14 Jun 2017
In Nigeria, ranked 136th out of 176 countries on Transparency International’s most recent Corruption Perception Index, petty corruption is a feature of everyday life. But in 2015, charismatic former general Muhammadu Buhari won the Presidency on an anti-corruption ticket. A spate of high profile corruption cases were launched, and a range of laws were introduced to the legislature to crack down on bribery, money laundering and other economic crimes.
Halfway through Buhari’s tenure, leading Nigerian Lawyer Kunle Ajagbe speaks to Amos Wittenberg about how much Buhari has really achieved, his blindspots, and prospects for the remainder of his time in office.
Thanks for listening in to this episode of the KYC360 podcast, a regular series of conversations with leaders in the world of financial crime prevention. Almost exactly a year ago, then British prime minister David Cameron, was caught on camera telling the Queen about the leaders of some fantastically corrupt countries attending the London anti-corruption summit. Nigerian and Afghanistan, he said, possibly the two most corrupt countries in the world. At this point Archbishop of Canterbury Justin Welby judiciously interrupted to say: “but this particular president, is actually not corrupt, he’s trying very hard.” Welby was referring to Muhammadu Buhari, president of Nigeria since 2015, who was focussed a significant amount of his attention as country leader, on tackling epidemic corruption. But how much has actually achieved and what obstacles continue to stand in his way? Today we put these questions to Kunle Ajagbe, a leading Nigerian lawyer of the firm Aidan, who recently co-authored an in-depth report on the topic for KYC360.com. Kunle is listed in the International Who’s Who Legal, ‘writes on legal and global issues for publications including Business Day and is a trustee of Global Rights Nigeria.’ He joins us over the line from Lagos.
Kunle to start off, could you tell us a bit about Buhari, his background and his politics and so on?
Well General Buhari or President Buhari, as he is now known, came into prominence in the early eighties in Nigeria as a military officer. First as one of the officers who put down a severe insurrection by an obscure Islamic group. Subsequently in 1983 in December, he came much more into prominence as the head of the military government, which overthrew the democratically elected government in Nigeria back then and he was in office as the head of state. The military Head of State in Nigeria between December 1983 until August 1985. And his regime then was remarkable for a number of things and that is part of what forms the foundation for why he was into office in 2015. At that time the country was in economy mess, which in many ways is quite similar to the situation we’re in right now. Buhari’s politics, or his economic policies rather, qualify him as someone who say has a very strong belief in the power of the state, as the invisible hand to regulate economy. So, he is not a free-willing, free-market apostle- not in that sense. I think he tends to be slightly suspicious of businessmen and business generally. But it’s also incorrect to describe him as a socialist or a communist. Far from it, he is none of that. But his economics is more, the state should be the guiding hand. As far as his political and social policies are concerned, I think it would be correct to describe him as a little bit more to the right, than to the left. Yes, he’s centrist on some issues. Instinctively, he’s secular-minded, that is on account as his training as…particularly in the British Army and having school in the Britain as a military officer.
So, we see all this plying out in the choice of policies which he has followed through up to today; which is that he is not a great believer in unregulated capitalism and I think that is that deep suspicion of businessmen and business, that formed the choice of his polices to day. We can see that through when the Nigerian currency the naira was slipping downwards in the US dollar. His further approach was to prop up the naira, the Nigerian currency, instead of letting it float. The result, if we were to be diplomatic about it, the results have been mixed, at the very best. At the very worst it has not achieved the intended results.
Thank you very much. How would you characterise the scale of corruption in Nigeria, was David Cameron accurate in his description?
My short response to that is David Cameron was unfortunately correct. I say unfortunately because, as a Nigerian, it certainly cannot be very appealing to hear your country described in such unflattering terms. But it’s so impossible to deny the fact that corruption is a massive, massive problem in Nigeria. I don’t think there are enough words to describe the scale of the problems. Only to say yes there’s a big problem, it didn’t start now, it’s been there for a while. There have been efforts of combatting it, but the best I can say is that those efforts have yielded mixed results at best.
Is corruption something you would encounter in your day to day life?
