Causes And Consequences Of Corruption: The Nigerian Experience
By Kayode Oladele
One of the reasons why we are meeting here this evening is to exchange ideas on our experiences, challenges, progress so far made in our fight
against corruption and discuss current developments in corruption prevention in relation to institutional techniques, investigation, enforcement, practice and procedure and to recommend appropriate strategies for combating corruption. The international community has finally appreciated and come to terms with the reality of the “cancer of corruption” and its ubiquitous nature; hence, we are all in agreement that being a persistent feature of human existence worldwide, its solution lies in the collective action of key global institutions with organized international joint efforts against corruption. These efforts have produced a lot of anti-corruption measures including bi-lateral and multilateral agreements, enactment of national anti-corruption laws such as the Nigeria’s Economic and Financial Crimes Commission Act, 2004, the designing of international framework and strategies for the prevention of corruption and the making of an all important United Nations Convention Against Corruption which has now become the reference point for anti-corruption fight all over the world.
Nonetheless, the need to study corruption and anti-corruption has continued to generate passionate commentaries and academic interests. While it is obvious that this interest has made the subject matter better understood to an extent, the hundreds of information being incorporated into its study, research data and the diversity of some of the findings have sometimes established some levels of complications too. Apart from the fact that some have attempted to mischaracterize corruption as a tool for development under such labels as “grease the wheels” arguments or the “efficiency grease”, the question still persists, for instance, on how corruption should be situated, whether within the context of the “moralists,” “developmentalists,” or “functionalists” definitions. More directly, should the definition be public-office centred, market-centred or public-interest centred?
Meanwhile, the definition of corruption becomes more complicated when viewed in terms of such classification as supportive corruption, transactional corruption, extortive corruption, defensive corruption, investive corruption, personal and institutional corruption, traditional and modern corruption, local, national or international corruption, or representational corruption, grand and petty corruption. Or simply put, should corruption be viewed as corruption and nothing more? Many questions continue to arise in our experience and engagement of corruption and corrupt practices.
To this extent and with a focus on the activities of the Economic and Financial Crimes Commission (EFCC) in Nigeria, this presentation engages two questions: What are the causes and consequences of corruption in Nigeria and how has EFCC responded to the scourge? To engage these questions, the rest of this paper is divided into four parts that involve the causes of corruption in Nigeria, its consequences, the role of the EFCC and a conclusion laced with a recommendation that focus on the need for a Special Anti-corruption Court.
What are the Causes of Corruption in Nigeria?
The causes of corruption are multiple and have been discussed by scholars under numerous headings but I will briefly discuss some of the major causes that we have identified as investigators as some of the common causes of corruption in a political economy.
First, we have identified weak institutions as a major cause of corruption. Corruption has a high propensity to thrive when legal and political institutions are weak and government policies generate economic rents. In most climes, there are so many incentives in the public sector, particular administrative and legal institutions that leave public officials with wide unrestricted authority and powers to create avenues for unjust enrichment or use the discretionary powers at their disposal to manipulate the system. According to the World Bank Report; “the normal motivation of public sector employees to work productively may be undermined by many factors, including low and declining civil service salaries and promotion unconnected to performance. Dysfunctional government budgets, inadequate supplies and equipment, delays in the release of budget funds (including pay), and a loss of organizational purpose also may demoralize staff. The motivation to remain honest may be further weakened if senior officials and political leaders use public office for private gain or if those who resist corruption lack protection. Or the public service may have long been dominated by patron-client relationships, in which the sharing of bribes and favours has become entrenched. In some countries pay levels may always have been low, with the informal understanding that staff will find their own ways to supplement inadequate pay. Sometimes these conditions are exacerbated by closed political systems dominated by narrow vested interests and by international sources of corruption associated with major projects or equipment purchases”.
