering in the near future.

[1] Executive Order No 6 of 2018 on the Preservation of Suspicious Assets Connected with Corruption and Other Relevant Offences

[2] John Mukum Mbaku, Corruption in Africa: Causes, Consequences and Cleanups (1st edn Lexington 2006) ix

[3] Kolawoje Olaniyan, Corruption and Human Rights Law in Africa (1st edn Bloomsbury 2014) 103

[4] Morris Szeftel, ‘Misunderstanding African Politics: Corruption and the Governance Agenda’ (1998) 25 Review of African Political Economy 221, 222

[5] Nlerum Okogbule, ‘Regulation of Money Laundering in Africa: The Nigerian and Zambian Approaches’ (2007) 10 Journal of Money Laundering Control 449, 450

[6] ibid

[7] Council Directive (EU) No 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing OJ L141/73

[8] Anne Weyembergh and others, ‘Competition or Cooperation? State of Play and Future Perspectives on the Relations between Europol, Eurojust, and the European Juridicial Network’ (2015) 6 NJECL 258, 258

[9]Nlerum Okogbule, ‘Regulation of Money Laundering in Africa: The Nigerian and Zambian Approaches’ (2007) 10 Journal of Money Laundering Control 449, 450

[10] Babajide Ogundipe, Chukwuma Ezediaro, ‘Nigeria’ in Homer Moyer Jr (ed), Anti-Corruption Regulation (11th edn Law Business Research 2017) 68

[11] United Nations Convention against Corruption 2005

[12] African Union Convention on Preventing and Combating Corruption 2003

[13] Valsamis Mitsilegas, ‘The Aims and Limits of European Union’s Anti-Corruption Law’ in Jeremy Horder, Peter Aldridge (eds), Modern Bribery Law: Comparative Perspectives (1st edn CUP 2013) 186

[14] Mazi Kanu Oji, Valerie Oji, Corruption in Nigeria: The Fight and Movement to Cure the Malady (1st edn University Press of America 2010) 9

[15] Economic and Financial Crimes Commission (Establishment) Act 2002

[16] ibid s1(c)

[17] Nigerian Federal Court, Case FHC/ABJ/CS/740/2018 (unreported)

[18] Toyin Bashir, Oluwatoba Oguntase, ‘Re-Examining the Purport of the Executive Order No 6 of 2018’ (2018) Mondaq, available online at; http://www.mondaq.com/Nigeria/x/756320/White+Collar+Crime+Fraud/ReExamining+The+Purport+Of+The+Executive+Order+No+6+Of+2018 accessed on 28 December 2018

[19] ibid

[20] Executive Order No 6 of 2018 on the Preservation of Suspicious Assets Connected with Corruption and Other Relevant Offences

[21] Nigerian Federal Court, Case FHC/ABJ/CS/740/2018 (unreported)

18 COMMENTS

  1. Comment:The presentation is lucid. The author raised interesting arguments on the issues connected to the Executive Order by Nigerian President Muhammadu Buhari. Further development on the issue should touch on the institutional capacity and/or inadequacy and the need for reform of the Nigerian legal system, which possibly led to the Executive Order. It is a good piece which can stimulate further discourse.

  2. I have gotten nothing much to say, the author is got everything covered, but then, well done Ma’am, the substance of the text is apt, More wisdom, Ma’am!

  3. I’ve actually not seen it from this nuanced perspective. I think Nigeria would require a few laws reviewed in order to effectively fight corruption. Looking forward to your write up after the election.

  4. I find this an interesting piece. I believe this is an outstanding with excellent analysis and explanation. Looking forward to more

  5. This is an interesting piece which to a reader raises concern on the impact of the executive bill and a but perspective from the author which made it more clearer on a plain mode.

  6. We need to have more conversations like this on anti-corruption practices and policies in Nigeria and the impact of the Nigerian legal system. This is an excellent piece.

  7. Very well written incisive piece. Issues raised ,particularly the sweeping power of the Attorney General to” confiscate” on mere suspicion is likely to be used as a political tool and, may, to a large extent,scare investors and thus hamper seeming economic growth. On the whole,the piece has raised genuine concerns for further discourse.

  8. The article was concise and meticulous. Very interesting and easy to follow, especially, for international readers who are unfamiliar with the Nigerian legal system. The author raised valid points and it highlighted the need for the reform of the legal system in Nigeria. It is vital that we continually fight corruption which is the spinal paralysis of Nigeria. This is the root cause of the decline in the economy and it hinders the health, education and state development of our country. I look forward to reading more from this author and I’m sure that it will motivate a further discourse. Great job.

  9. Very interesting piece on an issue of both national and international concern. As a student of law and development, what I find most interesting in the piece is the need to strike a balance between internal regulation of corrupt practices and quest for foreign direct investment. The World Bank and other development agencies have over the years emphasized the need for states to fight corruption but at the same time to ensure security of property interest through, among others, stable and predictable laws as well as absence of arbitrary use of state power. These measures are necessary ingredients for development and they are needed most in less developed countries such as Nigeria. I am not surprised that the author has brilliantly raised these issues given her informational base and areas of interest. Pls keep it up!

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