Saturday, 14 May 2011
Being a paper presented by
By DR. (MRS.) FARIDA WAZIRI AIG (rtd), FWC, OFR.
The Economic & Financial Crimes Commission
At the United Nations Conference on Least Developed Countries (LDC – IV)
Let me begin this paper with a statement of gratitude for giving me the privilege to make a presentation on the important issue of Challenges of increased capital flow to Africa in the face of the current reforms by the Economic and Financial Crimes Commission of Nigeria, an Anti-Corruption agency, which are yielding results that will show the way in the road ahead. I feel extremely honoured. The focus of this paper touches on the core of current efforts to addressing corruption in corporate governance which has been an albatross in the development efforts in the Africa continent.
Before the anti-corruption regime of the last couple of years which has brought Nigeria to international spotlight, poverty, unemployment and poor infrastructural development remain a common decimal in both the public and private life of the nation. Her major challenge and albatross has been the issue of corruption and its debilitating appendages - bribery, graft, fraud, manipulations and nepotism. Hence, the general assumptions and position amongst economic pundits and international stakeholders is that corruption is indeed the bane of Nigeria’s development as a people and as a society. Its attendant effects have been so deep- seated that it has stunted growth in all sectors of Nigeria’s socio-economic life. Against this back drop, the investments apathy arisen from the fear of being conned by intending foreign investors and the attendant high rate of poverty and stunted economic growth has made the need for an increased capital flow to Africa a huge challenge.
Background of the Anti- Corruption Crusade
Over the years, Nigeria’s external image suffered setbacks as it consistently remained the world’s second most corrupt nation in the world in 2000, 2001 and 2002 (TI, 2005). In 2005, it moved to the sixth position, showing a positive but minimal dive towards an improvement of sort but obviously still remains among the most corrupt nations of the world. This development earned Nigeria a stigma in the international community with a considerable apathy against her economic environment as the world became reluctant to invest in Nigeria for fear of fraud. Suffice to say, the low turn of investment locally and internationally has culminated into gross unemployment and poverty engendered by economic mismanagement and endemic corruption. It is therefore imperative to state that the escalating rates of poverty in the country caused by poorly implemented economic policies, misappropriation of funds, among others, culminate in state and mass poverty, the fear of which drives people to capitalize on opportunities for self enrichment.
Closely related is the societal pressure exerted on the public office holders and few affluent individuals by members of their nuclear and extended families to help them in one way or the other to survive the scourge of poverty. Hence, misappropriations of funds across the rungs of public institutions pervade the nation’s public sector. Although, corruption and financial crimes is not peculiar to Nigeria, it is a global phenomenon bedeviling almost all the countries of the world. Corruption related crimes such as money laundering and advance fee fraud perpetrated by Nigerians affect foreign nationals and nations that relate with our country. Consequently, Nigeria came to be viewed with suspicion as a safe haven for global criminals and a conduit pipe for the manufacture, orchestration and exportation of crimes such as money laundering and internet scam hence the abysmal low level of capital flow from foreign investment with its tolls on the Africa continent.
It was against this background that the civilian administration of President Olusegun Obasanjo instituted the anti corruption campaign with the establishment of the Independent Corrupt Practices and Other Related Offences Commission, ICPC and later the Economic and Financial Crimes Commission (EFCC) to among other things, curb corruption and other forms of economic crimes and sanitize the Nigerian business environment with a principal object of attracting investors to the country and indeed Africa.
The Establishment of the EFCC
The EFCC was established in 2002 by an Act of the National Assembly which was later amended in 2004. It was borne out of the determination of the Federal Government to root out corruption and sanitize the Nigerian economic environment by enforcing all economic and financial crimes laws.
The Act mandates the EFCC to combat financial and economic crimes and the Commission is empowered to prevent, investigate, prosecute and penalize economic and financial crimes. The Commission is charged with the responsibility of enforcing the provisions of other laws and regulations relating to economic and financial crimes, including the Failed Banks (recovery of debts) and Financial Malpractices Act of 1994, among others.
Also, the EFCC is charged with and has been investigating cases of abuses of office, official corruption, bribery of government officials, diversion of public funds through fraudulent award of contracts, corruption in land allocations, tax fraud, illegal bunkering, terrorism financing, capital market fraud, cyber crime, banking fraud, etc. With a mission to curb the menace of corruption that constitutes the clog in the wheels of progress; protect national and foreign investments in the country; imbue the spirit of hard work in the citizenry and discourage the crave for ill-gotten wealth; identify such ill-gotten wealth and confiscate them; build an upright work force in both public and private sector of the economy; and contribute to the global war against financial crimes and terrorism financing; the advent of the EFCC has impacted positively on Nigeria’s global acceptance being a turning point in the country’s anti-corruption crusade.
