NIGERIA’S PROGRESS IN CURBING ECONOMIC CORRUPTION

A PRESENTATION by

E.E. IMOHE, Minister and Head of the Economic and Commercial Desk, Embassy of Nigeria.

At A Forum organizedby

The Society of Government Economists.Washington, DC

27th September, 2005

Background

• Nigeria has often been adjudged to be corrupt. Systemic corruption, in both the public and private sectors, has often been ascribed to Nigeria.

• Transparency International has consistently rated Nigeria as one of the top 3 most corrupt countries in the world.

• Over the years, Nigeria has been cited over the prevalence of financial crimes such as the Advance Fee Fraud.

• Past administrations in Nigeria tried, to no avail, to rein in corruption.

• Current administration is determined to make significant progress in the fight against corruption.

TYPOLOGY OF ECONOMIC CORRUPTION IN NIGERIA

• Abuse of positions and privileges.• Low levels of transparency and accountability.• Inflation of contracts.• Bribery/kickbacks.• Misappropriation or diversion of funds.• Under and over-invoicing.• False declarations• Advance fee fraud and other deceptive schemes.• Collection of illegal tolls.• etc

IMPACT OF CORRUPTION

Corruption has had severe negative consequences in two main areas:

Negative Economic Impact• Loss of much needed revenue.• Discourages foreign investment, leading to decreased

FDI.• Nigerian banks lose viable business.• Stifles economic growth which results in development

failure

IMPACT OF CORRUPTION (contd)

Negative National Image

• Corruption diminishes national prestige and respect.• Nigerians are treated with suspicion in most business

dealings.• Honest (majority) Nigerians suffer the stigma of

corruption due to stereotyping.

THE CHALLENGE OF CURBING CORRUPTION

The Major Problems• An entrenched and institutionalized phenomenon• Failure of law enforcement agencies/workforce.• Constitutional constraints i.e some provisions of our

constitution seem to over protect the accused against the state.

• Attitude of defense lawyers – all manners of delay tactics are employed to stall the trial.

• Congestion and slow pace of court proceedings

THE CHALLENGE OF CURBING CORRUPTION (contd)

Efforts by previous governments in NigeriaLegislation.• The National Drug Law Enforcement Agency (NDLEA)

Act 1989.• Money Laundering Act of 1995.• Advance Fee Fraud (419) and fraud related offences Act

of 1995.• Failed banks Act of 1996.• Banks and other financial institutions Act of 1991.• Foreign exchange Act of 1995.• The corrupt practices and other related offences Act of

2000.

THE CHALLENGE OF CURBING CORRUPTION (contd)

Efforts by previous governments in Nigeria.

Strengthened institutions.• The Central Bank of Nigeria (CBN)• The Nigerian Deposit Insurance Corporation (NDIC).• The National Drug Law Enforcement Agency (NDLEA)• The National Agency for Food and Drug Administration

(NAFDAC).• The Securities and Exchange Commission (SEC).• The National Insurance Commission.• Independent Corrupt Practices Commission (ICPC).• The Nigerian Police Force.• The Customs and Excise Department.• The Corporate Affairs Commission.

THE CHALLENGE OF CURBING CORRUPTION (contd)

Action by present Nigerian Government.• Legal framework• Institutional measures• Administrative measures.

Action By Present Government (contd)

CREATING A LEGAL FRAMEWORKEnhancement of Existing Laws and creation of new ones• The money laundering Act: 2004• EFCC Act, 2002, re-enacted, 2004. This law vests the

powers of coordination and enforcement of varied but related economic and financial crimes law in the penal and criminal codes in one body – the Economic and Financial Crimes Commission.

• These existing laws have been enumerated in the foregoing.

Action By Present Govt (contd)ANTI-CORRUPTION AS AN ASPECT OF ON-GOING

ECONOMIC REFORM PROGRAMME.

INSTITUTIONAL MEASURES• The establishment of the Budget Monitoring and Price

Intelligence Unit (BMPIU) – otherwise known as “Due Process”.– Huge savings have been made (estimated at

hundreds of millions of dollars or 85 billion Naira), through a process of contracts review, oversight and certification.

– Cancellation of contracts not complying with laid down open, competitive bid parameters.

ANTI-CORRUPTION AS AN ASPECT ON-GOING ECONOMIC REFORM PROGRAMME (contd)

INSTITUTIONAL MEASURES• Establishment of an Anti-corruption Commission (ICPC)

under the Independent Corrupt Practices Related Offences Act of 2000, to monitor the conduct of public officers. No less than 55 cases are currently under investigation and prosecution, while some convictions have been recorded.

