Calls for establishment of Procurement Council
By Gabriel Ewepu – Abuja
The Civil Society Legislative Advocacy Centre, CISLAC, Wednesday, disclosed that Nigeria loses $18 billion to illicit financially outflows.
This was made known by the Executive Director, CISLAC, Anwual Ibrahim Rafsanjani, in an address of welcome at a Conference on Illicit Financial Flows tagged ‘Corruption in Arbitration’ organised by CISLAC, which other Economic and Financial Crimes Commission, EFCC, House of Representatives Committee on Anti-Corruption and Presidential Advisory Committee Against Corruption, PACAC, Civil Society Organisations, CSOs, and Media.
According to Rafsanjani the essence of the conference is to engage key stakeholders from the anticorruption institutions, civil society organizations and the media to share and exchange the knowledge and practices around Illicit Financial Flows.
He also added that the focus is on the gaps and potential corruption in global trade disputes through the instrument of investor-state arbitrations.
He said: “The current situation of Nigeria regarding Illicit Financial Flows (IFFs) and Money Laundering (ML) is extremely challenging. Putting things into perspective, Nigeria loses about $15bn to $18bn annually to Illicit Financial outflows, largely generated by tax evasion but fueled also by grand corruption, organized crime activities and many other licit and illicit practices.
“Although Nigeria might be an extreme case, this model is replicated throughout Africa. Recent high UN panel calculated that for every 1 USD gained through foreign direct investment and oversees development aid, Africa loses 2 USD because of illicit financial outflows.
“On today’s topic, corruption and gaps in the investor-state arbitration proves to be another area where Nigeria loses precious resources while most Nigerians live in abject poverty. Many Nigerians have little or no knowledge on this topic while some disputes may influence our country’s finances for years to come.
Speaking on CISLAC’s concern about the ongoing case between Process & Industrial Developments Limited and the Federal Republic of Nigeria, warned that may lead to the gigantic loss of funds, which also forms the crux of the conference.
“A single case of the Process & Industrial Developments Limited contra the Federal Republic of Nigeria may lead to the gigantic loss of funds, and we feel that there is need for key stakeholders from the anticorruption institutions, civil society organizations and the media to debate the factors that have almost led to this national catastrophe”, he said.
Recalling the legal battle between the Federal Government and P&ID, he (Rafsanjani) stated that, “The Process & Industrial Developments Limited v Federal Republic of Nigeria arbitration case concerns a 2010 contract relating to the construction and operation of a gas processing facility between Process and Industrial Developments Ltd (P&ID), a company incorporated in the British Virgin Islands, and the Nigerian Ministry of Petroleum Resources.
“Less than three years after the contract was signed, P&ID initiated arbitration, alleging that Nigeria had not performed its obligations under the contract and seeking damages for lost profits. Despite a number of corruption-related red flags in the contract, Nigeria did not raise the issue of corruption in its defence in the arbitration.
“The tribunal concluded that Nigeria had repudiated the contract. It awarded P&ID US$6.6 billion in damages plus 7 per cent interest per annum, even though neither party had taken significant steps to perform their obligations under the contract.
“Nigeria did not immediately pay the award. This damage in favor of the Process & Industrial Developments Limited, a sum which if includes the 7% interest per annum will be at about $10bn a figure equal to 28% of the country’s current 2021 annual budget.
“So far as we are aware, the arbitration in P&ID v Nigeria was conducted entirely in secret, and the existence of the arbitration did not become public knowledge until 2015, following a change of government in Nigeria. At that point in time the jurisdictional and merits phase of the arbitration had already been concluded.
“In response, in 2018, P&ID commenced proceedings in English courts to enforce the award. In August 2019, the English High Court granted P&ID leave to enforce the award. Nigeria has belatedly raised allegations of corruption in its attempt to avoid enforcement of the award in English courts.
“It alleges a long-running corrupt conspiracy in which associates of P&ID paid bribes to the Ministry of Petroleum Resources officials to obtain the contract and to ensure that the Ministry did not vigorously contest the subsequent arbitration.
“Due to the fact that this case is in court, we take no position on the case. Our message is for us all to learn from it and prevent further occurrences.”
However, he stated that CISLAC being a key stakeholder in the advocacy for transparency and accountability in Nigeria demands establishment of Procurement Council as stipulated in the Procurement Act 2007.
“We would like to recommend that full adherence to the procurement act will help prevent the occurrence of the contract which led to this arbitration award in the first place.
“We would like to also call on the Federal government to inaugurate the procurement council as stipulated in the Procurement Act 2007. The existence of a publicly accessible beneficial ownership register will also go a long way in preventing corruption in public procurement”, he added.
