MONEY-LAUNDERING NIGERIA’S FUTURE

IBORI

Nigeria has a tendency to excel in the negatives.  One of these is in the league of international money-launderers.  Indeed, Nigeria is the money-laundering capital of Africa.

In 1987, at a reception in honour of President Ibrahim Babangida at the Waldorf Astoria, New York during his visit to the United States, I had an interesting conversation with Alhaji Abubakar Alhaji, then Permanent Secretary, Federal Ministry of Finance.  He said he had just been to the World Bank where he was asked what happened to the $12.8 billion Nigeria had made from windfalls in the oil market as a result of the Iran-Iraq war.  I said to him: “What did you tell them, Sir.”  Alhaji Alhaji is a naturally blunt no-nonsense man.  He replied: “I told them to ask the military.”

More recently, David Cameron, Prime-Minister of Great Britain, is reported to have asked President Goodluck Jonathan what happened to the $100 billion dollars Nigeria made from oil and gas exports in 2012, insisting that “lack of accountability and transparency is a big problem in Nigerian oil and gas industry.” 

 

Before you ask what business is it of David Cameron’s how we spend our money in Nigeria, let me point out that the question apparently came up because President Jonathan went cap-in-hand to the Group of Eight industrial countries (G8) to solicit loans in international multilateral institutions for unspecified infrastructural industrial restructuring in Nigeria.  The fact that his request was rejected outright tells me our President could not give satisfactory explanation to the G8.  Why give aid to Nigeria when it is clear the money would largely be pocketed by strategically-placed pen-robbers within the Nigerian government?

 

Questions without answers

These questions about the routine disappearance of Nigeria’s billions just won’t go away, even though the presidency provides no satisfactory answer.  When I heard of David Cameron’s query, the first question I asked was whether Nigeria actually made that kind of money in 2012.  Who knew?  Not too long ago, our total income was not more than $5 billion a year.  I phoned a financial expert who confirmed that, based on the number of barrels of oil Nigeria was selling at the general market prices of 2012, that amount was very likely.

So we are back to the question; what happened to the money?  What did we do with it?  I live in Nigeria.  If we made that kind of money in 2012, I should know about it.  I should be able to point to one or two things done with the money.  But I cannot.  In 2012, to all intents and purposes, the Nigerian economy was in some kind of recession.  The business climate was dull.  Unemployment was high.  Yes, the economy grew statistically by 7.1 percent.  But statistics often have little relationship with the actual situation on the ground.

The nagging questions about the theft and squandering of Nigeria’s patrimony do not let up, and they are not only being asked by foreigners.  Oby Ezekwesili, a former World bank Director, stirred up the hornet’s nest by declaring that the combined administrations of Musa Yar’adua and Goodluck Jonathan misappropriated literally billions of dollars.  She pointed out that Obasanjo left $45 billion in Nigeria’s foreign reserve account and another $22 billion in the excess crude account when he left office in 2007; being direct savings from increased earnings from oil under his administration.  These savings have completely disappeared without trace.  Where did these monies go?

The government has no explanation and would not accept Ezekwesili’s challenge to engage in a public debate on the matter.  The answer to such questions as these must remain relevant in the so-called democratic election of our next president. 

 

Capital of money-laundering

As a country, Nigeria has a tendency to excel in the negatives.  One of these is in the league of international money-launderers.  Indeed, Nigeria is the money-laundering capital of Africa.  According to Global Financial Integrity (GFI), a Washington D.C. based research and advocacy organisation, Nigeria comes first among the African countries that have suffered from massive outflows of illegal funds between 1970 and 2008.  In a study entitled: “Illicit Financial Flows from Africa: Hidden Resource for Development,” GFI maintains Nigeria lost $165 billion, nearly 19 percent of the total $854 billion outflows from Africa, to the developed market-economy countries.  GFI also placed Nigeria seventh out of the 20 largest exporters of illicit funds worldwide, with a total figure $129 billion from 2001 to 2010.

With the exit of General Sani Abacha, the former Nigerian head of state from 1993-1998 who died in office, we suddenly discovered that money was looted directly from the Central Bank and transferred into secret bank accounts abroad.  In all, Abacha alone reportedly looted and laundered over $4 billion. 