• Establishment of the Economic and Financial Crimes Commission (EFCC) in 2003, through external pressure from the G8 Financial Action Task Force (FATF).

Duties of EFCC

• Coordination of all activities in the eradication of economic and financial crimes.

• Liaison with local, regional and international law enforcement agencies.

• Prevention• Investigation and enforcement.• Etc

Impact of EFCC

• Impact has been phenomenal.• Conveyed immediate message no one is above the law.• Good cooperation and mutual legal assistance from

international agencies like INTERPOL and EUROPOL and from EU, US, South Africa etc.

• Between May 2003 and June 2004 recovered money and assets derived from crime, worth over $700 million, as well as £3 million recovered by the British Government.

• Over 500 kingpins of Advance Fee Fraud in custody standing trial.

• Currently prosecuting over 100 cases in court and investigating more than 500 others.

Impact of EFCC (contd)

• Presently prosecuting a fraud case involving $242 million arising from a bank fraud in Brazil.

• Increased the revenue profile of the nation by about 20% due to its activities in the federal Inland Revenue service and the seaports.

• Recovered billions to government in respect of failed government contracts.

• Curbed oil bunkering in the Niger Delta, from about 300,000 – 500,000 daily to less than 50,000 barrels.

• Prosecuting over 20 persons involved in the vandalisation of oil pipelines.

THE NIGERIA FINANCIAL INTELLIGENCE UNIT (NFIU)

• This unit has recently been established as an autonomous unit within EFCC. It is an arm of the global Financial Intelligence Unit.

• Its establishment was demanded by the Financial Action Task Force (FATF) as a pre-condition for de-listing Nigeria from the ranks of non- cooperative countries and territories.

• Its functions, in the main, will pertain to monitoring of Currency Transaction Reports CTRs and Suspicious Transaction Reports, with a view to combating money laundering and the financing of terrorist activities in Nigeria

Action By Present Govt (contd)

OTHER AGENCIES

• Other Law Enforcement Agencies with responsibility to ensure compliance e.g. ICPC, Code of Conduct Bureau, Police, Customs, NAFDAC, are being reformed, strengthened and modernised.

Action By Present Govt. (contd)

ADMINISTRATIVE MEASURES

• Nigeria has joined the Extractive Industries Transparency Initiative (EITI) aimed at encouraging the oil sector to imbibe a culture of transparency.

ADMINISTRATIVE MEASURES (contd)

• Banking and Financial Sector reforms July 2004.The main agenda:– Raise banks’ minimum capital base to 25 billion Naira

(about $185 million) before end of December 2005.(previously 2 billion Naira about US$ 15 million) pre-July 2004, there were 89 banks.

– Consolidate banking institutions through mergers and acquisitions.

– Enhance a risk focused and rule-based regulatory framework.

– Eliminate weak corporate governance, misconduct and lack of transparency.

ADMINISTRATIVE MEASURES (contd)

• A new ethic of anti-corruption is being encouraged particularly, but not limited to the public sector. Public awareness through the NOA is being undertaken.

Administrative Measures (contd)

Improved Public Expenditure at Federal and State levels

Emphasis on:• Medium Term framework to give strategic focus and

expenditure prioritization.• Fiscal discipline – commodity – price based fiscal rule.• MDG – directed expenditures in 2004 and 2005 budgets.• Improved budget transparency through:

– Publication of mid and end year budget performance– Monthly publications of revenue to tiers of

government.– Publication of revenue allocation over past 5 years.

• Fiscal Responsibility Bill 2005 is before the National Assembly, to lock in the changes taking place.

NOTABLE HIGH PROFILE CASUALTIES OF NIGERIA’S ANTI –CORRUPTION WAR

• Former Senate President Adolphus WABARA.• Former Education Minister Fabian OSUJI.• Former IGP Tafa BALOGUN.• Bayelsa State Governor ALAMEISEIGHA recently

arrested in London.• EFCC compiling data for the prosecution of 9 governors

CONCLUSION

Have we solved the problem of corruption – NO!But is the WAR being won?

– IMF doing Business guide 2006 contains improved rating for Nigeria.

– Goodwill from several international organizations, NGOs and foreign countries.

– US ready to support Nigeria’s FIU

I THANK YOU.