April 26, 2021

Corruption: Nigeria loses over $15 billion to illicit financial flow annually – HEDA


…urges FG to be proactive in tackling corruption cases

By Chris Onuoha

The Human and Environmental Development Agenda (HEDA) Resource center has revealed that Nigeria have been losing about $15 to $18 billion annually as a result of illicit financial flow (IFF).

HEDA also quoted that Nigeria’s loss has been accounted for about 30 percent of Africa’s loss to IFF which was at $50 billion in the last 10 years, saying it is unfortunate the number may rise as the corrupt practice escalates.

“The Thabo Mbeki report of 2018 put Africa’s losses at between $50 and $60 billion per year, with Nigeria accounting for 30 percent of the amount. Therefore, Nigeria may be losing between $15 and $18 billion every year to illicit financial flows.

“Some opinion poll have argued that Nigeria alone may have lost up to $50 billion annually, while other source estimates that African States collectively linked to IFF to the tune of approximately $60 to $100n billion each year,” stated HEDA.

These among other revelations was contained in a HEDA’s message during a media roundtable discourse held recently at Sheraton Hotels and Towers, Lagos, as the organisation presented to the public, the 4thedition of their publication, “A compendium of 100 high profile corruption cases in Nigeria.”

In his earlier remark, Chairman, HEDA Resource Center, Olanrewaju Suraju noted that corruption has eaten deep into the fabric of Nigeria society, that most of these cases as it connotes, ‘high profile’ in the compendium involved influential people and even serving government officials including politicians in the country.

Suraju noted that according to some reputable researchers, Africa is estimated to have lost much in excess of $1 trillion in illicit financial flows, with loses fast outstripping foreign direct investments and dev elopement assistance.

According to him, the reports stated that there are significant shortcomings in Nigeria’s constitutional provisions, domestic laws and treaty obligations that contributed to the country’s susceptibility to the problems of illicit financial flows.

HEDA records that most troubling damage done to Nigeria by illicit financial flow has been the damage caused to its administration of the justice sector.

It maintained that institutions within the administration of justice sector have suffered from underperformance, saying that State institutions have been severely weakened in their ability to combat corruption and IFF.

Suraju maintained that the massive drain of Africa’s financial resources into foreign land especially UK and UAE in focus could have been used to solve some of the continent’s ailing infrastructural deficits if it was curtailed.

The compendium covers some of verified cases with the most recent updates featuring reportage of a total number of 100 high profile case of corruption most of which are current.  It also reveals the complicity of key Nigerian stakeholders in the PSID failed contract and the emergence of young Nigerian internet fraudsters like Ramon Abbas Igbalode, Alias Hushpuppi and Ismaila Mustapha alias Mompha that have further put Nigeria to international ridicule in terms of corruption perception. These are in addition to the several existing and new high profile corruption cases involving politically exposed persons.

With the cases of Daziene Madueke, Dan Etete, Ceceilia Ibru, Dasuki, Olisa Metu, Adoke  among others, HEDA stated that the absence of effective implementation and enforcement of national laws allows these crime to thrive.

“With the widespread practice of acquisition of both offshore accounts and foreign luxury properties by prominent public officers, the ruling elite lacks political will to combat corruption and abuse of official power and functions,” HEDA Resource center.

Some of new cases of financial corruption were recorded while old cases and closed closes were equally recorded.

Guest speaker, Dr. Gbenga Oduntan, a UK based financial crime research expert, in his lecture, spoke on a topic:  “Fixing Nigeria’s Illicit Financial Flows (IFF): A Critical Review of UK and UAE Policies, Laws and Practices in Financial and Professional Institutions.”

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Delivering the lecture, he focused on those industries and professionals that top the bill in attracting and enabling money laundering, grand corruption and illicit business in relation to Nigeria.  He also disclosed the various techniques through which top quintile of Nigeria’s illicit financial flows (IFF) disappears into the black hole of institutions and investments in the UK and the UAE and thirdly, indicated things that need fixing in the anticorruption and general business regulatory environments in both the UK and the UAE as development partners of Nigeria as well as in Nigeria itself. Lastly, he elaborated upon some of the shortcomings in international anti-IFF, policies and practices as well as the imperative changes needed in international laws and international relations to slow down, prevent and stop furt her flows.

Oduntan noted that vast movement of IFF from Nigeria to the United Arab Emirate (UAE) and the United Kingdom (UK) among other more developed States is an undeniable reality of contemporary international life.

“Nigeria currently, grossly underperforms economically and scores extremely low on development indicators. The country has weak state institutions, manifests capacity gaps for regulation and suffers considerable security challenges,” said Oduntan.

He disclosed that the contributions of multinationals and other big businesses to the IFF problem afflicting Nigeria among other developing states is a manifestation of IFF in both the private and public sectors. These according to him, include corporations engaged in services such as agriculture, hydrocarbons, mining, and manufacturing.

He however advise that less attention should be focused on what he calls ‘bread and butter’ corruption, to multiple business corruption under multinationals, saying that UK is a single multinational corrupt nation that uses banking system to hid and manipulate actual figures in the financial sector.

“The Nigerian Federal Inland Revenue Service (FIRS) recently calculated that the country loses $15bn annually to tax evasion and that is after it has roughly doubled the tax base since 2015. For Nigeria the accruable taxes that disappear through both tax evasion and tax avoidance by multinationals is clearly one of the ‘greatest crimes’ of the 20th and 21st Centuries,” Oduntan said.

He noted that since Nigeria, attained independence in 1960, systemic tax evasion has been representative of the actions of the international businesses and Multinational companies operating within the country.

Other issues like Trade Misinvoicing IFF and Rein voicing techniques  were treated which he refers as an accounting trick involving trading partners, who agree to trade at a certain price but record the transaction officially at a different price in order to shift money secretly across borders. According to him, Illicit Transfer Pricing is a technique where trade mispricing is used to hide or disguise income generated from illegal activity.

“Once money is generated through bribery and corruption, the next step in the negative value chain of action is for the money to be laundered. In this context, it is notable that Nigerian PEPs have a penchant for choosing the UK and the UAE particularly London and Dubai banks and financial institutions,” said Oduntan.

He advised that offshore financial centres in the UAE and the UK’s Overseas Territories must perform exceedingly better at introducing the transparency needed to strengthen their defences against money laundering by all forms of criminal actors.

“Money illegally earned, transferred, or used that crosses borders” is the most common definition of illicit financial flows (IFFs). IFFs reduce domestic resources and tax revenue needed to fund poverty-reducing programs and infrastructure in developing countries; accordingly, they are receiving growing attention as a key development challenge,” Oduntan concludes.

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