Anti-corruption: An evaluation of strategies, legislations and systems in Nigeria

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1 Anti-corruption: An evaluation of strategies, legislations and systems in Nigeria Iliyasu Buba Gashinbaki Reproduced with permission of the copyright owner. Nigeria Political Map Magellan Geographix Synopsis No one is sure when and where corruption first started in Nigeria. But Nigerian scholars like B. C. Osisioma, Ejiofor, Chinu Achebe, and Wole Soyinka amongst host of others had a consensus view that, the cradle of corruption in Nigeria was colonialism. To buttress this view, they argued that, in 1914 the British colonial powers amalgamated vast territories of separate and distinct ethnic nationalities, kingdoms and caliphates, which have diverse cultural, religious and social values into one single corporate entity called Nigeria. Since then, the "core ideology" of nationhood which is "service delivery for the common good" of the society (Nigeria) became a mirage. When the colonial powers left in 1960, the little cohesion force of nationalism and independence struggle that binds us together began to fall apart. Thus, ethnic, religious and regional divides impregnated with corruption tendencies surreptitiously crept into the system.

2 Apart from colonial influence, further studies on Nigeria have revealed that there seem to be a close link between "natural resource wealth" and "corruption". The correlation is derived from the universal believe that "scarcity leads to invention" and "abundance leads to abuse". In Nigeria, Oil Revenue accounts for 95% of the foreign exchange earnings, in addition to large untapped potentials of solid minerals, agriculture, and tourism. Besides, the economy is bigger and stronger than all the other 14 countries within the West African sub-region put together. Thus, making it the second largest economy in Africa with a population of about 130 million people. The resultant effect of this was that government assumed the dominant role as producer and controller in the economy, or produced "perverse incentives" or created inefficiencies and waste. In the context of an oil producing economy (with huge rents from oil as easy source of government revenue), a culture of rent-seeking quickly developed. Invariably, Government became an automatic instrument for instant acquisition of wealth and therefore distorted the incentives and ideals for handwork in the whole society. Government being the major source of patronage and rent-seeking, the fight for public office became a matter of life and death and corruption became a cultural symbol. Therefore, the above inherited legacies of corruption coupled with military dictatorship which dominated much of Nigeria's political history since independence in 1960, eventually eroded the rule of law and brought high incidence of abuse of power and public office. As a result, even regulatory and enforcement institutions including the judiciary became weakened and vulnerable to corrupt practices. This led to massive public corruption and rampant corporate failures (especially bank failures in the late 1980s and early 1990s). There was also an upsurge in crime particularly, advance fee Fraud, Bank frauds, drug trafficking and money laundering - creating a situation of insecurity not only for lives and property but also for investment. Relative to its own history, and in comparison with other countries in Asia, especially Pakistan and Indonesia; economic development over the decades has been quite disappointing. According to UNDP 2004 Human Development Report, "as at 2000, Nigeria had earned approximately $300 billion from oil exports since the mid 1970s, but its per capita income was 20% less than the 1975 level, and the country has become so heavily indebted (external and domestic debt amounts to about 70 percent of GDP) that it has serious difficulty servicing existing debt". It is evident therefore that, Nigeria is not only poor; it also experiencing some forms of de-capitalization (human and financial). From the foregoing it easy to understand why, the public sector is characterized by pension crisis, arrears of salaries of civil servants, huge debts to government contractors and suppliers of goods and services, a boom and burst cycle of revenue and expenditure, misallocation and excessive mismanagement of resources, etc. Besides the IMF/World Bank Structural Adjustment Programme (SAP) policy also devalued the Naira, which eroded the purchasing power of the people. All these put together created a breeding ground for corruption to become a monumental calamity to the country. Anti-corruption strategy: Institutional model A lot of strategies were introduced or adapted to curb corruption activities in Nigeria. The institutional model started in 1977 by the Jaji declaration by president Olusegun Obasanjo; the Ethical Revolution of Shagari in 1981; War Against Indiscipline by Buhari in 1984; National Orientation Movement by Babangida in 1986; Mass Mobilization for Social Justice by Babangida in 1987; War Against Indiscipline and Corruption in 1996 by Abacha to the Independent Corrupt Practices (and Other Related Offences) Commission by Obasanjo in 2000 and the Economic and Financial Crime Commission 2002 by Obasanjo. The institutional strategic model for anti-corruption is therefore fathomed on the wisdom that anticorruption institutions/agencies were established in Nigeria to administer the following policy prescriptions "deterrence, prevention, and public sector reforms". They are: a. To establish and maintain a high standard of public morality in the conduct of Government Business and to ensure that the actions and behaviors of the Public Officers conforms to the highest standard of public morality and accountability. The Code of Conduct Bureau and Code of Conduct Tribunal was established. The Bureau therefore prescribes standard codes of conduct and appropriate penalties for violation of such conduct(s). Public Officers are regarded as elected or appointed public office holders.

