Non-Conviction Based Asset Recovery in Nigeria: An Additional Tool for Law Enforcement Agencies?
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- 2024
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Abstract
1 Introduction
Nigeria suffers from extensive financially-motivated crime. Indeed, its name is synonymous in certain countries with the advance fee fraud scheme which begins with ‘a letter mailed, or e-mailed, from Nigeria [that] offers the recipient the ‘opportunity’ to share in a percentage of millions of dollars that the author—a self-proclaimed government official—is trying to transfer illegally out of Nigeria’.1 Perhaps it is this ignoble practice that explains why contemporary Nigeria is a ‘significant’ centre for financial crime and cyber-crimes according to the U.S. State Department.2 However, it would not explain Nigeria’s ranking as amongst the worst on the African continent for organised criminality and criminal markets. These depressing rankings from the European Union-funded Africa Organized Crime Index3 reflect Nigeria’s ‘infamous’ human trafficking networks; non-renewable resources crimes (including extensive illegal oil bunkering); pervasive drug markets; and its position as a ‘major transit hub’ for wildlife trafficking.4 Indeed in terms of the latter, Nigeria is one of only six ‘Countries of Concern’ for the U.S. State Department—a label that derives from the Department’s belief that public and classified material indicate either high-level or systemic government involvement in the trafficking of endangered or threatened species.5
The involvement of public officials brings us to the crime of corruption, which is not measured by the Africa Organized Crime Index, but which is probably the most important financial, if not organised, crime in Nigeria, whether gauged by the value of the proceeds of crime generated or the impact of the crime on economic development and everyday life. It has been suggested that close to $400 billion was stolen from Nigeria’s public accounts from 1960 to 1999 and Sani Abacha alone removed the equivalent of 2–3% of the country’s GDP for every year that he was President.6 Similarly Ibrahim Magu, the then acting chairman of Nigeria’s main anti-corruption agency, the Economic and Financial Crimes Commission (EFCC), posited that the money stolen by 32 entities (human and corporate) between 2011 and 2015, was well over N1.3 trillion (approximately US$6.5 billion).7 One wonders if it was estimates like these that led the then Prime Minister of the United Kingdom David Cameron to describe Nigeria as ‘fantastically corrupt’8 in 2016.
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Today, Nigeria ranks 150th of 180 countries in Transparency International’s Corruption Perception Index 2022 with a score of 24/100.9 Shehu10 explained that the manifestations of corruption include crony capitalism, embezzlement, extortion and extortive corruption, facilitation payments, kickbacks, kleptocracy, lobbying/campaign financing, patronage and regulatory capture, rent-seeking, systemic corruption and state capture, as well as tender and procurement fraud. Further details of such widespread contemporary (and historical) corruption can be found in literature such as the six (overlapping) versions of the Human Environmental Development Agenda’s (HEDA) A Compendium of 100 High Profile Corruption Cases in Nigeria11 or A New Taxonomy for Corruption in Nigeria by Page.12 All of the proceeds of public embezzlement constitute monies that could have been used for the economic development of Nigeria.
Grand corruption13 in Nigeria and elsewhere produces criminal assets that require laundering. Corrupt public officials protect themselves by using their positions to bribe others to ignore the law. Therefore, corruption not only constitutes a cause of money laundering (i.e. as a predicate offence), but corruption by politicians and public officials can become a major impediment to the rule of law. Over the years, kleptocrats and other Politically Exposed Persons (PEPs)14 in Nigeria have been able to conceal massive amounts of stolen wealth in offshore financial centres around the world. In sum, corruption is the main source of proceeds of crime in Nigeria, and the main target for asset recovery in the country.
Despite Nigeria’s accession to international treaties such as the United Nations Conventions on corruption, transnational organised crime and drug trafficking, and its adherence to the anti-money laundering (AML) recommendations or standards set by the Financial Action Task Force (FATF) and its regional body GIABA,15 these, and other, financially motivated crimes continue on a large scale. Notwithstanding Nigerian efforts led by the current administration to combat money laundering, according to the U.S. State Department there have been ‘minimal increases in arrests and prosecutions’.16 Relatively few cases of grand corruption are prosecuted successfully in Nigeria, and, consistent with other countries,17 the value of the assets recovered from financially motivated criminals is very low in comparison to the value of the proceeds they are said to generate.
This chapter focuses upon a single form of asset recovery, that known as civil forfeiture, civil recovery or non-conviction based (NCB) asset recovery as a means of depriving kleptocrats and PEPs of the proceeds of their crimes and its (debated) legal basis within Nigeria.
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The next part of this chapter considers the international legal framework relating to asset recovery, including the UN Conventions and best practice in applying NCB asset recovery in other jurisdictions (Sect. 2).18 We follow this with an overview of the challenges faced within Nigeria with asset recovery in general, and particularly in connection with the proceeds of corruption (Sect. 3). The chapter then considers in detail the current legal basis for the use of NCB asset recovery and its application within Nigeria (Sect. 4) after which we present a summary of our reflections on whether NCB asset recovery can assist the Nigerian authorities in their efforts to combat financial crime (Sect. 5).