The Strategic Reforms
Since its establishment, the EFCC has taken the bull by the horns working tenaciously to fulfill its mandate. Under the current leadership, it vigorously pursues its mandate of investigating cases ranging from high profile corruption cases, advance free fraud, money laundering, tax invasion, contract scams, identity theft, illegal bunkering, bribery, looting and foreign exchange malpractices. The Commission has made concerted efforts identifying, tracing and freezing, confiscating, or seizing proceeds derived from such illicit activities. EFCC, from inception, has also played host to the Nigerian Financial Intelligence Unit (NFIU), vested with the responsibility of collecting suspicious transactions reports (STRs) from financial and designated non-financial institutions, analyzing and disseminating them to all relevant government agencies and other FIUs all over the world.
So far, the Commission has been able to and still recording successes in several areas of its mandate. Among others, it has recorded several convictions on corruption, money laundering, oil pipeline vandalism and related offences. Assets and money worth over $11 billion have been recovered from corrupt officials and their cohorts. The Commission is tenacious with over 65 high profile cases at advanced stages of prosecution in several courts in Nigeria and over 1500 other cases in court and secured over 600 convictions. The Commission successfully prosecuted one of the biggest fraud cases in the world involving about $242 million arising from a bank fraud in Brazil. It has increased the revenue profile of the nation due to its collaboration with the Federal Inland Revenue Service and the Seaports and has recovered revenue in excess of N75 billion,(over $500million US Dollars) for government. * See tables on record of investigations/convictions/recoveries
Record of Investigations/Convictions (2003 – March 2011)
S/NO Class Of Cases Number of Convictions Under Trial Under Investigation
1. Politically Expossed Persons (PEPS) /High Profile Cases 36 75 105
2. Advance Fee Fraud (AFF) 428 789 445
3. Money Laundering (ML) 15 163 26
4. Cyber Crime/Internet Fraud 137 476 186
TOTAL 616 1,503 762
Table of Recoveries (June 2008 – March 2011)
Sector NAIRA (N) DOLLARS ($)
1. Banking N650 Billion $4.3 Billion
2. Taxation N3.5 Billion $23.3 Million
3. Local Business/Firms N150 Billion $10 Million
4. Multi-national Penalties N36 Billion $240 Million
5. Others (Forfeitures, AFF etc) N135.5 Billion $903.3 Million
6 TOTAL N975 Billion $6,500,000,000
Specifically, the Commission recorded some landmark achievements which have provided a veritable platform for certain reforms that will make Nigeria a safe business environment for foreign investors thereby improving on the capital flow to Africa with Nigeria as the benchmark. These among others include:
- Cleansing of the Banking Sector: EFCC has contributed to the sanitization of the banking sector through investigation and prosecution of Chief Executives and other officials for money laundering and other frauds. Bank failures which were rampant in the past have now become a thing of the past. Over $5 billion bad loans were recovered and already one of the Chief Executives of the banks was a few months ago convicted and sentenced to imprisonment while we recovered about $1.5 billion US Dollars from her.
- Reorganization of critical agencies of government: The Commission has been in the driver’s seat to clean up and reorganize key agencies and institutions of government in Nigeria. Its efforts have culminated in the change of leadership of the most critical agencies such as the Nigerian Police, the Customs and the National Drug Law Enforcement Agency (NDLEA). The EFCC, particularly under the incumbent leadership, is equally championing vital reforms in order to stamp out corruption.
- Prosecution and conviction of corrupt top public officers: The Commission has successfully prosecuted and secured convictions against top government functionaries, including the former chief law enforcement officer of the country, the Inspector General of Police (IGP) . Investigation by EFCC has caused the removal from office and prosecution of a former president of the Senate, governors, ministers, parliamentarians, etc.
- Recovery and return of proceeds of Advance Fee Fraud (419) Crime: The Commission over the years has turned on the heat against fraudsters leading to the prosecution and conviction of some Advance Fee Fraud kingpins including the celebrated $242 million case involving a Brazilian bank. This feat has also been repeated in other cases involving international victims.
- Partnership with Microsoft against Internet Scam and Identity theft: EFCC has deployed the latest technology and best available software to combat cyber crimes and is currently working in partnership with Microsoft to develop more appropriate software to aggressively and effectively address the problem.