What this means is that a considerable amount of Nigeria’s income is round-robined back to our trading partners.  They get back part of what they pay us for our exports as our officials steal the money and funnel it back to them.  That means a significant amount of Nigeria’s earnings never benefits Nigeria or Nigerians.  Nigeria’s oil and gas income is used to develop further our trade partners in the developed market economy countries.

This money laundering puts pressure on money markets as corrupt Nigerian officials buy up foreign-exchange for export. The Chairman of the Economic and Financial Crimes Commission (EFCC), Mr. Ibrahim Lamorde, revealed that as much as $14 billion in cash was taken out of Nigeria from January to August, 2012 through the nation’s airports.  This was corroborated by the Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, who puts his own estimates at about $11 billion.

If some of these monies happen to come back, it is with diminished value.  They are not used to create real wealth or to enhance job opportunities.  They are not, in any case, in the hands of the industrious or the enterprising.  Instead they are laundered back into the less productive sectors of the economy, such as the overvalued real estate sector.  Little wonder then that some houses in Lagos and Abuja are as expensive as those in New York. 

Money launderers import goods at sub-market prices.  Since it is stolen money and their primary objective is to re-integrate their ill-gotten wealth stealthily back into the national economy, they don’t care if the goods are sold at a loss.  Therefore, their activities hinder domestic production because local producers cannot compete with the depressed prices of money-laundered imports.  

 

Western double-dealing

Grandstanding Western moralists like David Cameron who lecture Nigeria about the corruption of our leaders are themselves inherently corrupt.  If they were really against theft by government officials in developing countries, they would not readily accept stolen money in their countries.  However, while they rail against corruption, they create frameworks which permit them to receive stolen money with thanks. 

Some of this money ends up in choice real estate.  Others are hidden in fake offshore companies and investments entities whose ownerships are suitably disguised.  This makes it very difficult, if not impossible, for investigators to trace the monies, let alone recover them.  The GFI report said the massive outflows of illicit money out of Africa to the West was facilitated by “a global shadow financial system comprising tax havens, secret jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade pricing, and money laundering techniques.” 

In a series of articles, the Financial Times of London revealed that much of the money stolen by corrupt soldier-politicians of Nigeria’s past military regimes ended up in British banks.  In an article entitled “Money laundering probe targets London” it said: “Banks in London played a key role in enabling former Nigerian dictator Sani Abacha to launder more than $4bn (£2.76bn) looted from the country during his four and a half year rule. The trail has led to accounts at London offices of 15 banks.”  It is estimated that over £1.5 billion looted from the Nigerian treasury is currently being kept in British banks. 

The British have imposed no sanctions on these banks for laundering “lucrative” stolen money.  They are not even that enthusiastic about facilitating the return of the monies to Nigeria. Rowan Bosworth-Davies, a former Fraud Squad officer, is quoted as saying that a lot of people in the City of London are convinced that if proper legislation is enforced to facilitate the recovery and return of stolen money: “It will be bad for UK Plc.”

In short, Nigerian money-laundering has been good for Western economies, funneling funds for them through back-doors deliberately opened to attract those funds.  Abacha’s loot did not only go to Britain.  It also went to banks in the United States, Germany and especially Switzerland, without any intervention from financial regulators in those countries.  Some of these countries are now concerned that those same backdoors may be used to finance terrorist activities.  But, at the same time, they are mindful that concern for terrorism should not militate against their status as citadels of international finance, be it legal or illicit.

 

The way forward

Money-laundering is a major problem for the Nigerian economy, especially because a lot of the money ends up abroad and those that return are used unproductively.  With a population of 170 million, Nigeria can hardly be described as a rich country.  If the modest earnings of the country over the years had remained in Nigeria, it would have made a considerable difference to the economy.  But looting has now reached epidemic proportions.  If millions were being stolen before; billions are being stolen now.  This portends a bleak economic future for Nigeria.

It is naive to expect the Western nations to help us to police the theft of our patrimony.  In many ways, they benefit from our corruption. It is also not possible to expect the Nigerian government to police itself.  The government itself is the problem.  Nigerian politicians, both military and civilian, capture government with the intention to prepare for their personal futures while mortgaging Nigeria’s future.  Therefore, there is need for Nigerians ourselves, through public enlightenment processes and through insistence on accountability by Nigerian officialdom, to grab the bull by the horns.  These issues must be at the forefront of any democratic election campaign and those involved must be brought to the book.

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