2 International Basis for NCB Asset Recovery
The origin of asset recovery in international treaties is often traced back to the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 (Vienna Convention). This convention required state parties to adopt measures to enable the confiscation of proceeds derived from illicit drug production, trafficking and associated money laundering in order to eliminate the main incentive of those involved in the supply side of the problem. The Vienna Convention focused upon confiscation after a trial in a criminal court and did not specifically mention civil or NCB asset recovery, but it did suggest that parties to the convention ‘may consider ensuring that the onus of proof be reversed regarding the lawful origin of alleged proceeds or other property liable to confiscation’.19 This would mean that, rather than prosecutors being required to prove that the origin of proceeds was unlawful in order to allow confiscation, the individual would be required to prove the origin of the proceeds was lawful in order to avoid such confiscation.
Two years later, the G7 constituted a Financial Action Task Force on Money Laundering (FATF) that produced a Report20 which would later be viewed as the first version of its standard-setting ‘40 Recommendations’ to prevent money laundering. Amongst other things, the Report recommended that countries adopt measures similar to those set out in the Vienna Convention, to enable their national authorities to confiscate the proceeds of any (but primarily drug) money laundering offences (Recommendation 8). It did not mention NCB asset recovery but encouraged international cooperation on confiscation.
Going further, the United Nations Convention against Transnational Organized Crime 2000 (Palermo Convention) addressed recovery of the proceeds of transnational crime committed by a ‘structured group’.21 It required state parties to adopt measures to enable the identification, tracing, temporary freezing or seizure and permanent confiscation of the proceeds of criminal activities noted in this Convention. Like the Vienna Convention, it encouraged state parties, when requested, to conduct similar asset tracing and recovery activities on behalf of other state parties. It did not specifically name NCB asset recovery; however, Article 12(7) suggests that state parties may wish to ‘consider the possibility of requiring that an offender demonstrate the lawful origin of alleged proceeds of crime or other property liable to confiscation’ which seems similar to the Vienna Convention’s suggestion that state parties consider reversing the onus of proof in regard to asset recovery.
Three years after this, the United Nations Convention Against Corruption (UNCAC, 2003) made the return of assets stolen through corruption a ‘fundamental principle of the Convention’ and declared that state parties ‘shall afford one another the widest measure of cooperation and assistance in this regard.’22 The Convention devoted Articles 51–59 to asset recovery, and while none of these Articles specifically mentioned NCB asset recovery, Article 54 suggested state parties ‘consider’ taking measures ‘to allow confiscation of such property without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence or in other appropriate cases’ (our emphasis).
FATF updated its international AML standards in the same year. One of the 40 Recommendations encouraged countries to adopt measures similar to those set forth in the Vienna and Palermo Conventions to enable their authorities to identify, investigate, restrain and ultimately confiscate the proceeds of money laundering or predicate offences. The preferred first route is to pursue a criminal prosecution, with asset recovery a part of that process. However, FATF also recommended that countries consider adopting measures that allow such proceeds ‘to be confiscated without requiring a criminal conviction, or which require an offender to demonstrate the lawful origin of the property alleged to be liable to confiscation.’23
The current international AML standards appearing in 201224 also referenced the Vienna and Palermo Conventions alongside the ‘Terrorist Financing Convention’ and repeated ideas about asset recovery. Moreover, these standards used the term ‘non-conviction based confiscation’ on two occasions. The first was when recommending that countries consider adopting measures that allow proceeds of crime to be confiscated without requiring a criminal conviction, or which required an offender to demonstrate the lawful origin of the property alleged to be liable to confiscation. The second was when recommending that countries should ensure they had the authority to be ‘able to respond to requests made on the basis of non-conviction-based confiscation proceedings’ and related provisional measures, unless this was inconsistent with the fundamental principles of the domestic law of a state party.
FATF’s 2012 best practice paper on confiscation and asset recovery provides eleven pages of guidance on these matters. It restates UNCAC Art.54 that, as a minimum, Recommendation 38 means countries should cooperate with NCB asset recovery requests when the suspect is unknown, unavailable by reason of death, flight, or absence; and that countries should explore ways to recognise the NCB confiscation orders of other countries, even if they do not have the same such orders.25 FATF suggest also that NCB confiscation would be useful in numerous circumstances, including situations where property is found but: the person is immune from prosecution or there is no realistic chance of bringing a prosecution; a conviction could not be obtained for procedural or technical reasons (e.g. the statute of limitations is exceeded); the person has already been acquitted; or where there is insufficient admissible evidence to meet the burden of proof.26
The World Bank27 has argued that ability to instigate civil proceedings for asset recovery should be ‘affirmatively stated in the law’, either incorporated within existing criminal codes or as part of a separate piece of legislation. The most recent edition of this report28 noted the complexity of asset recovery particularly in states where there is widespread corruption, thus recommending consideration of all ‘legal options’. In such circumstances, UNCAC’s Intergovernmental Group on Asset Recovery (IGGAR) noted, NCB asset recovery is effective in ‘divesting the corrupt of the proceeds of their crimes and restoring those funds to the victim state’ especially where assets have been moved or are located offshore. Indeed, where the corrupt are government officials, it may be the only available tool.29 Despite this, the IGGAR also note that NCB asset recovery does not necessarily provide a simpler alternative to criminal investigation and prosecution, as it also requires investment in capacity to understand and unravel (often complex) financial structures and arrangements.
