The Economic and Financial Crimes Commission’s (Efcc’s) Critical Role in Growing the Economy

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Monday, 16 May 2011
PAPER PRESENTED TO THE NIGERIA-BRITISH CHAMBER OF COMMERCE BY DR. MRS. FARIDA WAZIRI, OFR ON 7TH MAY 2011
My brief is to discuss the role of the EFCC in growing the Nigerian Economy. I intend to present an overview of the historical background of the Commission, discuss its mandate, its achievements, the criticisms to which it has been subjected to and the key initiatives that have been introduced under my watch. I trust that in telling the story of the Commission and the lessons we have learnt in setting up the EFCC and running it, same will be of some use. Were I to be asked the question of the role of the EFCC in the Economy, my answer will run thus: “To provide financial security and provide a level playing field in the economy for all stakeholders”. My discussion will therefore establish how the activities of the Commission has provided that financial security and provided a level playing field.
At the onset, we must understand that corruption is the biggest killer disease in Africa. Corruption apart from distorting key macroeconomic indices ensures that basics such as Medicare, water, schools, roads and other infrastructure are unavailable.
By way of proemial remarks, it must be stated that at no time in the history of Nigeria has so much been demanded from a single institution or agency of Government like the Expectations from the Economic and Financial Crimes Commission. The Commission has assumed a larger than life status and has grown to be perceived in the eyes of Nigerians as a solver of all problems even those outside its mandate. The reason for these misplaced expectations may not be unconnected with the failure of most institutional structures in Nigeria.
The historical background to the existence of the Economic and Financial Crimes Commission derives from the recognition from the late 1980’s of the need to create a special interventionist agency to investigate economic and financial crimes. At that time, the menace of Advance fee Fraud, with its negative impact on Nigeria had been recognised. At the same time, it was recognised that the sophistication of economic crimes were such that there might be the need for a special Commission to handle its investigation and prosecution as opposed to the regular law enforcement agencies.
By 2002, Nigeria found its way in the Financial Action Task Force’s list of Non-Cooperative Countries and one of the conditions for being taken off that list was compliance with Recommendation 26 of the FATF’s then 49 recommendations, which required the creation of a Financial Intelligence Unit. Consequently, the EFCC was created in 2002 and Nigeria’s Financial intelligence Unit domiciled therewith. The Statute creating the EFCC was first enacted in 2002 and subsequently re-enacted in 2004. The EFCC started operations in 2003.
The Statute creating the EFCC vested it with the mandate to:
1. Investigate and prosecute economic and Financial Crimes. Section 47 of the enabling acts sets out financial crimes to cover several issues such as bank frauds, tax evasion, capital market fraud, futures market frauds, etc.
2. Be the national coordinator for anti money laundering.
3. Be the designated Nigerian Financial Intelligence Unit.
4. Implement the provisions of the Advance Fee Fraud Act, Failed Banks Decree, Money Laundering Act and the Banks and other Financial Institutions Decree.
From a practical point of view, the EFCC sees it s mandate as the provision of financial security for the Nigerian economy. It implements the mandate through tackling those menaces such as official corruption, tax evasion, bank fraud, Advance fee fraud, illegal bunkering and several other shades of economic crimes that can distort key economic indices and inhibit growth. It also seeks to create a level playing field for all stakeholders within the Economy.
THE SCORECARD OF THE EFCC
Commentators on the EFCC tend to be astounded when faced with the performance indicators posted by the Commission the relatively harsh operating terrain. It has grown to become the premier anti-corruption agency in Africa and indeed the level of recoveries it has made is arguably unparrarelled in the history of any agency in the world.
In the area of convictions, the Commission has secured over 600 convictions. An analysis of the pattern of convictions shows that the bulk of them have come from areas of Advance Fee Fraud and allied offences arising there from. There have been other high profile convictions involving politically exposed persons such as Tafa Balogun, Diepriye Alamiesigha, Bode George, Cecilia Ibru and Lucky Igbinedion among others. At the time of writing, there are pending before various courts over 1500 cases ranging from Advance Fee fraud, official corruption, Money laundering, illegal bunkering, abuse of due process, tax evasion, and other shades of economic crimes.