3 b. To address public sector corruption, through education and prevention by examining, reviewing and enforcing correction of corruption-prone system and procedures of public bodies, with a view of eliminating or minimizing corruption in public life. Thus, the major focus of the Independent Commission Against Corruption (ICPC) was structures of government, public institution and public corporations. It has powers to investigate and prosecute all public officials including the police, except those officers that have immunity as prescribed in the constitution. It remains the most powerful anti-corruption legislation ever passed in Nigeria to deter public official from massive looting and plundering of public funds. The ICPC therefore, is Nigeria's last hope to deliver the public service from corruption. c. To ensure that government contracts are awarded in accordance with the best practices and universal standards for tendering and procurement of contracts around the world. The Due Process Office was established in 2003 under the Office of the President. Specifically it was targeted to curb or minimize the reckless abuse inherent in the Government's tendering procedures and the procurement process. d. The Economic and Financial Crime Commission (EFCC) was a major departure from the past enabling laws for fighting corruption or economic and financial crimes in Nigeria, in terms of powers, functions and responsibilities. It was borne out of international pressure as a precondition for the removal of Nigeria from the list of Non-Cooperative Countries and Territories (NCCTs) of the Financial Action Task Force (FATF) on Money Laundering. The EFCC is the designated Nigeria Financial Intelligence Unit (NFIU). The NFIU is expected to receive and analyze financial information - Currency Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) - from Financial Institutions and Designated Non-Financial Institutions with a view to disseminating intelligence information arising thereof. Besides, the Commission is charged with the following responsibilities among others; o Enforcement and administration of the Act in the overall context of preventing, detecting, investigating and prosecuting all cases of economic and financial crimes in Nigeria. o Charged with the responsibility of enforcing other laws and regulations relating to economic and financial crimes o In addition, the Commission is the coordinating agency for fighting economic and financial crimes in Nigeria, including fighting terrorism and terrorist financing. Anti-corruption: Legislations and regulations Anti-corruption legislations have been codified in relevant sections of the criminal code and penal code ordinance. Although the first separate law that prescribe offences and penalties is the Miscellaneous Offences Act of 1985, essentially anti-corruption legislations has not changed substantially. In most cases, the old laws are slightly modified and a new agency will be empowered to handle it. The following legislations are either wholly exclusive or partly targeted to anti-corruption in Nigeria, they are: Relevant sections of the criminal code and penal code. Miscellaneous Offences, Act 1985 The National Drug Law Enforcement Agency Act (NDLEA) of Code of Conduct Bureau and Tribunal Act, 1990 Banks and other Financial Institutions Act of 1991 (amended in 2002) Money laundering Act of 1995 (amended in 2002 & 2004) Foreign Exchange Act of Failed Bank (Recovery of Debts) and Financial Malpractices in Banks Act of 1994 (amended in 1999) Advance Fee Fraud (otherwise known as 419) and Related Offences Act of In spite of these enabling laws and the relevant institutions/agencies of government to administer them, corruption activities still thrived in the economy unabated. Therefore, two special anti-corruption legislation were enacted to handle corruption with a view of addressing the entire anti-corruption strategy and framework in Nigeria, they are;

4 I. Independent Corrupt Practices (and other related offences) Commission (ICPC) Act The ICPC is vested with the powers to educate, prevent, detect, investigate and prosecute all offences under the Act. Sections 8-26 of the ICPC Act clearly spell out offences and penalties covered by the Act if committed after 13th June 2000, the effective day of the law. These offences equally prescribed severe penalties ranging from 1 to 7 years, imprisonment with hard labour, imprisonment and fine depending on the gravity of the offence. An offence under this category includes; giving or accepting gratification by an official in person or through his agent, fraudulent acquisition of property, deliberate frustration or hindrance or obstruction of investigation activities, transferring money from one vote to another, false statement and fraudulent disclosures, electoral fraud such as bribery of electoral officials. The Commission also has powers to tap telephone lines and freeze bank accounts of suspects. Indeed the ICPC Act criminalizes virtually all loopholes and lacunas public officials exploited before the law was enacted. II. Economic and Financial Crimes Commission (EFCC) (Establishment) Act 2002 The EFCC is an inter agency commission; it is the co-coordinating agency for the enforcement of all economic and financial crimes laws in Nigeria. Apart from the administration of the EFCC Act, the Commission is vested with powers of enforcement of all other laws relating to economic and financial crimes in Nigeria, including; Relevant sections of the criminal code and penal code. Banks and other Financial Institutions Act of 1991 (amended in 2002) Money laundering Act of 1995 (amended in 2002 & 2004) Failed Bank (Recovery of Debts) and Financial Malpractices in Banks Act of 1994 (amended in 1999) Advance Fee Fraud (otherwise known as 419) and Related Offences Act of Under the EFCC (Establishment) Act 2004, the Commission has powers to investigate and prosecute offences such as advance fee fraud, money laundering, counterfeiting, illegal funds transfers, futures and market fraud, fraudulent encashment of negotiable instrument, fraudulent diversion of funds, computer credit fraud, contract scam, forgery of financial instruments, issuance of dud cheques. Others are, powers to freeze account, tap telephone lines, identify, trace and seize proceeds of terrorist etc. Anti-corruption system: Dual system approach Basically, two approaches or special purpose vehicle are tenable; they are, through government institutions/agencies and civil societies pressure groups. Fortunately, there has been a coherent relationship between the two systems as both are targeted toward curbing corruption activities in the society. There is no exact statistics on the number of civil society groups operating in Nigeria, but they substantially play a pivotal roll in fight against corruption. INSTITUTION ICPC (approximate figures) Cases received Recoveries (in USD) ??? 600 million Investigation Prosecution EFCC (approximate figures)

