During 2016 the media has been full of stories on 'Dasukigate' – the allegations that Sambo Dasuki, national security adviser to former President Goodluck Jonathan and current President Muhammadu Buhari, had misappropriated funds meant for the purchase of arms and equipment in the country's fight against Boko Haram. According to media reports, the sum involved was $2.1 billion.
The Economic and Financial Crimes Commission (EFCC) is reportedly investigating around 250 companies and individuals in connection with the alleged misappropriation. Stories presently dominating the news include allegations that a former defence minister and members of his family were recipients of $15 million of the funds and that he had passed approximately $5 million of this to a state governor. The minister and his sons are alleged to have been directly involved in receiving and passing the funds to the governor to assist him in his election campaign, with the EFCC claiming to have CCTV footage showing the cash being loaded onto an aircraft in Lagos to fly the money to the governor's state. The governor, who had been impeached and removed from office a number of years earlier and was on trial for corruption, is alleged to have used the funds to pay military personnel to intimidate voters and to help him to manipulate the poll, resulting in him returning to office notwithstanding the ongoing trial. Under the Constitution, sitting governors enjoy full immunity from both civil and criminal actions, so the trial is suspended during his term of office. However, this immunity has not stopped the EFCC from freezing his bank accounts and seeking the interim forfeiture of real property in which he is alleged to have beneficial interests. The propriety of these actions are presently the subject of litigation.
The former minister of defence, who is reportedly also a US citizen, is presently in the United States, from where he issues regular statements condemning the EFCC and Buhari for what he describes as a politically motivated campaign against him. While he and his sons remain in the United States, his wife and daughter have been questioned by the EFCC and allegedly have had their bank accounts frozen and passports seized.
The funds reported to have been misappropriated have mostly been moved through banks. As large sums passed through the accounts without good reason, under Nigerian money laundering legislation the banks involved were obliged to take a number of steps to enable law enforcement agencies to monitor the movement of the funds and take steps to prevent what appears to have been misappropriation on a monumental scale.
Among other things, Nigerian banks must identify the beneficial owners of accounts that they hold and scrutinise transactions to ensure that they are consistent with their knowledge of the customers, their businesses, their risk profiles and the sources of the funds being moved. Where transactions are inconsistent with known transaction patterns or the nature of the account holders' businesses, banks must report these transactions to the EFCC. Under the law, the EFCC is required to acknowledge receipt of such reports and can direct banks to defer such transactions for up to 72 hours. Failure by a bank to comply with these provisions could result in the Central Bank of Nigeria (CBN) imposing penalties on it. The minimum penalty is N5 million ($16,000), with no maximum sum stipulated in the legislation. The legislation also empowers the CBN to suspend banking licences for failure to report. In addition, banks are required to report to the EFCC every transaction in excess of N5 million, in the case of individuals, and N10 million, in the case of corporations. Failure to report is a criminal offence punishable with a fine of between N250,000 and N1 million ($8,000 to $32,000) for each day on which the contravention continues.
There have been no reports of the CBN imposing any penalties on banks for failure to report these transactions. This suggests that either the banks involved did not report any of the transactions because they were not considered to be suspicious, or the banks did report them to the EFCC but it failed to take action. However, one report alleges that a cash sum in excess of $100 million was deposited with a bank on the instructions of a former minister, with directions that the money be converted into naira and distributed to Electoral Commission officials. It is improbable that the receiving bank would not have considered this to be a reportable transaction. In fact, the bank concerned issued a statement when its managing director was arrested that it had indeed reported the transaction at the time.
This suggests that the EFCC and the CBN were aware of at least some of the transactions, and at the time chose to take no action and not to apply the Money Laundering Act. If this was indeed the case, it is clear that such lapses must be examined and steps taken to ensure that the legislation is properly implemented. If the EFCC is unable to process the volume of suspicious transaction reports that this activity suggests must have existed, there is a strong case for reports to be made to another body. However, if no action was taken due to there being an unwillingness to act – perhaps through political influences or pressure – this must be addressed and the public must be reassured that in future the EFCC will not be subjected to political influence. Given that the ongoing enforcement action is primarily against members of the former ruling party, this is a key issue.
The 2015 election defeat of the People's Democratic Party, which had controlled the federal government since 1999, demonstrates that political power does not remain in the same hands indefinitely. When it shifts and investigations into alleged public misfeasance are commenced, it is inevitable that most, if not all, of the targets of such investigations will be opposition party members. Therefore, it is vital for the EFCC, the CBN and other agencies to do as much as they can to demonstrate that enforcement action is unaffected by political considerations.
For further information on this topic please contact Babajide Oladipo Ogundipe at Sofunde Osakwe Ogundipe & Belgore by telephone (+234 1 462 2502) or email ([email protected]). The Sofunde Osakwe Ogundipe & Belgore website can be accessed at www.sooblaw.com.