The prosecution and subsequent conviction of Chief Bode George marked a watershed in the history of the Commission. Chief George a chieftain of the ruling People’s Democratic Party, alongside principal officers of the Nigeria Ports Authority was convicted and sentenced to2 years imprisonment. The importance of this lies in the fact that this was the first time in the history of the Commission that a high profile case involving a politically exposed person went through the full process of trial and conviction without recourse to a plea bargain. A process that was equally affirmed and upheld by the court.
The Commission has recovered over $11 billion since its inception in 2003. The bulk of this, that is, $6.5 billion was recovered in the last two years alone. These recoveries include some part of the Abacha loot as well as recoveries arising from the bank sanitisation exercise which the Commission embarked on with the Central bank of Nigeria. Expectedly, a substantial portion of these recoveries are Government Funds that have been siphoned and criminal proceeds from bank frauds. It will do us well to explain the avenues of recovery and the use to which this recovered fund are channelled. Restitution may not be the primary motive of the work of the commission but it is an important incidental of the investigation and prosecution of criminals. Thus in cases of official corruption and theft of Government funds, the proceeds of the crime are remitted to the office of the Accountant General of the Federation of Nigeria or that of the applicable State Government, as required by public service rules. Where the victim is a private entity, the proceeds of the crime are given to such private entity. See table for record of recoveries
Table of Recoveries (June 2008 – March 2011)
 Sector NAIRA (N) DOLLARS ($)
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
The Commission has aggressively sensitised the general populace and politically exposed persons on the ills of corruption. Whereas hitherto, public funds are misappropriated with impunity, there is a growing understanding of its negative impact. Most importantly, the cliché that “EFCC is watching” has continued to gain grounds. There has been a gradual reduction in corrupt practices that were hitherto accepted and taken for granted.
As indicated earlier, the history of the Commission cannot be divorced from the efforts of Nigeria to be delisted from the Financial Action Task Force’s list of Non cooperative Countries and Territories. In this respect, the results have been singularly successful. The creation of the Nigerian Financial Intelligence Unit, domiciled with the Commission has led not only to the delisting of Nigeria but also the membership since 2007 of the prestigious Egmont Group of Financial Intelligence Units. Nigeria continues to play a significant role in the Egmont Group and indeed is nurturing some other West African countries to assume membership. Further, the Commission played a key role in the establishment of the West African Regional style FATF agency, GIABA, and key staff including the incumbent Director General were drawn from the Commission.
All the foregoing success indices of the Commission have led to an improved image of Nigeria and Nigerians. The decisive steps taken by the Commission in combating Advance Fee Fraud, has translated into its being a key member of the International Mass marketing Fraud Working Group. Further, the county’s ranking in Transparency Internationals’ list of corrupt countries has continuously improved.
The ratio of recoveries and convictions in the last two and a half years under my watch constitute about 60% of the total success story of the Commission. This is not accidental but a function of a change in direction and insisting that the mandate of the Commission must be carried out within the rule of law. Our experience has been that working within the limits of the law has challenged our capacity and led to more in-depth analysis and investigations. This has therefore meant that cases are more vigorously investigated, leaving no loop hole for defence attorneys to take advantage of. See table on record of investigations/ Convictions.
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
CRITICISM OF THE EFCC
Inevitably, the Commission has continuously found itself in the eye of the storm as a result of executing its mandate of providing financial security for the Nigerian Economy. This is only to be expected in a country boasting of Nigeria’s diversity.
The Commission is serially being criticised for operating outside the bound of law and infringing human rights. While this is arguable, under my watch there has been a concerted effort to respect the rights of individuals and ensure that suspects are charged to court promptly, eschewing illegal detentions. As I have pointed out above, this has led to greater operational efficiency within the Commission.
