Money Laundering and Trans-Organized Financial Crimes in Nigeria.
Nigeria loses US$600 million annually to money laundering. Between the mid-1980s and 1999, Nigeria lost US$100billion to money laundering. In the so acclaimed democratic era, between 2001 and 2004, the country lost an estimated US$25billion to money laundering. Nigerians who specialise in international money transfer have also extorted about US$357,142,857 from overseas victims. However, such illegal inflow and outflow of huge amount of money that has contributed to the impoverishment of the Nigerian economy cannot be easily perpetrated, without the cooperation, collaboration or at the very least, connivance of the professionals, particularly accountants.
Yet, the various statutory provisions, companies’ and professional bodies’ Acts locally and internationally, all combined to place the responsibility on the accountants and auditors to detect and report cases of suspected money laundering and other financial crimes to the regulators. This paper… utilizes archival documents to provide the evidence which suggests the role of the accountants in acting as the advisers and vectors of the ruling elites, politicians, public officials and their multinational corporations and other foreign capitalists’ collaborators in siphoning the collective wealth of Nigeria into the individual private bank accounts abroad. The paper further provides the evidence, which suggests that, the successive Nigerian governments, the ‘good governance’, ‘accountability’ and ‘transparency’-preaching Western economic powers, and the ‘ethical conduct’ and ‘transparency’- preaching accountancy bodies (local and foreign) have been reluctant to investigate or prosecute the culprits and erring members within their borders or associations in the face of the evidence of these local and trans-organized financial crimes in Nigeria.
Nigeria is the eighth highest exporter of petroleum worldwide, producing 2.4 million barrels of oil per day at an average price of between US$60–US$70 per barrel and generates US$36 billion annually from the oil and gas sector (Kupolokun, 2006)1. Paradoxically, the country ranks number nine on the United Nations’ (UN) poverty list [BBC News, January 20, 2006]. The reasons for such artificial poverty creation in Nigeria are not far-fetched. Through the unpatriotic attitudes of its corrupt rulers, politicians, public officials and their foreign collaborators, Nigeria loses US$600 million to money laundering annually (Elumelu, 2007)2. Between the mid-1980s and 1999, the country lost US$100 billion to money laundering [see Vanguard, October 25, 2005].
The former Nigerian dictator, General Sanni Abacha, utilized the services of a British businessman and generous donor to the British Labour Party, Uri David, and a British lawyer, Jefrey Tesler, to stash away US$4 billion in various banks in London and Switzerland, while he lost US$30 billion to the international fraud syndicate [see The Times, October 15, 1999 and September 5, 2000; Regis, 2005]. In the so called the democratic era, between 2001 and 2004 alone, the country lost an estimated US$25 billion to money laundering [Okauru, 2006]. On the part of the developed world, losses representing credit card fraud, advance fee fraud in the Netherlands and lottery scams in Spain perpetrated by mostly Nigerians who form the majority of West Africans operating in both countries amount to 100 million Euros and 200 million Euros annually (Nigerian Economic and Financial Crime Commission, EFCC, 2007).
The corrupt attitude of the Nigerian rulers, politicians, public officials and individuals have been further enlarged by the more sophisticated corruption (see Halliburton, 2004), cross-border bribery (see French Electronics Giant, SAEM, 2004), Tax evasion, money laundering and illegal capital flight (see cases of Shell, 2002; Chevron, 2004), and other trans-organized financial crimes constantly perpetrated by some of the MNCs and other foreign capitalists operating in Nigeria.[Van der Wiel, 2007]3. The above local and trans-organised financial crimes have been further aided by the fraudulent and syndicated activities of some member countries of the acclaimed Financial Action Task Force (FATF), particularly Britain, France, Germany, USA and Switzerland, in providing safe havens for the looted funds from Nigeria [see Agabi, 2002; Shata, 2003; Olugbogi, 2007; Obasanjo, 2005].
Such financial crimes by the Nigerian rulers, politicians, public officials, individuals and their MNCs, politically-exposed foreign elites’ collaborators are made possible and continue to be sustained by the unethical practices by the professionals, particularly accountants and auditors (local and foreign) (see the case of Osakwe, 2002). Despite the various statutory provisions, the money laundering legislations, companies’ and professional bodies’ Acts4 in place in Nigeria, it is the members of the veteran Institute of Chartered Accountants of Nigeria (ICAN), in particular, who connived with the ruling elites, MNCs and other foreign capitalists in siphoning the collective wealth of Nigeria into the foreign private accounts of the corrupt rulers, politicians, public officials, and their foreign collaborators [Dafinone, 2005; Aloba, 2002].