Oh yes and I daresay that there’s scarcely any Nigerian who hasn’t confronted corruption in one shape of form or the other. It may not always be overt, depending on what you do for a living, where you live. Even if you do not confront it directly it is certainly there in an indirect form. But given that you stay in a rural part of Nigeria, I would say with a lot of areas, there is scarcely any Nigerian who doesn’t live with the consequences of corruption.
How does the situation in Nigeria compare to the corruption in other parts of Africa?
Unfortunately, because of weak institutions and weak regulations, many countries in sub-Sahara Africa in instance, do not occupy an enviable position in the corruption perception index of transferring international. So one instance of Africa is in Kenya- many countries in Africa are blighted by corruption. Nigeria isn’t the worst, but neither is it in the brightest of positions. So, in other words, many African countries they still have a lot to do to raise their running, in terms of their fighting against corruption. For me to the end of the day, what it boils down to is having strong institutions, to be able to take the fight to combating corruption.
How important is corruption as a political issue in Nigeria?
It is a big issue. There’s a certain part of that corruption in Nigeria, on the one hand it’s so super basic, on the other hand the public expect their political leaders, their elected representatives to at least to say something about it and to be seen to do something about corruption. As a matter of fact, when President Buhari was contesting for the last general election in June 2015, he fought it and won it largely on the platform of anti-corruption. So, there’s a commentary around corruption in the public mind in Nigeria. There’s a huge expectation that it has to be dealt with. How far successive governments have got with it, is a different matter altogether.
In light of that, basically winning an anti-corruption ticket- in the first year of his administration, would you say that Buhari was keeping the promises that he had made?
The outside qualifying answer is yes, he has. What I will explain by saying that, the President came to the office, yes demonstrating by statements and his actions that resolutely fighting corruption and to his credit there were no more high profile anti-corruption cases against certain politically exposed individuals very high profile individuals. But no sooner than he passed those comments, there were allegations that the persons being tried for corruption were political opposition or people who could be dispensed with. There were also allegations that the inner-circle of President Buhari had numerous political corruption allegations against them and this persons had be shielded against the fight against corruption. There’s a bit of truth here and there, as with many of these things and so it has given a qualifying conversation to the fights against corruption in Nigeria. There is a fight, I think it will be quite challenging to say that there is nothing being done about it. But the problem is so pervasive, that to approach it from a law and order angle alone will not solve the problem. Likewise, too, to approach it from a judicial angle of charging people in court, will also not solve all the problems of corruption in Nigeria. In other words, it appears that given the nature of corruption in Nigeria, it needs to be tackled from a multiplicity of angles, in order to be able to rein it in. As it is right now, nobody and I mean nobody of where there position is, can tell you that corruption has been tamed in Nigeria. It hasn’t been tamed- it has gone underground and the corrupt government officials have become more subtle, some would say they have become more intimidated, but certainly there is still some corruption in Nigeria.
That’s fascinating. Could you give an example of ways corruption has gone underground?
Well ok, I would explain it this way. Since President Buhari came into office in 2015, a number of initiatives have been deployed to tighten the screws as it were and or instance, every bank customer in Nigeria has a unique identification code. What that then means is, that if you have two, three, four, five bank accounts, you are able to have as many bank accounts as you wish. There is no law prohibiting you from having ten-twenty bank accounts. But you have to use an identification process. Now that looks quite simple enough. Previously I could work into different banks and use different aliases, but now it because it is driven by metrics, which is unique to each individual, all my bank accounts can be accessed by the security agencies and the monies in those accounts, I could be quite sure of the sources of those bank accounts. Now that has revealed a lot of questionable deals and questionable sources of income. So, the consequential results is that for corrupt government officials, they know now that there is a higher degree of scrutiny on how easy it is for them to open multiple bank accounts. That is just an example.
Yet another example is a process known as the TSA- The Single Treasury Account Systems. What it does, is simply mean that under President Buhari, although this idea is not original to him, but it is to his credit that he enforces and implemented it. What it simply means is that all government agencies and ministries deposit the money due to them into a single bank account. Again, this sounds pretty simple enough. But here’s the deal, previously all government agencies could open any account that they wanted. So if you have a hundred ministries they could open a thousand bank accounts at their own discretion. What this policy has done is to streamline the process and ensure that what goes in and what goes out, can be monitored by the Finance Ministry and the central bank and it makes it a whole lot easier to see what goes into government accounts and what comes out by ways of expenditure. So for those who are corrupt in government, it’s a driven them underground, but it hasn’t defeated corruption in Nigeria. That’s what I mean when I say they’ve tended to be much more careful now, much more circumspect, but only the most reckless will say that corruption has been defeated in Nigeria.
