Last week, the US government returned $311 million to Nigeria. The money is part of the $3 to $5 billion stolen by the late dictator Sani Abacha during his military rule. To date, Nigeria has recovered $2.6 billion, with the bulk of this, $2.017 billion, recovered under President Olusegun Obasanjo. Cases are still pending before the courts in other countries to recover the rest of the loot.
Since 1980, an estimated $1.3 trillion in illicit funds has been lost from sub-Saharan Africa, with Nigeria as one of the top four emitters of illegal flows in Africa, along with South Africa, Democratic Republic of Congo, and Ethiopia
Here’s how it happened
After Abacha’s death in 1998, Abubakar Abdulsalami – head of the interim government that returned Nigeria to a democratic government after 16 years of military rule – set up the Special Investigation Panel (“SIP”) to investigate the theft. In its November 1999 report, the panel found a total $1,491 million, and £416 million was stolen, mostly in cash, chiefly with the help of Ismaila Gwarzo, the then National Security Adviser, and Abacha’s oldest son, Mohammed.
Gwarzo was ordered to authorise false funding requests for security operations or equipment and obtain the funds from the Central Bank of Nigeria (CBN). The cash remitted to Gwarzo was taken to Aso Villa, and laundered by Mohammed through Nigerian banks, and Nigerian or foreign businessmen to accounts belonging to his children and associates. The report also noted 36 instances when the funds were transferred directly from the CBN to accounts abroad, held by offshore companies owned by his associates, Nigerian or foreign businessmen who then transferred these funds to Abacha’s associates.
Though no evidence was found, it was common knowledge that Abacha in exchange for his approval on contracts exceeding $50,000 would take bribes of up to 40% of the contract price.
Replicating the Obasanjo administration’s success in Switzerland
Through a letter rogatory, a legal term for a formal request seeking legal assistance from a foreign government, the Obasanjo administration requested an interim freeze order directed at five Swiss banks. The orders were granted, and Switzerland requested that the Nigerian government present a formal request for mutual legal assistance, which once accepted by the Swiss government, enabled them to confirm the freeze orders. However, several legal hurdles remained between Nigeria and the loot.
Domestic crime laws limit mutual assistance
One such hurdle is that mutual assistance treaties are limited by domestic law on the crime. The Swiss authorities, after freezing the accounts, could not provide the information needed to identify other assets in Switzerland and trace those that had been transferred to Luxembourg, Lichtenstein, Jersey British islands, Jersey US and the UK, because appeals had been lodged by the Abacha family, and the investigators had a legal obligation of confidentiality to both parties. Similarly, Luxembourg on receiving a Letter Rogatory evidencing 7 transfers of up to $32 million within its jurisdiction, froze eight accounts totaling $630 million but informed the Nigerian government that it could not institute criminal proceedings because the charge of money laundering was directly associated with drug trafficking under its laws.
The administration found a way around this by choosing to institute civil proceedings and filing a complaint before the Attorney General of Geneva under the Swiss penal code, as a victim of the crime being investigated, seeking damages. This strategy, born from a thorough understanding of the Swiss criminal justice system, deviated from the diplomatic lines of the letter rogatory and mutual assistance and resulted in the total freezing of $645 million across 130 Swiss banks by the end of 1999. If the administration had relied on mutual assistance, alone, it would have taken until 2003 for Nigeria to receive the evidence needed to trace and freeze the funds in other jurisdictions, after the Swiss authorities had rejected all the appeals by the Abacha family.
Burden of proof for criminal convictions
Another legal issue is the requirement for a criminal conviction for confiscation and the onus of proof in most jurisdictions. In most jurisdictions, where confiscation of assets is requested, the burden is on the prosecuting party to prove the criminal origins of the assets or cash, and this requirement demands that it be evidenced to the last cent. This strict requirement is double-edged in that it protects innocent citizens from overreaching governmental authorities, but it also makes it nearly impossible to recover assets in cases with the Abacha organisation’s reach. Furthermore, most jurisdictions require that conviction precede confiscation, and while there was evidence of Abacha’s crimes, there was yet to be a conviction.
Under the Swiss penal code, authorities had an obligation to investigate any allegations of money laundering within the state and could prosecute members of a “criminal organisation” solely on evidence that part of the criminal activity had taken place in Switzerland. While evidence of criminal activity was clear from investigations by Swiss authorities, it was critical to prove that Abacha and his associates fulfilled the requirement necessary to be called a “criminal organisation” according to Swiss law.
It was a novel idea for a head of state and his associates to be considered a criminal organisation but based on the definition, “as one who keeps its structure and personnel secret and pursues the aim of, inter alia, obtaining income by criminal means”, Abacha and his associates qualified. Proving this, reversed the burden of proof, making it the task of the criminal organisation (Abacha and associates) to show that the assets subject to confiscation were not connected to criminal activity in any way. Furthermore, this route did not require criminal conviction for confiscation.
Shortly after the freeze orders in Switzerland, the first money laundering suspect, an Indian businessman, was indicted of forgery. His indictment granted Nigeria access to the evidence against him per the Geneva rules of criminal procedure, opening the floodgate for requests for mutual assistance on investigations into, and the recovery, of other assets in Europe.
International legal cooperation
Curbing money laundering requires cooperation at the international level and the efficacy of the legal systems and authorities’ cooperation play a definite role. The Swiss authorities were very cooperative, with the examining magistrate travelling twice to Nigeria to examine witnesses and collect evidence. The cases began under the Swiss Attorney General, Bernard Bertossa in 1999 and criminal charges against members of the criminal organisation were also brought by his successor Daniel Zappelli in 2003.
Following the request to Luxembourg, even though Luxembourg could not initiate criminal proceedings, it ensured that the evidence needed was transmitted to Nigeria less than three months after receiving the request, before any appeals could be entered. The evidence along with that obtained in Switzerland led to the freezing of accounts in more than ten banks in Liechtenstein of over $200 million.
Contrast briefly with the response from the UK that had been identified as the domicile of the bulk of the looted funds. In June 2000, a request for mutual assistance was lodged at the UK’s Home Office; in May 2001, the request was granted, after the Abacha family had the opportunity to file allegations against Nigeria; in December 2004, requested evidence was finally transmitted to Nigeria. However, no investigation was initiated by the UK authorities into the location of the funds laundered through London banks, no assets were frozen, thus, the transmitted evidence was severely lacking, rendering the entire exercise unprofitable.
Curtailing illicit outflow
These issues faced by the Obasanjo administration remain in play today across several countries, and future administrations would have to take proactive and innovative steps in navigating them. Mutual assistance, though notoriously slow and with dubious success, is the lowest-hanging fruit that can open channels of communication. In a study by the Global Forum on Transparency and Exchange of Information for Tax Purposes, Western countries were two to three times more likely to make requests for information than their African counterparts. Also, future administrations must identify and initiate the most promising proceedings – civil or criminal – in the relevant, cooperating jurisdictions.
Since 1980, an estimated $1.3 trillion in illicit funds has been lost from sub-Saharan Africa, with Nigeria as one of the top four emitters of illegal flows in Africa, along with South Africa, Democratic Republic of Congo, and Ethiopia. Most of these outflows stem from resource-exporting industries (in Nigeria, oil & gas), where the high volume of exports can provide sufficient cover for money laundering. Given the tedious process of recovering looted funds, drafting laws, policies and regulatory measures to curtail illicit outflows, with precision, and significant scrutiny of such trade agreements are vital to getting Nigeria back on its feet.
SOURCE:BUSINESS DAY