It is the accountants and auditors (local and foreign) who help in the concealment and conversion of such funds gained from criminal activities in Nigeria by transferring them from the illicit to licit sectors and eventually investing them, thereby legitimizing the illegitimate funds [Nigerian Drug Salvation, 2002]. Paradoxically, the two recognized and self-regulated professional bodies, particularly the ICAN, has, either by design or default, been reluctant to investigate its implicated members or prosecute its erring members it claimed to have investigated.These local and trans-organised financial crimes and the anti-social behaviour of the accountants have contributed to the precipitation of hunger, diseases, the inadequate funding of education and health, and the lack of provision of basic life amenities such as good drinking water and electricity in Nigeria (see Bakre, 2007; Bakre, 2006).
Despite the evidence, the consequent poverty all over Nigeria and the continued reluctance of these MNCs to cooperate with the regulators in Nigeria, little have been done by the authorities in the developed home countries of the MNCs and other foreign capitalist, to curb the corruption and other trans-organised financial crimes atrocities being constantly collaborated or sometimes perpetrated by these MNCs and some other foreign capitalist elite operating in Nigeria [see CNN News, August 11, 2002]. Instead, the Financial Action Task Force, FATF that had threatened Nigeria with economic sanctions, if Nigeria did not put in place a draconian money laundering legislation by December 2002, all its member countries except France, have failed to ratify the United Nations Convention Against Corruption as at June, 2005 (see This Day, June 9, 2005).
However, it is interesting to note that the implications of these foreign entities in criminalizing the Nigerian business culture and subverting the nation’s due process are diametrically opposed to the anti-money laundering conventions globally. These include the United Nations (UN), European Union (EU), United States (US) conventions and the International Financial Reporting Standards (IFRS), which are all meant to criminalize cross-border corruption, trans-organized financial crimes5 and ensure accountability and transparency in the global financial system. These conventions and standards seem to have failed to achieve these purposes in Nigeria.
Unlike developed countries, Nigeria has little or no resources at her disposal to combat these global crimes [Ekaette, 2002]. Consequently, in addition to the hypocritical threat of economic
sanctions on Nigeria, money laundering and other trans-organised financial crimes have become more devastating to the Nigerian economy than to those of developed countries [Ribadu, 2006]. It is therefore highly unlikely if this hypocritical approach can solve this global cankerworm and at the same time succeed in eradicating poverty in Nigeria in accordance to the United Nations’ target goal to eradicate poverty globally by 2015.
Money Laundering and the Professions in Nigeria
The resources at the disposal of the Western economic powers, like the USA, UK, France, and Germany, suggest that compared to Nigeria they are far more capable of shaping international regulatory regimes to suit either the interests or curb the malpractices of MNCs based within their borders but operating in Nigeria. However, Western economic powers seem to have found themselves in the contradictory role of a need to strike a balance between their capitalistic ambition and their moral obligation to see to the maintenance of economic stability and security in Nigeria, a situation that would also benefits the Western economic powers’ economies. As Hoogvelt and Tinker  explain:
In the post-colonial era, the western capitalists naively appeal to the governments of the developing countries for political stability and predictability. It is not realized that it is in the very nature of overseas exploitation to create instability and unpredictability precisely because it is successful in allying itself with the ruling elites in continuing to extract surpluses in the developing countries.Despite these contradictions, Ekaette,  with particular emphasizes on Nigeria, points to the Western economic powers’ responsibility to the developing countries thus: Developed countries have a special responsibility, given the resources at their disposal to investigate and prosecute the companies within their jurisdiction that are conniving with public officers of developing countries to perpetuate corruption and subvert the orderly development of those nations [Emphasis added, The Guardian, October 30, 2002].
However, Arnold and Sikka  explain why the above deemed responsibility of the Western economic powers to the developing world especially may never be actualized: Within powerful nations, politics limits and shapes state actions not only because of the disproportionate influence exercised by corporate lobbies on domestic and international economic policy, but also because the nation-states increasingly compete to secure inward investment and thus smooth the path of capitalist development (Emphasis added).