5 Conviction 2 0 Strategy Legislative powers Systems Structure Deterrence, prevention and public sector reform agenda Investigation, detection and prosecution of public sector corruption at the federal, states and local council levels Law enforcement and public sector reforms agenda Headed by a chairman and 12 commissioners 2 each from the six geopolitical zones in Nigeria. Deterrence, prevention, private sector reform agenda Investigation, detection and prosecution of all forms of economic and financial crimes in Nigeria. Law enforcement and public sector reforms agenda Headed by an Executive Chairman with Board of Directors composed of all the Regulatory Financial Institutions including Federal Ministry of Finance and Central Bank of Nigeria. Table 1: Performance Index for ICPC and EFCC STRENGTH WEAKNESSES OPPORTUNITIES THREATS Strong and wide laws Well established institutions and agencies for fighting corruption Public support for antcorruption is increasing Confidence and support of the international community The law covers the entire sectors of the economy Lack of capacity and professionalism Inadequate funding Dwindling political will to fight corruption by the leadership Political interference and lack of independence Corrupt judiciary and criminal justice system leading to prolonged trials. Changing attitude towards the evil of corruption The use of ICT will improve the efficiency of the anti-corruptions agencies and courts. Reform agenda in public and private sectors have created a good platform for curbing corruption. International cooperation of corruption is increasing globally Future reforms on legislation may address funding problems by ceding a certain percentage of recovered fund to anti-corruption agencies as encouragement. International treaties and conventions not yet ratified may pose as potential problems The growing sophistication in the use ICT may poses a danger if reciprocal improvement is not achieved. The lack of conviction in cases is dwindling public support. The continuous congestion of courts coursing lengthy proceedings is discouraging people from reporting corruption cases The continuous loss of confidence in government and its institution due to devastating policies, e.g fuel hike, removal of subsidies on agriculture and education.

6 Table 2: SWOT Analysis ICPC and EFCC Conclusion and recommendations To sum it up therefore, I strongly believe that there is no any single universal panacea for fighting corruption. However, a perfect matrix of, legislations, systems and strategies targeted to increase the risk and reduce benefit of corruption needs to be embraced by the entire citizenry. Until this is achieved, corruption will continue to remain as a cultural symbol in Nigeria even in the next millennium. But, we do not accept this, and we will not allow it, so let me leave you with some few prescriptions that I think are indeed necessary for reducing internal bleeding in the systems, strategies and legislations in Nigeria. These are: Need to develop and adopt a national anti-corruption framework looking at all angles of prevention, investigation, prosecution and education. To succeed, anti-corruption campaign along the above-identified areas i.e. (prevention, detection and education) need to be rooted into our legislation, strategy and system. It should be looked into as an interrelated sets of plan of action that link one from the other. This means that one set of activities is dependent on the outcome of preceding actions. Expansion, intensification and localization of grass roots anti-corruption initiatives; activation of programs in all key result areas; improved coordination among partner organizations; better office level incentives; unified monitoring systems; and, strengthened anti-corruption bodies and civil society groups. Privatization of all public agencies and institutions which constitute a drain on the economy, especially those in energy sector, oil & gas sector and public utilities. Increased funding for the 2 anti-corruption agencies in the country. Automation of court and training of judges with a view of reducing judiciary corruption. Review of the Criminal Justice System and laws of evidence to keep pace with the developments with global trends in ICT, as electronic evidence is still inadmissible in our courts. ABOUT THE CONTRIBUTOR Iliyasu Gashinbaki, CNA CFE, is an anti-corruption expert and author of "Bank failures: The worst corporate crisis of the millennium in Nigeria." He is a policy consultant to the Nigeria Governors' Forum and was associated with the Economic and Financial Crimes Commission (EFCC), Nigeria. Iliyasu at: gashinbaki {at} gmail {dot} com