The fact that investigations can span multiple jurisdictions gives rise to additional potential barriers to the use of NCB asset recovery, which have been highlighted by the NGO Basel Institute on Governance.30 For example, in some circumstances a decision in one jurisdiction to forego criminal action in favour of civil remedies, including NCB asset recovery, may have implications on another jurisdiction wishing to undertake criminal action on ‘related matters’. Another barrier is that without appropriate non-conviction legislation, destination countries may not be able to respond to legal assistance requests. Further, it is recognised that even if both jurisdictions have in place appropriate NCB recovery legislation, the standards of proof can vary31 making it difficult for the courts to enforce others’ judicial orders.
Countries that are asked to enforce foreign NCB confiscation orders but do not have any NCB provision themselves may regard such a request as beyond the scope of co-operation in criminal matters under UNCAC.32 Some such jurisdictions, however, are willing to interpret the ‘essence and purpose’ of the requesting country’s civil or administrative proceedings widely enough to ‘create an analogy to [their] own domestic proceedings’.33
In sum, despite some issues, NCB provision has been promoted as a means of combatting financially motivated crime, including corruption, through denial of economic gain. It thus plays a role in strengthening the international framework for prevention of money laundering, which alongside monitoring of PEPs (FATF’s Recommendation 12) removes opportunity for or benefits of corruption.34
3 Challenges with Asset Recovery in Nigeria
Having previously noted that the first choice of sanction should be criminal prosecution with criminal asset forfeiture, in common with other jurisdictions, Nigeria’s legal system contains both civil and criminal law provisions. This means that, if a criminal prosecution in respect of assets derived from corruption cannot be pursued or fails, the alternative of NCB asset recovery can be considered.35 There is debate in Nigeria, however, surrounding: (a) the very existence of relevant NCB asset recovery-related legislation; and (b) asset recovery more generally.
3.1 Legislative Basis for NCB Asset Recovery in Nigeria
Setting aside ethical criticism of the use of civil recovery in any criminal justice system and the potential for any government to use it (or any other anti-corruption tools) for partisan purposes, there remains a fundamental debate regarding whether provision allowing for NCB asset recovery exists within Nigeria’s legal system. Legal scholars would normally be clear about the existence of such a distinctive power in law, and academic debate would usually focus upon legal minutiae such as its limitation, or on the consequences of using the power in practice. However, a review of the literature reveals there are academics (albeit not legal scholars) who imply or suggest NCB asset recovery does not exist in Nigeria and who propose its enactment.36 Indeed, even the Nigerian government itself appears to have stated this on at least one occasion. In answer to a question37 about asset recovery in a UN review of its implementation of certain articles of UNCAC, the official response was: ‘The Proceeds of Crime Bill is currently before the National Assembly. When passed into law it will enable Non-Conviction-Based Asset Forfeiture and also provide a harmonized framework for managing recovered assets.’38
In complete contrast, Waziri-Azi noted that ‘the assets of some … high-profile individuals have already been recovered through the increased use of non-conviction based forfeiture orders’39 going onto conclude that:
As we will discuss, relevant legislative provisions do exist and have developed over time. However, there are many barriers to their effective implementation which may obscure their existence and usefulness.Contrary to public opinion, non-conviction based forfeiture mechanisms, have always been provided for in Nigerian laws like the Corrupt Practices and Other Related Offences Act (2000), Advanced Fee Fraud and Other Fraud Related Offences Act (2006), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks, Code of Conduct Bureau and Tribunal Act, Economic and Financial Crimes Commission (Establishment) Act (2004), Administration of Criminal Justice Act (2015), National Drug Law Enforcement Agency Act.40
3.2 Asset Recovery Generally in Nigeria
The legislative framework establishing the Nigerian law enforcement agencies (LEAs) provides them with a wide range of powers to identify, track and seize assets, and the ability to seek orders from the court to freeze, confiscate and forfeit the proceeds of crime. For example, powers of criminal forfeiture (sometimes regarded as a more effective method of asset recovery because of its preventative nature) are available through s.7(1)(b) of the Economic and Financial Crimes Commission (EFCC) Act (2004). This Act also makes the EFCC the coordinating agency for the enforcement of the provisions of various legislative acts related to economic crime.41 Criminalisation not only allows national authorities to detect, prosecute and deter offences but also provides the legal basis for international cooperation among LEAs and judicial and administrative authorities. S.7(1)(b) EFCC Act also states that the ‘Commission has power to cause investigations to be conducted into the properties of any person if it appears to the Commission that the person’s lifestyle and extent of the properties are not justified by his source of income’. This section therefore grants the EFCC proactive powers to investigate any person (not just those convicted of a criminal offence), and in particular any PEP, who appears to be ‘living beyond their means’.42 Significantly, although ‘it is not legally possible to enforce a foreign non-conviction-based confiscation order in Nigeria’,43 Nigeria has benefitted from the recovery of stolen assets that have been found in other jurisdictions that have NCB asset recovery provisions within their legislation.44 More usually, however, international recovery efforts involve a range of sanctions and take time and commitment as illustrated in the following two high-profile cases:
3.2.1 The Abacha Case
General Sani Abacha was President of Nigeria from 1993 to 1998. During this period, he is alleged to have embezzled billions of US dollars with the proceeds laundered through bank accounts in several offshore financial centres, including Switzerland. The incoming President Obasanjo (1999–2007) sought assistance from a Swiss legal firm to assist with a request for MLA which successfully resulted in a general freezing order over Abacha’s assets. As there was no available ‘final forfeiture judgement in the Nigerian courts’ at this time, ‘the Swiss courts legally applied the organized crime provisions of the (then) Art 59 Swiss Criminal Code which mandated the confiscation of ‘all assets, which are subject to the power of disposal of a criminal organization’. Deeming the Abacha clan ‘a criminal organization’, the courts declared the assets would be confiscated.45 The World Bank was brought in to monitor the repatriation of funds totalling $1 billion which took place in a series of tranches between 2005 and 2017.46
3.2.2 The Ibori Case
James Ibori, former Governor of Delta State (1999–2007) used a network of associates and family members to move stolen funds through a series of companies located in offshore jurisdictions. He was charged with embezzlement in the Nigerian courts but the case was thrown out in 2009. However, in 2012 Ibori pleaded guilty in a London court to conspiracy to defraud the Nigerian state and to money laundering and was sentenced to a 13-year prison sentence. More recently in January 2020, the UK launched a fresh attempt to confiscate assets totalling £178 m.47 As reported by Spotlight on Corruption48 the confiscation process in the UK that commenced in 2007 has been far from straightforward. In March 2021 the UK returned £4.2 m ($5.8 m) to the Nigerian authorities, being the proceeds recovered from family members and from an associate who were separately convicted in the UK of money laundering. The return took place under a 2016 bilateral memorandum of understanding that required the proceeds to be used for development projects.49
International cooperation notwithstanding, the legal and institutional framework for asset recovery in Nigeria continues to evolve,50 and the most recent evaluation of its effectiveness was carried out in the autumn of 2019 (published in the summer of 2021) by GIABA.51 The two principal FATF Recommendations are 4 (measures to identify, trace and evaluate property which is subject to confiscation) and 38 (authority to take expeditious action in response to requests by foreign countries to identify property which may be subject to confiscation).52 The 2021 evaluation report considered that Nigeria had addressed the deficiencies highlighted in its 2008 mutual evaluation and from a perspective of technical legal compliance was now compliant with Recommendation 4. It was found to be largely compliant with Recommendation 3853 (partially compliant in 2008), so positive progress has been made in both cases.
The 2008 evaluation had stated that, in relation to Recommendation 38, Nigeria did not have ‘comprehensive legislation on international cooperation’ but that it had been able to negotiate multilateral and bilateral agreements on MLAs54 that included asset restraint and confiscation. The most recent evaluation noted that the country still failed to ‘demonstrate effective legal and operational frameworks for seeking international cooperation including the recovery and repatriation of assets’ but that the enactment of the Mutual Legal Assistance in Criminal Matters Act, 2019 (MLACMA) had the objective of streamlining these processes.55
While significant efforts have been made in this direction and some assets have been seized, confiscated, or forfeited to government, there are problems arising from the management of these assets both while under interim forfeiture after seizure and when finally forfeited after due process. Over the years, there has been concern because of fears of dissipation,56 a lack of transparency57 and chaotic management.58 According to Nigeria’s Open Government Partnership,59 a ‘lack of transparency has been exacerbated by a fragmented and inefficient legal and institutional framework’ resulting in a failed process for asset identification, recovery, management and disposal (if required). Interestingly, the LEAs themselves seem to agree on the need for a strategy and / or mechanism for the management of such assets.60
Frustrated with the slow progress on asset recovery, President Buhari (2015–2023) had signed Executive Order No 6 (2018) on the Preservation of Suspicious Assets and Related Schedules.61 This order appears to have been prompted by the frequent adjournment of cases due to perceived incompetence of public prosecutors, congested dockets of the courts, and dilatory tactics of defence counsels. However, the most frequent barrier is the continued abuse of interlocutory appeals which has frustrated attempts to expedite trial procedures in the Federal and State High Courts.62 The Executive Order is mainly concerned with the provision of restraint pending criminal prosecution in order to prevent asset dissipation and was implemented as a ‘stop-gap’ for the long delayed (and now enacted) proceeds of crime legislation described below.63 The order did not purport to create new powers of forfeiture but rather instructed the relevant authorities, under the direction of the Attorney General (AG), to use ‘all available lawful or statutory means, including seeking the appropriate Order(s) of Court’ (s.1(a)).