In China it’s reported that one of the main results of the crackdown under their president, Xi Jinpingis that the cost of a bribe has gone up, because the official asking for it is taking a greater risk. I wondered if you see anything similar to that.
To a certain extent yes in government circles, but particularly in the central government in Nigeria. There is a tendency to be much more discreet now and to know what if possible, money for a bribe is much more expensive, you could very well be talking to an undercover government agency- you never know. So are those are the things that have made government officials much more wary of demanding for a bribe. But like I did say earlier on, that is not to say that bribes are still not being demanded, they are. They are just much more discreet now.
You titled your report for KYC360, ‘Nigeria at Half-time’- so you’re looking back over the last two years and the two years that Buhari still has left as the country’s premier and you set out a suite of legislative reforms that Buhari proposed to tackle to corruption. Could you take us through those?
Certainly, there have been a couple of legislations that have been proposed by the President Buhari administration, with varying degrees of success, before the national assembly of Nigeria’s parliament. Some of the most important ones include the money laundering bill, there’s an initiative to tighten it, even though it’s been in place for quite a number of years now. But I’m aware that the OACB and couple of other international agencies have been putting pressure on the Nigerian government to tighten the screws with its anti money-laundering legislation. There’s a currently a bill which is making its way around the Nigerian parliament, that on mutual assistance on criminal matters and what it’s intended to achieve. Is simple to ensure that the Nigerian government is better able to operate with other countries for the purpose of criminal investigation, repatriation, tracing money laundering issues and so on. Freezing accounts and all of that and so on.
The Proceeds of Crimes Bill is also pending. Before now there has been an Extractive Industry Bill to try and get a rein on the processes of the extractive industry, because that has been major source of problems for Nigeria. So there are some of the initiatives that have been put in place. But the legislative process it is…it has its own issues, in fact I’ll put it that way. It’s also impossible right now to say whether to be active in law.
The Proceeds of Crime Bill, is that modelled on the UK’s Proceeds of Crime Act?
Yes to a certain extent and what it is also designed to achieve is that, apart from jailing perpetrators of crimes or particularly corruption. The proceeds of those crimes, those in the middle, will not be able to benefit from it. Before now, there was specific legislation that dealt with the proceeds of crime, it was more or less left to the orders of the judge in a particular matter. So if, for instance, the proceeds of the crime were not made the subject of the judgment of the court, technically that individual could leave court, who served his time in prison and when he gets released, he goes back to enjoy the proceeds of crime. Tat was always possible in the past. But with this bill that is being proposed now, it would tighten it and make it almost impossible for that individual, who upon his completion of hi period in jail, could come out and still enjoy the fruits of his crime as it were. So yes there are some aspects of it that mimics the position of the Proceeds of Crime Act in the UK.
One of Buhari’s main obstacles has been the upper legislative house, which among other things, has repeatedly rejected his candidate for the head of the economic and financial crimes commission. Why are they so opposed the changes he’s proposing?
It’s an interesting question. Officially the reason the upper legislative house as a senate, rejected the nominee of President of Buhari for the position of Chairman of the Economic and Financial Crimes commission, which is Nigeria’s main anti-corruption agency. The official reason is that there’s an incriminating security report against the gentleman. However president Buhari’s government have insisted that it doesn’t believe the security report. SO they are in this ‘dig, dong’ back and forth, between President’s Buhari’s administration and the upper legislative house. So s it is there’s a stalemate. The gentleman continues to be in an ‘acting’ capacity. That is the official position. Yet another possibility, even though it is impossible to confirm this, is that the gentleman is feared, the nominee is feared by some of the senators, many of whom have anti-corruption hanging against them. Including unfortunately, the senate president. He had a case at the code of conduct tribunal about false declarations of assets. That is a criminal offence in Nigeria and it has political ramifications, because if he’s convicted. He could be barred from holding any elective office. So these are very powerful individuals. Now is it because of politics, it’s hard to say. Is it because there are charges against these powerful individuals, it’s hard to say. My suspicion is that the truth is somewhere in-between.