In this context, combating money laundering in Nigeria may become even more complex for most developed capitalist world apostles of “accountability”, “good governance” and “transparency” in Nigeria. This is because the banks in developed capitalist countries, most of which operate in secrecy, are a part of the capitalist establishments which seek to secure inward investments from Nigeria [see BBC News, October 10, 2002]. These inward investments from Nigeria, in most cases include money from undisclosed identities and sources [see the case of UBS Geneva and Abacha, 1996]9. As Sikka,  observes; “you cannot avoid money laundering if you have bank secrecy”.
Moreover, as the banks in Nigeria are also established with profit interest in mind while the money laundering legislation in both Nigeria and developed countries sometimes positions itself in conflict with this commercial interest of the banks in Nigeria and developed capitalist countries, this suggests that combative engagement may never take place between these corporations, banks, individuals, their respective governments and controlled institutions10 in developed countries and Nigeria.
On the one hand, as the Nigerian authorities cry out about the exploitation by the MNCs and the powerful foreign capitalists in exploiting her economy, the authorities in developed countries condemn such actions by word of mouth alone [see Powell, 2004]. They rarely take any action that will investigate and prosecute the offenders within their borders. On the other hand, the developed economies put their resources together to put pressure on the Nigerian government, to introduce draconian legislations that could investigate and prosecute Nigerians implicated in money laundering and other financial crimes [see Vanguard, November 5, 2002]. The developed world MNCs and individual capitalists take advantage of the capitalist ambition of the erring Nigerian rulers, politicians, public officials and individual capitalists, who are still serving the interests of some colonial and global capitalists, and the weak regulatory system in place in Nigeria to pursue their narrow capitalist interests [Odah, 2002].
The collaborative exploitative actions by the Nigerian elite, MNCs and other foreign capitalists cannot be easily carried out without the culpability or at the very least the connivance of some professionals such as accountants and auditors in Nigeria (see Dafinone, 2005; Iwok, 2006). In this context, the Nigeria auditing rules and standards have placed responsibility on the accountants and auditors to use various regulations, legislations, and auditing standards to report suspected malpractices, fraudulent activities, money laundering and other financial crimes to a public body or regulator (see the ICAN Act, 1965; ANAN Act, 1993). However, the accountants and auditors globally have formed major international businesses and become holders of a major fraction of international capital [Sikka, 2001]. Such capitalistic ambitions of the accountants and auditors in Nigeria for example, have led the Nigerian accountants and auditors to continue to compromise their independence (see the case of Aknitola Williams Deloitte and Afribank Nigeria Plc, 2006). The capitalistic interests of the Nigerian accountants and auditors have been making them to collaborate with company’s management and directors to falsify and deliberately overstate company’s accounts (see the case of Akintola Williams Deloitte and Cadbury Nigeria Plc, 2006).
In fact, the Nigerian accountants and auditors themselves have become ‘vectors’ and ‘agents’ of the corrupt rulers, politicians, public officials, MNCs and other local and foreign elites in siphoning money from Nigeria to developed economies and vice versa [Agabi, 2002].The MNCs in Nigeria with the professional advice of their respective accountants and auditors have been using fictitious spaces in offshore havens to deprive Nigeria of tax revenue which would have enabled populations, often on the edge of subsistence, to develop social infrastructure, education, clean water, sanitation facilities and healthcare locally [see Bakre, 2006]. Nigerian accountants, lawyers and bankers play a key role in facilitating the creative use of the concepts of ‘residence’ ‘domicile’, ‘jurisdiction’ and legal personalities to avoid paying taxes and fulfilling social obligations [see Bakre, 2007]. Accountants in the political directorate and public service of Nigeria have used secrecy provided by offshore places, such as London, Switzerland, Bahamas, Cayman island, to help General Abacha, Governors Alamieyeseigha, Audu, Dariye, Etete, Nyame, Nnamani, Kalu, Turaki etc to launder money looted from the Nigerian public treasury into private bank accounts in the above countries [see The Guardian, July 18, 2007; Tribune, July 20, 2007].
*University of Essex, UK.
**Excerpt from the full article.
Photo credit: The Guardian