The following year, the Nigerian Government gazetted the new Asset Tracing, Recovery and Management Regulations, 2019, (the Regulations) providing a framework for asset management.64 These stated that the Office of the AG would be responsible for the management of assets, regardless of whether they had been restrained or permanently forfeited, and for the coordination of all asset recovery work being conducted by Nigeria’s LEAs irrespective of whether the tracing and investigating took place within or outside of Nigeria.65 In September 2020, the Ministry of Justice established a Central Database for Asset Recovery and Management for the storage of records of all recovered assets within and outside Nigeria, including for NCB forfeiture. Part 3, s.11(1–3) of the Regulations requires proceeds from the disposal of permanently forfeited assets to be paid into a designated ‘Federal Government of Nigeria Asset Recovery Account’ held at the Central Bank. S.11(4–6) sets out the time periods for firstly the AG informing the Minister for Finance of funds being paid into the account (15 days); and for the Minister to transfer such proceeds into the Consolidated Revenue Account (30 days); or to other tiers of government (45 days). S.1(7) provides for the Federal Government to receive at least 30% of the proceeds of asset recovered for other State and Local Governments.66
The explanatory note to the Regulations states that the provisions are in line with international best practice for management and disposal of assets in a transparent manner. As we were unable to locate any asset recovery database,67 it is not clear if data (part 2 (s.3(c-e))) are being shared either within government agencies or (better) located in the public domain, or if there are plans for such sharing. Anecdotally, we heard that these Regulations were not being followed by LEAs and that a high court had declared the Regulations null and void.
It has been observed that the funds recovered internationally were as a result of the effort and investigations undertaken by agencies in external countries and not as a result of the action of domestic agencies.68 Consistent with our observations, the mutual evaluation report notes that it is difficult to measure the volume of assets that have been recovered via forfeiture as there is little accessible in the way of a public record nor is there a central database of recovered proceeds.69 Those asset recoveries that have been publicised have been vastly inflated for the benefit of the news media.70
A Proceeds of Crime Bill had been pending for over a decade, moving back and forth from the executive to the legislature, due to its political sensitivity and objections from the LEAs who feared dilution of their own powers.71 The Bill sought to address the deficiencies inherent in the Nigerian asset recovery armoury already discussed and was eventually enacted as the Proceeds of Crime Recovery and Management (PCRM) Act (2022). While somewhat watered down from its original form,72 the PCRM Act aims to construct an ‘effective legal and institutional framework’ for the recovery and management of the proceeds of crime or from benefits derived from unlawful activities and to harmonise and consolidate existing legislative provisions on their recovery. This latter objective is achieved through s.77 with respect to the management of finally forfeited assets which affords primacy of this PCRM Act over other relevant laws.
At its core are NCB confiscation powers, and the creation of individual Proceeds of Crime Management Directorates within existing LEAs. The relevant organisations will have the power to implement, enforce and duly administer the provisions of the Act in connection with asset recovery and management. The Act aims to ‘strengthen collaboration’ to improve criminal asset recovery specifically via ‘non-conviction based forfeiture proceedings’ (s.1(f)). Powers vested with individual organisations with respect to investigation, identification, tracing and recovery of the proceeds of unlawful activities appear to remain intact although each must also comply with the provisions of this Act (s.54). The Directorates must establish and maintain statistics on amounts recovered and managed (s.3(f)) with proceeds to be paid into a single account at the Central Bank—the Confiscated and Forfeited Properties Account (s.68(1)). This account is to be managed ‘by the head of the relevant organisation’ with reports provided to the Minister of Finance (s.68(2)). It also provides for the Federal High Court to designate special courts to hear and determine all cases under the Act (s.73(2)).73
There is evidence to support the fact that PEPs and other powerful officials in Nigeria have escaped prosecution and, as already mentioned, even when a case is brought to court there may be frequent delays, with other cases being thrown out for poorly prepared evidence.74 This is where NCB forfeiture may prove useful as a potential additional tool, as it does not rely on first securing a criminal conviction. Nevertheless, while the PCRM Act aims to streamline asset recovery initiatives in Nigeria, there is no guarantee that efforts to use the powers contained in this Act will avoid existing systemic problems that undermine the effectiveness of implementation on the ground.
4 NCB Asset Recovery in Practice
As discussed above, in Nigeria, AML and asset recovery powers lie primarily with agencies established under the EFCC Act. The earlier Corrupt Practices and Related Offences Act 2000 (CPA)75 and the Advance Fee Fraud and Other Fraud Related Offences Act 2006 (AFF Act) contain additional provisions. The provisions are complex in their drafting and, in practice, overlap in their reach. Their use is varied and, at times, inconsistent. We will consider the EFCC Act and the CPA together as there is considerable overlap between them.