Closely related to the issue of weak institutions is the role of formal rules and the criminal justice system. There is hardly any country where corruption is legalized; to the contrary, there are several formal rules and laws prohibiting corruption and corrupt practices with appropriate sanctions and punishments. In addition to organic laws, several public institutions such as the Police, Customs and Immigration, Road Safety Corps, Fire Marshals, the Armed Forces , internal revenue agents, and other institutions including the judiciary have comprehensive codes of conduct to regulate their behaviours which also prohibit the receiving or accepting of bribes, gifts, gratifications etc. However, in a political economy that is laced with corruption, such formal rules are usually supplanted by informal rules or customs that allow corruption to flourish. For instance, the law may criminalize the giving and taking of bribes but in practice, one can hardly get anything done without gratification or in Nigerian parlance, “settling” someone. In Nigeria until the establishment of the EFCC, the laws were hardly enforced and the informal rules prevailed. The EFCC was thus established to strengthen the institutions and to shift emphasis back to the recognition and enforcement of formal rules. In addition to the formation of the EFCC, the government of Nigeria, recognizing the need to have a strong formal rules, had also enacted various other laws such as The Money Laundering Act, the Advance Free Fraud Related Offences Act and the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act and several other appropriate legal frameworks to control corruption and strengthen the legal and economic institutions including the criminal justice administration. The Act also made the EFCC the designated Financial Intelligence Unit (FIU) in Nigeria, which is charged with the responsibility of co-coordinating the various institutions involved in the fight against money laundering and enforcement of all laws dealing with economic and financial crimes in Nigeria. Essentially however, the incentive to engage in corruption and corrupt practice is stronger where the probability of being discovered or prosecuted is remote or non-existent.
Another cause of corruption is public perception. Corruption is supported when some/few societal culture promotes corruption. Why should a convicted corrupt individual be offered a chieftaincy title by traditional rulers? Why do governors, some of whom have been fingered in corruption be given awards or be elected into the senate? There are also other instances where religious institutions have ordained corrupt public officials and sometimes organized thanksgiving services for corrupt ex-convicts who are just being release from prisons.
The nature of the economy is also a crucial factor. It has been argued that rent-seeking or rent-based systems tend to promote corruption. If this view holds, then, because the Nigerian economy is based on rents from crude oil and gas, it follows that there would be a number of “leakages” that would allow for the easy flow of cash and favours, sometimes in illegal ways. Until recently in Nigeria, public officers would deliberately delay the implementation of national budget with the hope that at the end of the financial year, any unspent budget would become largesse to be shared by the senior civil servants. This is why it is often said by experts that for corruption in public sector to flourish, public officials must possess “the authority to design or administer regulations and policies in a discretionary manner”. However, with the passage of new government policies which have made it mandatory for any unspent budget heads at the end of the financial year to be returned to the federation account and the passage of the Freedom of Information Act which is aimed at promoting transparency and accountability in government finance among others, this practice has also become a thing of the past in Nigeria.
Other identified causes of corruption in Nigeria include poverty, poor remuneration or incentive system.
Consequences of Corruption in Nigeria
The consequences of corruption are universal even if there could be variations in the level of state and non-state responses to these consequences. Simply put: massive corruption in the Nigeria has reduced the amount of money needed for development just as it does in any other political economy.
First, corruption promotes poverty. A simple example could be made with the corruption in the management of pension funds in Nigeria. The theft of pensions means that retired Nigerians would not have access to their pensions as at when due. This means that those that have dependants to care for would be deprived of the needed funds. Some pensioners eventually died because of the rising expectations that often end in frustrations sometimes occasioned by standing for hours on long queues. What happens to the dependants of a pensioner when he or she is deprived of his pensions? Will such dependants be able to attend qualitative schools or will they be forced out of schools to fend for themselves? If education remains one of the main routes leading to a good life and national development, without education, what would be the future of these dependants and the country?
Another consequence of corruption is that it creates the condition for political instability. This is because unrestricted corruption makes the state an unlimited allocator of wealth to individuals and groups. This character of the state makes it possible for the politics of do-or-die to take root, with politicians struggling to out-compete one another sometimes in violent manner. It must be recalled that the various military regimes that took over power from democratically elected representatives of the people had always justified their intervention on the ground of grand corruption and looting of state treasury by political state actors
Third, corruption contributes to the blanket criminalisation of Nigerians, especially the youths. With its capacity to generate poverty and instability, the youth have been systematically hijacked for selfish ends by unscrupulous politicians and ideologues. Some of those that were not ‘hijacked’ have found interest in advanced fee fraud popularly referred to as Yahoo-yahoo or 419 in local parlance. While corruption cannot, and should not, be the singular cause of this systematic criminalisation, it contributes to it.
Four, corruption promotes the existence of underground/illegal economy. The possibility of bribes infiltrating the security systems have made it easy for underground economies in counterfeit, adulterated and substandard products, especially drugs. Though these underground economies worth billions of dollars, the government do not benefit from taxes nor are the people benefiting from the dangerous effects of adulterated drugs.
Five, corruption also has other social costs apart from poverty. As rightly noted by Myint (2000: 50), in “any society, there are laws and regulations to serve social objectives and to protect the public interest, such as building codes, environmental controls, traffic laws and prudential banking regulations. Violating these laws for economic gain through corrupt means can cause serious social harm.” The frequent use of substandard materials and violation of building regulations have led to several buildings collapsing and killing innocent occupiers have become a recurrent decimal in Nigeria while large scale oil spills with catastrophic effects have continued in some part of the country.