Secondly, the Commission is perceived to be a tool of any incumbent president in dealing with political opponents and it is invariably accused of selectivity in investigations and prosecutions. The position of the Commission has always been that in a country where corruption is entrenched, it is impossible to commence the prosecution of all and sundry at the same time. In any case, the issue of selectivity is adjectival in nature under the circumstances. Most suspects investigated and commentators who make these allegations fail to bring forward the defence that the suspect in a particular case is not corrupt. This will appear to be focusing on side issues rather than the substance of the matter. The just concluded elections have again brought to the fore the impartiality of the EFCC under my watch and under the present administration. No one can today stand to accuse EFCC or myself of being used for political witchunt or thwart their political ambition. This is a clear break from the stigma of the past. This approach has in no small measure boosted professionalism in the operations of the Commission but has equally yielded more results as the table below will show. Our decision to stay away from the political terrain and concentrate on educating the masses has invariably led to the rejection of more of those we are prosecuting at the polls. See Table below.
S/NO PEPS Standing Trial As At 2007 Polls As At 2011 Polls
1. PEPS Standing Trial and contested Election 14 15
2. Ex-Governors standing trial, contested and won 7 2
3. Ex-Governors standing trial, contested and lost 0 7
4. Other PEPS standing trial, contested and won 7 3
5 Other PEPS standing trial, contested and lost 0 12
 TOTAL 28 39
       Figure Of PEPS Standing Trial And Contested At The 2007   And 2011 Polls
Thirdly the Commission stands accused of playing to the gallery. It is always pointed out that suspects are arrested, investigated and brought to court with so much fanfare and thereafter the case appears to wither away. While these points may be valid, it does not amount to playing to the gallery and indeed shows a misunderstanding of the mandate of the Commission. Rather, this state of affairs exposes the structural weaknesses in the administration of justice in Nigeria. The Commission is not a judicial body and indeed should not be a judicial body. Its functions are limited to investigation, filing charges in court and thereafter diligently monitoring the prosecution of the case. In practice, defence attorneys appear to have perfected the art of delaying trial of cases rather than addressing the substance of the charges against their clients. Consequently all shades of interlocutory applications are filed and litigated all the way to the Supreme Court and back. In virtually all of the cases of politically exposed persons that the Commission has filed, these interlocutory applications tend to take upwards of 5-6 years to dispose of and the impression created in the minds of most observers is that the Commission is only playing to the gallery and was never serious ab initio with the cases. The duty lies squarely on the doors of the judiciary in expediting criminal trials. Justice is not served by these delays. To date, the Commission has over 50 of such cases of politically exposed persons that has stagnated in the courts.
THE CHALLENGES OF THE EFCC
As indicated earlier, the commission operates within a rough terrain and it is only its doggedness that has ensured the results that it has posted.
The key challenge of the Commission has been the absence of the requisite favourable legislative framework necessary for the success of an anti-corruption war. The first of these constraints is the absence of a special court for the trial of cases of corruption and financial crimes. We have already noted the debilitating effect of the slow pace of trials. Were there to be a special court as we have always advocated, then the ratio of convictions in high profile cases and the resultant multiplier effect on the anti-corruption war will be enhanced.
Secondly, there is the need for a non-conviction based assets forfeiture law. Indeed the barometer for measuring the seriousness of any country is the enactment of this piece of vital legislation. Unfortunately, Nigeria does not have this legislation and several attempts to introduce it have proved futile. If the Commission can boast of a recovery of $11 billion in 7 years, without this law, then definitely it will do better once the legislation is enacted. The case for the law becomes stronger in view of the unnecessary delays in trials. Once it is appreciated that corruption and economic crimes thrive because the criminal is interested in the acquisition of wealth, then part of the anti-corruption strategy must include legal structure for depriving the criminal within the process of trial of the illicit wealth. Most politically exposed person have political immunity and have the means to evade or delay trials. However where their assets are sequestered within the bounds of the law, it is in their interest therefore to either not loot public funds or to avoid delaying trials.