The CPA includes two provisions which allow limited forms of NCB forfeiture, although both are drafted in perplexing terms.76 Sect. 47(1) is particularly puzzling:
The effect of subsection (b) is that the court is not merely authorised, but required, to order forfeiture in circumstances where the property in question is proved to be the subject-matter of, or used in, the offence charged, and yet that offence has not been proved against the accused. However, how can the link between the property and the offence be proved without proving the offence and identifying the offender? One possibility is that although the prosecution proves the relevant matters to the satisfaction of the judge, the trial fails to reach a verdict because, for example, the accused dies or absconds (similar in scope to Article 54 UNCAC). Another is that it might be clear that the alleged offence took place, despite the accused being acquitted of being a party to it (for example, they might innocently have received the property as a gift from the true culprit). It seems plausible, however, that the intention of the section is to create a form of interim forfeiture of property connected to the alleged offence, pending the outcome of the trial.77 This reading is supported by the cross-heading of the section: ‘Forfeiture of property upon prosecution for an offence’. Nigerian principles of statutory interpretation (like those in English law)78 allow cross-headings to be taken into account where the wording is ambiguous.79 If this reading is correct then s.47(1)(b) of the CPA has been largely superseded by the more clearly worded power of interim forfeiture contained in the EFCC Act at s.29.In any prosecution for an offence under this Act, the court shall make an order for the forfeiture of any property which is proved to be the subject-matter of the offence or to have been used in the commission of the offence where –(a)the offence is proved against the accused; or(b)the offence is not proved against the accused but the court is satisfied:(i)that the accused is not the true and lawful owner of such property; and(ii)that no other person is entitled to the property as a purchaser in good faith for valuable consideration.
S.29 applies to property that has been seized by the EFCC, which the EFCC is required to do under s.28 whenever a person is arrested under the EFCC Act. S.29 avoids the perplexing requirement for ‘proof’ under the CPA, and instead requires only ‘prima facie evidence that the property concerned is liable to forfeiture’. This has been defined in a series of Nigerian cases as evidence which if uncontradicted and believed will be sufficient to prove the offence.80
The EFCC Act (s.33) also provides more clearly than the CPA for the forfeiture of a defendant’s property following an acquittal. When an accused is acquitted or discharged the court may either revoke or confirm the forfeiture of assets, according to what ‘is considered just, appropriate or reasonable in the circumstances’ (s.33(1)). S.33(2) specifically provides that forfeiture may be confirmed where the accused is discharged on ‘merely technical grounds’. The availability of these powers since 2004 probably explains why, so far as we can discover, the ambiguous s.47 CPA has been little used.
The constitutionality of interim forfeiture has been challenged in several cases. In Nwaigwe v FRN81 the Court of Appeal upheld such a challenge and ruled that s.29 EFCC Act was an unconstitutional violation of the presumption of innocence. In subsequent cases, however, the constitutionality of s.29 has been upheld.82 The constitution expressly provides that forfeiture, whether by civil or criminal proceedings, does not violate the right to property (art 44(2)(b)), and interim forfeiture, as a measure to prevent assets from being dissipated prior to trial, can easily be defended against the charge that it violates the presumption of innocence.83 A more difficult issue, however, is whether the presumption of innocence is violated by the power to confirm forfeiture following acquittal on the simple ground that it is ‘appropriate, just or reasonable’ to do so (s.33(1) EFCC Act). We have not been able to find a case which decides this point. Problems about the compatibility of forfeiture powers with the presumption of innocence are by no means unique to Nigeria.84
S.48 CPA deals with property that has been seized by the Independent Corrupt Practices Commission (ICPC) during an investigation, where that investigation does not result in prosecution or conviction. It allows the Chair of the ICPC to apply to the High Court, within 12 months of the date of the seizure, for the property to be forfeited on the ground that it has been obtained in connection with, or as a result of, an offence under the Act.
It appears that under s.48(3) CPA, the initial burden of satisfying the court that the property was used in, or the subject-matter of, an offence rests (in accordance with common-law principles) on the ICPC. Under S.138(1) Evidence Act 2011, if the person alleged to have committed a crime is a party to the proceedings, the allegation must be proved beyond a reasonable doubt. This will not apply, however, where the alleged offender is not a party, for example because they have fled the country. Once the ICPC proves the crime and its connection with the property, the onus shifts to the person claiming the property to ‘show cause’ why it should not be forfeited (e.g. because they were not the offender and purchased the property in good faith).
One case where s.48 CPA was successfully used against an alleged embezzler involved the forfeiture of properties worth N124.5 million (about US$346,000) by a civil servant, Daniel Obah, who was alleged to have purchased them with money fraudulently drawn from his ministry’s account.85 Reports of the case do not say whether the criminal activity was proved to the criminal standard as the Evidence Act 2011 requires. Even assuming that civil courts strictly adhere to the criminal standard of proof, civil proceedings might be attractive as a way of avoiding the delaying tactics common in criminal proceedings.
The clearest provision for NCB forfeiture is to be found in the AFF Act at s.1786:
As under the CPA, the court has to give notice inviting anyone with a claim to the property to come forward. The notice period is normally 14 days, but this can be varied by the High Court (s.17(4) AFF Act). Section 17(6) expressly provides that forfeiture under the section shall not be based on conviction. In Ogungbeje v EFCC,87 the Court of Appeal stated emphatically:Where … any property in the possession of any person, body corporate or financial institution is reasonably suspected to be proceeds of some unlawful activity under this Act, the Money Laundering Act of 2004, the Economic and Financial Crimes Commission Act of 2004 or any other law enforceable under the Economic and Financial Crime Commission Act of 2004, the High Court shall upon application made by the Commission…upon being reasonably satisfied that such property is …the proceeds of unlawful activity … make an order that the property or the proceeds from the sale of such property be forfeited to the Federal Government of Nigeria.