In a goodwill message, the Chairman of Economic Crimes Commission , EFCC, Bawa Abdulrasheed, represented by Head Research, EFCC, Abiodun Adebanjo, disclosed that the Act establishing the Commission clearly states what illicit financial outflow means, ‘Economic and financial crimes according to the Section 46 (Par. 2) of the EFCC Establishment Act (2004) is captured as:…all the non-violent criminal and illicit activity committed with the objectives of earning wealth illegally either individually or in a group or organized manner thereby violating existing legislation governing the economic activities of government and its administration and includes any form of fraud, narcotic drug trafficking, money laundering, embezzlement, bribery, looting and any form of corrupt malpractices, illegal arms deal, smuggling, human trafficking and child labour, illegal oil bunkering and illegal mining, tax evasion, foreign exchange malpractices including counterfeiting of currency, theft of intellectual property and piracy, open market abuse, dumping of toxic wastes and prohibited goods, etc.’
“These are indeed the sources of IFFs in Nigeria. IFFs remain one of the most pervasive and daunting challenges Nigeria today.
“Investigations by the EFCC and other international law enforcement agencies, such as the Federal Bureau of Investigation (FBI), National Crime Agency (NCA). Whom we work very closely with at the EFCC reveals that the massive flow of illicit money out of Nigeria is facilitated by Global Shadow Financial System (GSFS) comprising Tax havens, secrecy jurisdiction, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, multinational asset stripping and money laundering techniques.”
He also made it known that the IFFs in Nigeria is perpetrated by corrupt leaders and their foreign accomplices and multinational companies.
“The situation we have seen in Nigeria is that corrupt government officials and their private sector collaborators use fronts and ownership structures that do not provide sufficient information about the true identities of the natural persons behind the title to hide illicit money and transfer same to safe heaven foreign jurisdictions.
“The real problem is not just about anonymity but the lack of transparency on the part of the countries where these monies are held to the countries where these monies are stolen from”, he stated.
According to the EFCC boss he presented the Nigeria Statement at the United Special Session of the General Assembly (UNGASS) on “Challenges and Measures to Prevent and Combat Corruption and Strengthen International Cooperation,” at United Nations Headquarters, New York.
“In the address the position of Nigeria on the need to stop IFFs was clearly outlined.
“As Nigeria called for a multifaceted approach at UNGASS, in addressing illicit financial flows, as recommended by the High Level Panel Report on International Financial Accountability, Transparency and Integrity for achieving the 2030 Agenda (FACTI Panel), we are 100% committed to this at the EFCC.
“The FACTI Panel Report provides paths to financial integrity for sustainable development, strongly showing how to redirect the resources lost from illicit flows to finance the implementation of the 2030 Agenda and the achievement of the SDGs.
He also disclosed that, “Aside the Abacha related resources, the EFCC is working on repatriating several others funds. Just recently as we may recall the UK Government returned to Nigeria £4.2 Million Pounds that was taken out of Nigeria by the former Governor of Delta State, Mr. James Ibori.”
And he also assured that, “We at the EFCC are fully committed to supporting efforts at curtailing IFFs in Nigeria.”
Meanwhile, he promised support for CISLAC in its effort and all other NGOs and INGOs in this regards in the fight against corruption.
“We believe at the EFCC that the quest for “IFFs free Nigeria” is a task that must be done and all and sundry are important in this fight. Once again I want to thank CISLAC for organizing this conference”, he said.
Chairman House Committee on Anti-Corruption, Hon. Shehu Nicholas Garba, represented by member of the committee, Hon Yohanna Micah Jiba, said illicit financial flows emerge from countries of origin and these are monies that supposed to service public services including health, education, security, and infrastructural development.
Garba also promised the Committee’s collaboration with CISLAC in the fight against corruption.
Also giving a goodwill message, the Executive Secretary, Presidential Advisory Committee Against Corruption, PACAC, Prof Sadiq Radda, said, “As far as this government is concerned there is no going back in the fight against corruption.
“The President and the Vice President have made commitment to Nigerians that corruption will be fought as long as we are concerned there is no going back. For the first time in this country that the President and Vice President has said is not going to be business as usual this is because we all believe as a country we will not make the needed progress unless and until we fight corruption.
“Fighting corruption is not a choice but a necessity and it is a necessity because for us that are living now in Nigeria the resources of the country must be for the citizens, and again for our children to be proud of a country that belongs to them there is work to do.
“We are happy to partner with CISLAC and other CSOs to fight corruption believing that there is no single individual or any arm of government that can successfully fight corruption.
“Corruption has to be fought jointly, collaboratively and everybody giving assistance. That is why the President has always said it is not a personal thing; the President and the Vice President alone cannot fight corruption. The legislature, CSOs, civil servants, religious people and all citizens have to play a role.”