These senators are publicly elected, accountable officials and it seems surprising that they can get away with such open opposition to tackling corruption, I wonder if that’s a symptom of the broad acceptance of corruption in Nigeria?
I wouldn’t go as far as saying broad acceptance, I would rather say that these individuals, they’ve not been convicted yet, even there are serious charges against them. Many of hem are extremely powerful. They occupy high positions. They can get the best lawyers. However, it’s also the case that whether it’s in India, in Columbia, in Venezuela, you often have individuals who appear to live less than exemplary lifestyles, example representations- but somehow there is that appeal which they have. There is a country that I would rather not mention, but about a third of its members of parliament, or near enough, have criminal charges against their name. So, whilst I don’t excuse what is happening in Nigeria, it is by no means unique. Like I said, these are extremely powerful individuals and unless they are convicted, the rest of us have expressed displeasure, but there’s precious little that we can do.
I suppose Berlusconi comes to mind as an example of the phenomenon you describe.
Yeah certainly. Thank you for reminding me. Regardless of what a good number of people will feel in Italy and outside Italy, Berlusconi was elected to high office on more than one occasion, if I remember well, he was elected prime minister on three or four separate occasions. All the way he was battling one allegation or the other and some of them would make us flinch, but somehow he was elected back into office. Berlusconi is not the only example we could sight.
Absolutely, it’s a very important point. Rather unexpectedly, the senate did recently pass a bill to crack down on money laundering; just last week actually. I t approved legislation that approves it to ask any country where a money launderer is hiding, to help it prosecute that person and it would provide the country in question with evidence that supports a conviction. I wondered if you could tell us more about that. Is it perceived to be a big win by Buhari.
I think by all accounts, whenever it is passed by both legislative parties, what I mean is that the Upper Legislative House has passed the bill, it still has to go to the Lower House, it still has be passed. Hopefully it’ll be passed without any major changes and then it goes through the Executive office, it’ll be…it should be right considered as a major win for the Buhari administration and there is…it’s a bit of a surprise in the sense that I personally that the bill would have gotten the kind of priority that I has. But so much for that, it’s a big win and hopefully it will go a long way in assisting the fight against corruption. That bill is of particular importance to the history of combatting corruption in Nigeria. What I mean by this is that on more than one occasion in the recent past, high profile individual in Nigeria have actually absconded from Nigeria to countries, where they believe the arm of the law could not reach them. A certain high-profile elected officials in Nigeria, a couple of years ago, left Nigeria in very conspicuous circumstances and went to Dubai, believing there was no extradition treaty between UAE and Nigeria, it was free of any possibility of being extradited back to Nigeria. However, what it never reckoned with was that there were targets against them in London and so the metropolitan police reached out to the authorities in Dubai and easily extradited to the UK, where he faced charges and was jailed and imprisoned. He was only just been released a few months ago, back to Nigeria. So what this bill appears to recognise is that corruption often takes place in Nigeria, is perpetrated in Nigeria, but the proceeds are laundered abroad. So, to have recognised the International nature of it now, is a bid step forward. All the while money laundering legislation, has tended to focus on corruption within the territory of Nigeria. Unlike the UK Bribery Act, which has in many respects an extra-territorial view. So, the fact that a UK, a British company in the Maldives, in Australia, commits some act of corruption, does not immune it from facing charges in the UK. We are not there yet with Nigerian legislation, but we accept that they are now looking beyond the territory of Nigeria, I think it’s a big step forward and who knows and we might soon have our own version of the UK Bribery Act, that takes a lot more global view of corruption. But by all accounts this is a big step forward.
But given as you say, money laundering and corruption are effectively almost always international crimes, there has been some frustration in Nigeria (as I understand it) with the failure of asset recover from places like the UK back to Nigeria.