- Capacity building for Law Enforcement and Judicial officials: The Commission believes in international best practices in all its area of operations. Hence, there has been a sustained programme of training for the officers of the Commission to better equip them for the arduous task of fighting corruption. As such the Commission has invested in a state of the art training institute to facilitate periodic and regular training. Also, assisted by donor agencies, the Commission has also fostered training for designated judges handling cases of corruption, money laundering and other financial crimes.
- Sensitization and public campaign Programme: The current leadership of the Commission on assumption of office instituted an aggressive programme of sensitization of the public and whistle-blowing to ensure that the Nigeria publics buy-in to the anti-corruption fight through the Anti-Corruption Revolution Campaign (ANCOR). This has engendered mass participation in the anti graft campaign which proceed is evident in the outcome of the recent general election, adjudged as one of the freest in our nation.
- Creating direct interface with off-shore investors and entities that can be scammed: We have created the Transactions Clearance Platform (TCP). The TCP which can be accessed at our website, www.efccnigeria.org, is designed to do basic due diligence for anyone who gets a business proposal from Nigeria. The TCP will confirm the authenticity of the business, the individuals behind the business and the track record of the business. It will not confirm the profitability or otherwise of a business or indeed help in procuring license and approvals. In the past 18 months after its existence, it has processed over 17,000 requests. Using sophisticated tools of detecting potential cybercrime, it has also sent advisory mails to over 3 million foreigners that would have been defrauded of billions of dollars in proposed transactions worth over $12 billion dollars.
From the foreground, it is obvious that the EFCC has remained a major anti- corruption agency in Nigeria that has earned the confidence and applause of the international community in Nigeria’s fight against corruption. However, the challenge of increased capital flow to the Africa continent still remains an issue.
Attendant Results of the Reforms
With the improved financial and economic environment of the country, it appears the road ahead promises some prospects for Nigeria and Africa at large in attracting foreign investors. The EFCC through strategic, effective and sustainable commitment to the crusade has engendered a number of positive steps in the right direction that will eventually open the doors of the country to foreign investors. These include:
- Confidence in Financial Institutions: The Commission’s concerted efforts and collaboration with other regulatory agencies in sanitizing the banking sector and the stock market have not only gained more points for Nigeria in the Transparency International’s global corruption perception index, but have yielded a whopping sum from debtors of the non-serviced loans facilities across the troubled banks. This in effect has boosted the local and international confidence in the county’s financial sector with Nigerians in Diaspora yearning to return with viable investment profile. This is indeed a step in the right direction.
- Economic and Political Stability: The Commission recognizes the need to adopt adequate measures to further forestall irregularities that may undermine democratic principles and practice which are all critical in the war against corruption because it cannot address the issue of corruption, poverty and security without giving priority attention to good leadership and management that would bring about transparency and accountability in governance. This no doubt prompted the EFCC with the assistance of the donor agencies to vigorously drum up support for enforcement of the anti- graft laws and other regulations relating to transparency and accountability by public officers to curb corruption in governance. This has led to a measure of stability in the economic and political landscape as a viable democratic culture evolves. This is evident in the just concluded electoral process in the country. The exercise is widely hailed as free and fair by both local and international monitors and it is widely believed that the process with will rekindle global confidence in Nigeria.
- Passage of Anti-Terrorism Law: Terrorism financing and money laundering are twin most deadly financial crimes that have portrayed the country in bad light as foreign investors would not have anything to do with Nigeria. But with the active implementation of the Financial Action Task Force (FATF) 40+9 and the passage of the anti-terrorism law by the Nigeria government, that has changed. Also, the Commission succeeded in breaking the link between tax evasion and money laundering/ terrorist financing through Project Eagle claw. Over $20 million US dollars has been recovered to government coffers through this effort.
A lot of grounds have been covered in the last few years. Many of you will agree with me that the business environment of our country is friendlier today than ever before. Investors mostly from the emerging markets of China, India, Brazil and South Africa are daily closing deals worth billions of dollars. Their investment can be found in all the key sectors of the Nigerian economy, and this is despite the debilitating infrastructure gaps. Even outside the shores of our country, especially on the west coast of Africa, Nigerian companies are setting up shops and doing well. The President of Sierra Leone, Koroma was recently in Nigeria to woo Nigerian investors to come help rebuild the economy of his country. These indices are indicative of a turnaround in the global fortunes and image of our country. The challenge, in my candid assessment, is to deepen current initiatives and consolidate the achievements of the recent past to guarantee their sustainability. Our dream of joining the 20 most developed economies by the year 2020 is not a pipe dream. It is realizable but we cannot attain it if we allow corruption to remain a de-marketing element to our rebranding efforts.
Thank you for your attention
Source: The Economic and Financial Crimes Commission (EFCC)