The next challenge the Commission faces is weak funding and capacity building structure for its staff which is a derivative of the former factor. It must be accepted that fighting corruption is expensive. It must also be accepted that the investigation of specialised economic crimes can only succeed where the officers are suitably and adequately trained.
Outdated laws within Nigeria have not been helpful to the anti-corruption fight. Nigeria’s evidence Act was enacted in 1945 and is out of touch with modern day commercial realities. For instance, electronically generated evidence is not admissible and in today’s world, it makes the job of establishing criminality a herculean task. Further, the Penal and Criminal Codes of Nigeria are over 50 years old and probably drafted for an age when the country faced “lesser” crimes such as simple theft, house breaking, et al. However the world of commerce and the society has grown more sophisticated. It would have been unimaginable to the draftsmen of the Criminal and Penal Code that anyone can steal in billions of Naira. The practical effect is that not all crimes are recognised. The sanctions contained in these two pieces of legislation are insufficient and this leads to public outcry when a convict who steals billions of Naira is convicted and sentenced to jail terms of two years or even less.
Our experience with certain countries has not been palatable. Consistently countries have not been too cooperative in retrieval of stolen funds and it will appear that peculiar national interest guides cooperation with us. We must understand that the ill effects of corruption does not only affect the origin of the illicit funds but also the receiving countries in the sense that in both locations, funds that have no bearing on productive ventures has either left the economy or has been injected into it. Consequently, there is a major distortion in macroeconomic indices and this should not be accepted. Countries must work better together.
According to the UN, around $148 billion is annually stolen from Africa by the political leaders, the business elite and civil servants with the collusion and conivance of banking industries in Europe and other developed economies. This is staggering!
RECENT KEY INITIATIVES OF THE EFCC UNDER MY WATCH.
When I assumed the chairmanship of the Commission in June 2008, some of the key issues that have a bearing on this discussion engaged my attention and I promised they will define my tenor:
1. Sanitisation of banks. This was premised on the understanding that banking and financial institutions are the platform for laundering and the flight of ill gotten wealth.
2. Aggressive investigation and prosecution of cases of tax evasion. Under section 47, of the Act establishing the Commission, tax evasion is an economic rime and there was the need to break any nexus it may have with money laundering.
3. Fight Cybercrime and the scourge of Advance Fee Fraud using smart technology.
4. Actively implement the 40 plus 9 recommendations of the Financial Action Task Force.
5. Initiate legislative intervention in key areas that will aid the anti-corruption fight.
Arising out of these commitments, we embarked on tax investigation to establish the criminality involved therein and so far have recovered over $20 million for various levels of Government. Charges are being prepared and will be filed in court against the affected companies and their directors.
We were also involved in the Central Bank of Nigeria’s bank cleansing exercise and to date have recovered close to $5 billion dollars of bad loans for the banks. Charges have been filed against several bank executives and stock broking firms. As we speak now, some of them are back in our custody preparatory to filing fresh charges against them. Already, one of them, that is the former Chief Executive of Oceanic bank has been jailed.
From a point of view of 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 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.
The Commission has also launched an Anti-Corruption Revolution Campaign (ANCOR). The leit motif behind the campaign is not only to sensitise Nigerians about the ills of corruption but also to get them actively involved in the work of the Commission as whistle blowers.
RECOMMENDATIONS
In the light of the above, there is the urgent need for the Federal Government to tie the release of bulk funds from the excess crude account to either tiers of government to specific projects that would not only be monitored to completion but one that would impact positively on the socio-economic development of the states. This, to a large extent will also help curtail the incidents of capital flight from our economy.
For greater effectiveness and results-oriented anti-graft campaign, I will like to re-emphasize here again the urgent need for special or designated courts to prosecute corruption cases. This we believe will help solve the problem of endless delays we face today in the trial of PEPs. This is more so because a special problem deserves a special solution.
I thank you for your attention and look forward to further discussions arising from your questions.
Source: The Economic and Financial Crimes Commission (EFCC)
 
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