Lastly, and consequent upon the aforementioned is that corruption is antidevelopment to the extent that it reduces the amount of funds available to be used for developmental purposes. Monies that should have been used to better education, health, infrastructure and other items needed to encourage a good life of Nigerians are stolen by a microscopic few. But how has the EFCC responded? What has been done so far?
The EFCC and Anti-corruption
In discussing the responses of the EFCC to corruption in Nigeria, it is pertinent to briefly have a grasp of what the agency represents and its origin. The emergence of the country’s Fourth Republic was marked with the election of retired General Olusegun Obasanjo, a former military ruler between 1976 and 1979 as Nigeria’s President on May 29 1999. Prior to that time, it had been estimated that about US$400 billion was stolen between 1960 and 1999. Based on his conviction that corruption remains a major challenge of the country, two distinct anti-corruption agencies were created: the EFCC and the Independent Corrupt Practices and Other Related Offences Commission (ICPC).
The EFCC was created and empowered to prevent, investigate and prosecute economic and financial crimes as entailed in the Banks and Financial Institutions Act 1991, Miscellaneous Offences Act, the Money Laundering Act 1995, the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994, the Advance Fee Fraud and Other Fraud Related Offences Act 1995, the Economic and Financial Crimes Commission Act (2004), and the Money Laundering and (Prohibition) Act 2004.
A lot has changed in Nigeria since the establishment of the Commission ten years ago. Increasingly, accountability is gaining centre stage in our governance system as senior government officials are now being called upon to give account of public resources under their watch. Several public officers who are found wanting have been indicted and many are today facing criminal trials on allegation of corruption and breach of trust. The same goes for the private sector; chief executives of Banks have been investigated, prosecuted and convicted with assets worth billions of Naira forfeited to the government and other victims of crime.
In 2012 for instance, a total of 7,737 petitions were received and processed by the Commission. This represents 6% increase over petitions received in the preceding year. Out of these, 2,606 were assigned for investigation, 2,385 were referred to other security agencies for necessary action and 2,746 were rejected for lack of merit. A total of 97 criminal convictions bordering on money laundering, illegal oil bunkering, pipeline vandalism, bank fraud, forgery and criminal breach of trust, etc. were also secured.
In the same way, a combined total asset worth N 9,755,924,635.69 was also recovered and forfeited to various victims of crimes which included government agencies and departments, private individuals, institutions and organisations. This is besides the recovery of a total of the over $170million between 2010 and 2011 made through settlements (jointly with the Honourable Attorney General of the Federation and Minister of Justice) from foreign multinationals involved in the Halliburton bribery scandal and custom duty violation, etc.
In addition, in the first quarter of 2013, the Commission recorded 33 convictions. Five of the convictions were on illegal transportation of foreign currency contrary to the Money Laundering (Prohibition) Act. The sum of $144,214.5 and N2, 705,000.00 were ordered forfeited to the Federal Government of Nigeria treasury. The remaining 28 were convictions for offences of obtaining money by false pretence, forgery, illegal dealing on petroleum products etc. Similarly within the same period, the Commission filed a total of 108 criminal charges. The Commission has also secured five interim forfeiture Orders and 3 freezing Orders.
Moreover, within the same period, the Commission assisted the Metropolitan Police in the investigation, prosecution, conviction and sentencing of Mr. James Ibori, a former governor of Delta state by the Crown Court at Southwark. London on February 27, 2012, to 13 years imprison for money laundering and fraud. The same goes for the case involving the former Managing Director of Intercontinental Bank PLC, Mr. Ereastus Akingbola before the Royal Commercial Court in London on 31 July 2012 in which the Court ordered the forfeiture of a total sum of approximately N165billion in favour of Access Bank plc (formerly Intercontinental Bank plc). The EFCC played a vital role in the prosecution of the case providing the UK authorities with critical assistance during the course of the investigation. The EFCC’s partnership with the UK authorities in these cases represents best practices in international cooperation as provided by the United Nations Convention against Corruption (UNCAC).
The criminal prosecution of top Politically Exposed Person (PEPs) also continues to receive priority attention of the Commission. This is consistent with its top – down approach to combating corruption. To this effect, five former state governors and a former speaker of House of Representatives including a cabinet Minister were accordingly charged to court between 2011 and 2012 for corrupt practices bordering on contract fraud and/or abuse of office. The trials of these cases are pending and will be concluded soon.