This section is much easier to interpret and to apply than either s.47 or s.48 of the CPA. It applies to a wider range of offences and to any property that is the ‘proceeds of unlawful activity’, rather than being the subject matter of, or used in, a specific offence. Rather than requiring the court to be ‘satisfied’ of the criminal connections of the property, it requires only that it be reasonably satisfied. The term ‘reasonably satisfied’ is defined by the Evidence Act 2011 s.33(2) as meaning that the party bearing the burden of proof has adduced sufficient evidence to satisfy the court on the balance of probabilities in the absence of any contrary evidence.The sum total of the provisions of the law is that there is non-conviction based forfeiture of properties suspected to be derived from proceeds of crime, the submission by learned Counsel that there must be investigation, trial and conviction before an order of forfeiture is made by the Court is therefore a gross misconception and without foundation in law.88
The question whether such a low standard of proof is compatible with the presumption of innocence (Constitution of Nigeria art, 36.5) or with the Evidence Act 2011 s.135(1), which requires a court to apply the criminal standard of proof where the commission of a crime by a party to civil proceedings is ‘directly in issue’ was addressed by the Court of Appeal in Jonathan v FRN.89 Drawing on case law from various jurisdictions, but primarily the US, the Court held in this case that s.17 AFF Act created an ‘in rem’ procedure, based ‘on the legal fiction that the property and not the owner has contravened the law’, and the presumption of innocence had no place in such proceedings.90 The effect of s.17 was to place the burden on the appellant (the wife of former President Jonathan) to prove that the funds in question were not the proceeds of unlawful activities, ‘since it is the Appellant who is asserting that the funds came from legitimate source or origin’.91
The AFF Act creates a wide-ranging power of civil forfeiture wherever the EFCC can make out a prima facie case that assets are the proceeds of corruption or financial crime. At the time of the 2008 GIABA report, however, civil forfeiture appears to have been relatively little used. It is since 2015, according to Page, that its use has significantly increased, being viewed by prosecutors as a ‘creative’ response to the inefficiency of the criminal courts.92 This does not explain why more recent academic contributions, discussed earlier, give the impression that NCB forfeiture does not exist. We can only ascribe this to the difficulty for scholars who are not lawyers93 (and even those who are) of finding up-to-date and intelligible information about this area of law. In contrast to the earlier mutual evaluation of 2008, the 2021 report draws on s.17 AFF Act as providing evidence that there is a legal basis to apply NCB forfeiture where it has not been possible ‘for justifiable reasons’ to secure a money laundering conviction. However, they also note that the country did not show that it had followed this route,94 which suggests that NCB asset recovery remains uncommon in Nigeria.
Tope Adebayo LLP describe ‘civil forfeiture as an innovation birthed by necessity.’95 It is an innovation that raises a difficult issue of principle, which is by no means unique to Nigeria.96 Forfeiture of assets in cases of corruption looks very much like a punishment for a crime, which should only be imposed when the presumption of innocence is rebutted in a criminal trial. On the other hand, it seems perfectly reasonable that someone who is asking the state to uphold their right to certain assets (or to return those assets following seizure) should be asked to prove on the balance of probabilities that they have legitimately acquired such a right. This, rather than the legal fiction that an asset is somehow ‘guilty’, is the justification for civil forfeiture proceedings where the burden of proof is on the purported owner of the asset. By circumventing the protections afforded to criminal defendants, however, such a procedure creates a risk of abuse.
In their very useful discussion of civil recovery in Nigeria, Tope Adebayo LLP defend its constitutionality but add:
It is too early to say what impact the newly-enacted PCRM Act will have on this debate. Part 5 of this Act specifically addresses NCB recovery of the proceeds of crime, subject to civil proceedings and as such to be proved on a balance of probabilities (s.8). The scope of its application is set out in s.7 and s.19 PCRM Act, and, in addition to the proceeds of crime, covers property used or intended to be used in criminal activity, and property that is abandoned or unclaimed that is reasonably suspected to the be the proceeds of crime. Such assets are to be subject to a court granted preservation order and, as with the AFF Act, a notice period of 14 days is provided to allow for interested parties to come forward. An important part of the PCRM Act, s.19(4), maintains the validity of a forfeiture order irrespective of the outcome of current or future criminal proceedings with which the property may be associated.It is conceded that the procedure could be abused by overzealous EFCC officials to unjustly deprive persons of their legitimate assets. There is therefore a duty on the Courts to ensure that when an application is brought pursuant to Section 17 AFFA, all persons with legitimate interest in the asset are served with the interim order. The court must ensure that significant opportunity is given to all parties to contest the application.97
Concerns have been raised by the Policy and Legal Advocacy Centre98 (PLA Centre) over s.74 which reverses the burden of proof:
the defendant in any proceedings under this Act bears the burden of proving that he is the legitimate owner of the assets suspected to be proceeds of crime or derived from unlawful activity or that the assets are of legitimate origin and not proceeds of unlawful activity.These concerns centre on the potential for the law to be abused against ‘enemies of a government in power’. However, from our prior discussion, s.74 would seem to be consistent with both the Vienna and Palermo Conventions. The PLA Centre also argued that the section appeared inconsistent with the principles of common law and in contravention of s.131 of the Evidence Act 2011 and s.36(5) of the 1999 Nigerian constitution that provides for the presumption of innocence in a criminal prosecution, although our prior discussion would suggest that this has already been tested in the courts.