Yes, that has been…the Nigerian government has often expressed of deep frustration with UK based banks and those based in other countries, primarily Luxembourg, Switzerland and a couple of other tax havens. Proceeds of corruption that have been laundered in financial institutions in many of these countries. They have been finding it extremely difficult in some cases impossible, to repatriate these moneys back to Nigeria. The reasons have been plenty, some of the reasons have been that the Nigerian government perhaps has not given it a proper indication as to how those proceeds will be spent. Now there will be those who fear this is slightly patronising and they tend to take that view because why is money being stolen from Nigeria, presumably these banks have the idea that this was stolen funds, but no questions were answered at the time. At the point when this turns out to be repatriated back to Nigeria, all manner of questions then tend to be asked of the Nigerian government. ‘Can you give an account of how this money will be spent?’ ‘Who will be the recipient?’ And so on. This continues to be a deep source of frustration to Nigerians on the part of Nigerian government. So, those are some lingering issues between the Nigerian government and many financial institutions in the UK, which is a prime destination for profits of crime from Nigeria.
Post-Brexit Britain is likely to look towards developing markets like Nigeria to form strong trade-links. Do you think this could be an issue in the negotiation of these treaties?
I would almost certainly think so, that it will be. Brexit has compelled a different set of logic of the British government and so I think they will look at strengthening ties with Nigeria and many other countries in Africa, in Asia and other parts of the world. However, I suspect that for the Nigerian government, on their part they will remain very open to discussing with the British government, all of the recent history of the issues of corruption and the proceeds of crime.
Taking a step away from Buhari’s administration, in recent years over the last half-decade say, what changes has Nigeria made more broadly, to increase KYC checks and tighten it’s financial crime prevention regime?
Ok, now I think in fairness to the banks. What one can easily say that, they have been less care-free about knowing their customers and I think a lot of credit must go to the Central Bank of Nigeria. For implementing a raft of KYC policies. Such that previously, if I wanted to open bank account for my company, all I had to do was just go to the bank and fill in a couple of forma and that was it. Now more it is much more likely that after filling in those forms, the bank officials will investigate it and they would like to know what I do, meet my staff, get to have a nose around. It is still likely that they will open that bank account, but at least they will be seen to satisfy themselves that they’ve placed a visit to the address of that company and tried to form a judgement about the company. It’s still not fool proof, but it has put everybody on their toes that they need to know who their customers are. It wasn’t so, until couple of years ago. So that has gone some way. Has it solved the problem? No certainly hasn’t, we have never solved the problem. But some stops have been taken.
If I were a compliance officer firm doing business in Nigeria, what particular risks, should I be aware of?
Oh, good question. Some of the reasons that you need to be aware of obviously would be corruption risk, you need to be careful about doing business with politically exposed persons and that becomes even more complicated, because politically exposed persons in Nigeria, may not proxies. So you need to be able to go beyond what you are seeing to try and unravel those who might be the invisible hand in this enterprise in this business, that is right there in front of you.
Finally, looking forward to the end of Buhari’s term and beyond, in what direction do you think Nigeria is travelling with regards to it’s financial crime protection regime?
I think between now and the end of President Buhari’s administration which will be in two year’s time in 2019, he will possibly be up for re-election. But between now and then,, I think that the successes that will be made in terms of combatting corruption, will be measured. And I say measured because we see a lot of movement, but in terms of how effective it has been, we haven’t had a great deal of convictions – which is a tangible way of measuring success. There has been a lot of hot air against corruption. In terms of lasting legacies, for President Buhari against corruption, maybe the proper way to look at it, would be that he has made the fight against corruption, a political contender. So that successive governments will find it difficult to ignore. So in other ways, successive governments whether he seeks re-election or not will have to take a position- do you have a programme to combat corruption, or not? I suspect that, that will be part of his legacy, rather than the number of officials that he was able to seek convictions for, because right now, two years into his four-year term, the number of persons that have been convicted are few, given the number of persons who have been charged to court- they are few! SO that says a lot. To the extent that corruption is there as a political issue, you have to talk about it, you must take steps about it. I think that will be his real lasting legacy.
Kunle Ajagbe thank you so much for joining us.
That was Kunle Ajagbe talking to me about his special report ‘Nigeria at Half-time’, co-authored with Viv Jones of Everlad Sutherland LLP. It’s live now on KC360 and is certainly worth a read. That’s all for today, but keep up to date with us at KYC360.com for daily update and daily insight into the latest money laundering methodologies and emerging financial crime risks. I’m Amos Wittenberg, thanks for listening.
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