Likewise, in what perhaps can be described as one of the biggest public sector frauds in Nigerian history, some dishonest marketers of petroleum products swindled the Federal government of over N1.71 trillion under the petroleum Support Fund (PSE) Scheme. The sheer magnitude of this monumental fraud ignited and fuelled national protests led by labour unions and civil society organization in January 2012 against the federal government’s proposal to completely remove the fuel subsidy scheme. Even though, further investigation continues, the EFCC has so far investigated and arraigned 13 companies including their management staff and directors in court with a combined sum of N12.4 billion involved. Of this amount, the Commission has so far recovered over N3 billion.
With the efforts of the Commission and its partners, Nigeria was delisted from the infamous list of non cooperative nations in the fight against corruption and money laundering by the Financial Action Task Force (FATF), the organization responsible for combating money laundering and financing of terrorism.
However, while the EFCC does not have all the powers to eliminate all the conditions that cause corruption, it has been involved in activities that would help eliminate some of the conditions for causing corruption. Apart from its declared goal of arresting and prosecuting corrupt individuals, the current leadership of the Commission aims to expand the fight against corruption beyond the EFCC to what can be described as the “private sphere,” though with normal interface with the public sphere.
Three such areas are worth mentioning. First are the Commission efforts at public enlightenment of youths and young adults. Considering that one of the focal principles of the current leadership of the EFCC is that the fight against corruption can only be won when the society becomes a partner, the Commission has become active in schools to encourage youths to shun corrupt activities. Second is a periodic engagement with the media with the aim of publicising some of the achievements of the EFCC and its challenges. The Commission, with the help of its Directorate for Media and Public Affairs, is currently in the process of fine-tuning a system that would encourage a continuous reportage of corruption and its manifestations in the Nigerian Press. A good number of journalists have been key to the fight against corruption and have been agents of anti-corruption beyond the rituals of reporting the activities of the Commission alone. Third is its partnership with other key actors in society such the bureaucracy, religious institutions and other private organisations.
At this juncture however, I would like to use this opportunity to discuss a fallacy that has continued to be a feature of the critique of the EFCC by some national and a few international actors in the anti-corruption struggles. It is sometimes assumed that the success of the EFCC should be located only in terms of the number of individuals serving jail terms. This is true and logical but it assumes that the EFCC is the only agency that would determine the incarceration of corrupt individuals. For instance, in spite of the fact that the EFCC did all in its powers to prosecute a former governor of Delta State in Nigeria, Mr. James Ibori in a Nigerian Court, the Commission’s efforts were frustrated by the inherent weakness in the Nigerian criminal justice administration and the Nigerian legal system Fortunately, the EFCC shares the victory with the London court in the prosecution and imprisonment of Mr. Ibori who is now serving jail term in UK owing to the partnership of the Commission with the UK authorities in the case within the context of the best practices espoused in international cooperation provided for by the United Nations Convention against Corruption (UNCAC). Ipso facto, even when the Commission would have preferred to jail corrupt individuals to long prison terms for their crimes against humanity, in the final analysis, it is the judiciary that has the ultimate powers to determine such punishment and conviction.
Concluding Remark: Towards Supporting EFCC’s Anti-corruption War
Anti-corruption should not be the preserve of one agency. It is a societal responsibility and it is this understanding that has propelled the new approach of the EFCC in advocating for more action by the civil society in the fight against corruption in Nigeria. While the EFCC is determined to continue to pursue its goals and objectives, it would simultaneously push the anti-corruption agenda on Nigerians through its current programmes and emerging partnership with key players, particularly the judiciary, the civil society organizations and the media. There must be informal rules to discourage corruption and the building of public awareness on the need to prevent corruption. This would mean more monitoring and evaluation function, educational function, media support and active participation of the public in the creation of anti-corruption environment.
However, the support of the judiciary is particularly important to the work of the Commission. It is also in this context that the establishment of anti-corruption Courts becomes very germane in order to expedite the trial and effective prosecution of corruption cases. Relevant laws should also be passed to limit or prohibit interlocutory appeals that tend to unduly delay the trial of substantive cases. For instance, according to Section 40 of the EFCC Act, an application for stay of proceedings in respect of any criminal matter brought by the Commission before the High Court shall not be entertained until judgment is delivered by the High Court. Unfortunately, several Judges have refused to uphold this law but instead have continued to grant stay of proceedings of criminal cases which on many occasions have led to frustrate witnesses and speedy trial of cases.
Thanks for listening.