5 Summary of Reflections on NCB Asset Recovery in Nigeria
Given the difficulties encountered in securing successful convictions of kleptocrats and PEPs or in recovering illegally-gained assets to date, the aim of this chapter was to determine whether NCB asset recovery powers are usefully available to the Nigerian authorities in their efforts to prevent financial crime, in particular grand corruption. Our research shows that ample legal tools are indeed, and have been, available to enable NCB asset recovery in line with international norms and expectations, despite some suggestions to the contrary. However, it is also evident that there are challenges to be navigated if NCB provisions are be to effectively employed as in practice their application is complex and inconsistent. While this may in part reflect fundamental concerns among the wider international, legal and academic community about the appropriateness of NCB asset recovery for reasons of fairness, questions of standards of proof and uncertainties about its justification, there are significant barriers specific to Nigeria which also serve to hamper implementation. In common with Nigeria’s criminal regime, much civil recovery power rests in the hands of multiple LEAs, which tend to compete for resources and influence, rather than collaborate. This serves to water down rather than strengthen the effectiveness of widely-applicable powers, such as those found in the AFF Act, in favour of agency-specific powers, such as those under the EFCC or the CPA.
The multiple-agency system has also generated a fragmented legislative picture, with overlapping and competing powers and vested interests frustrating attempts to deliver a single and effective proceeds of crime act. In fact, the latest legislative product, the PCRM Act, has been slow to appear and suffered dilution at draft stage, leaving yet another piece of legislation that muddies rather than clears the waters.
There is little doubt that too many opportunities continue to be presented to those in positions of authority to embezzle state resources for personal benefit and exploit overlap and inefficiencies in the investigative and legal systems, affording opportunity for the proceeds of corruption to be hidden away. In light of problems inherent in the Nigerian legal system, it is difficult to conclude that promising NCB asset recovery powers will be utilised in a fashion which will make a significant difference to the status quo any time soon.
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Peter Sproat
former Senior Lecturer in Financial Crime, Northumbria University. Peter is a research fellow at an investigative think tank which conducts forensic research and analysis on tax avoidance, tax policy, and tax law. Prior to that he was a senior lecturer in financial crime at Northumbria University and has extensive background in teaching aspects of financial crime, policing, and politics at a number of universities in the UK. Peter has published numerous academic articles on anti-money laundering, asset recovery and the policing of fraud and organised crime.
Tony Ward
Professor of Law, Northumbria University. Tony is Convenor of the Northumbria Centre for Evidence and Criminal Justice Studies, and Co-Director of the International State Crime Initiative (ISCI). His main research interests are in the law of evidence and the criminological field of state crime (including grand corruption). With Penny Green, he is co-author of State Crime: Governments, Violence and Corruption (2004) and State Crime and Civil Activism (2019).
Jackie Harvey
Emeritus Professor Northumbria University. Jackie is emeritus professor at Northumbria University’s Newcastle Business School. She has had a varied career crossing from fiscal and macro policy economist, commercial banking and entering academia in 2000. She established her research reputation in the field of anti-money laundering, most recently being principal investigator on a UK FCDO funded project examining beneficial ownership and corruption in Nigeria.
Sue Turner
Assistant Professor, Northumbria University. Sue is an Assistant Professor at Northumbria Law School with particular expertise in business and finance law and regulation. She leads numerous specialist modules across postgraduate, undergraduate and professional programmes and is a member of the Financial Crime Compliance Research Interest Group. Prior to joining Northumbria University, Sue was a banking and finance solicitor with a global law firm.
Abdullahi Shehu
Former Director General of the ECOWAS Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). Abdullahi has over three decades of vast theoretical and practical experiences on transnational organized crime. He was a Programme Expert on the UNODC Global Programmes against Corruption and Money Laundering in Vienna; Senior Anti-Corruption Policy Advisor in the UNODC Office in Nigeria. He was the pioneer Director General of GIABA from 2006 to 2014, during which he laid a solid foundation for the establishment of GIABA as a Financial Action Task Force (FATF) Style Regional Body and a specialised institution of the ECOWAS with remarkable record of programmes and projects implementation. As a professor of criminology, his main research area is anti-corruption/money laundering on which has published extensively.
Abdullahi Bello
Assistant Professor, Northumbria University. Abdullahi is an Assistant Professor at Northumbria University and the Programme Leader of the MSc Forensic Accounting programme in the University. He is a fellow of the Association of Chartered Certified Accountant (FCCA, UK) and a Certified Fraud Examiner (CFE, US). He has more than 22 years’ experience in law enforcement, banking, consulting and the academia in roles related to anti-money laundering, finance, intelligence analysis, forensic accounting, and financial investigation.
