The Nigerian Financial Sector Aids and Abates Public Treasury Looting


Abubakar Atiku Nuhu-Koko



Just as Western banks (i.e., European and North American countries in particular) have been serving as safe havens for criminality looted public funds by public office holders and leaders and their private business cohorts and collaborators from developing countries (Nigeria seriously inclusive), the bourgeoning Nigerian banks (Accounting, Auditing and Insurance firms inclusive) are also grotesques domestic safe haven for looted public funds. And at the same time, they serve as ever-willing collaborating conduit ducts through which such publicly looted funds are transferred to off-shore Western banks safe havens.


In the periods 1999 to 2007, huge sums of public funds were siphoned off and looted from federal, state and local government treasuries. These funds found there ways with absolute ease into the secure vaults of Professor Soludo’s (i.e., the Governor of Central Bank of Nigeria) restructured and consolidated Nigerian billion-dollar-rated trans-national mega-banks.


Many of these banks (including accounting, auditing and insurance firms), have been turned into epicentres of money laundering and corruption in Nigeria. For example, recently, one of such banks was caught red-handed or pants-down, in New York City (NYC), the United States of America (USA). The relevant US laws were vigorously visited on the bank. Can the Nigerian government borrow a leaf from this example? Is a financial crime committed by Nigerian bank overseas equally treated as an offense in Nigeria? These are $15m questions!


The Nigerian political public office holders belonging to all types of designations; particularly from the executive and legislative branches of the three tiers of government in Nigeria made regular massive cash deposits in these banks. In addition, they also purchase various types of financial instruments/products from these banks with their loot and no troubling questions ever asked by the banks and the bankers.


As a matter of fact, due to the highly lucrative huge benefits (including super profits) generated to the banks through such illicit activities, the banks go the extra-mile after the perpetrators of these acts by offering them huge competitive incentives. Highly sophisticated and impressionable classy looking young ladies; spotting very expensive imported skimpy outfits have been strategically recruited and assigned tasks to hunt for this first-class clients.


However, since the September 11, 2001 terrorists’ attacks in New York City, USA and subsequently, in other Western capital cities (where these Western banks safe havens are also headquartered), Western governments have taken stringent measures (though not insurmountable by the Nigerian operators) to make it difficult for such activities to continue in their countries.


Hence, the high costs and complexities of getting the Nigerian treasury looted funds laundered abroad have made it expedient for the perpetrators to use the Nigerian banks to launder the illicit funds.


These illegal acts were taking place even though there exists extant laws and regulations that require banks and bankers to report and or disclosure such activities to the relevant law enforcement and regulatory agencies of the government such as the Police, Independent Corrupt Practices and other related offences Commission (ICPC), Economic and Financial Crimes Commission (EFCC) and the Central Bank of Nigeria (CBN).


For example, can any responsible Nigerian banker or authorities at the CBN explain to Nigerians how some public office holders could (allegedly) successfully mass transfer and allegedly launder over N2.8 billion and N30.6 billion respectively without any question asked as to the motive etc?  


According to the EFCC Charge Sheet made public recently in respect of a former State Governor, now a suspect, some of these monies were alleged to have been ridiculously withdrawn from of his State government accounts as follows: on May 3, 2006 alone the sum of N16.3billion naira was allegedly withdrawn in 17 trenches of N500m; N4million; N8.4bn; N1bn; N1bn; N500m; N500m; N500m, N500m; N500m; N500m; N500m; N500m; N500m; N500mn; N500mn and N500m.


Again, the Public Prosecutor also indicated on the Charge Sheets that, on July 31, 2006 in Abuja, the former State Governor withdrew from his State Government’s accounts N91.8million; N32.5million on August 25, 2006; N34.6million on September 27, 2006; N417million on October 27, 2006; N32.5million on November 1, 2006; N25.1 million on November 28, 2006; N24.2million on December 27, 2006; N30.3million; on January 26, 2007 and N12.1million on March 26, 2007 (see Vanguard Newspaper, Friday, 9 May 2008). All these huge withdrawals were made without any question asked by the bankers and the CBN authorities.


At present the banks and bankers (including the corrupt depositors and shareholders) are living on the profits from holding deposits of corrupt and looted money. Therefore, banks, bankers and other financial institutions that aid and abate these illicit acts being committed by these categories of Nigerians (public office holders, bureaucratic and corporate Nigeria collaborator-perpetrators) are no better than any other wrongdoer.


However, it is the primary responsibility of the banking profession to cleanse itself. This is what other professionals are known to be doing; voluntary self-policing of their professions. This exemplary conduct is guided by norms (particularly under the gamut of Corporate Social Responsibility – CRS) rather than by laws.


Moreover, the public statutory agency with official responsibility for oversight of the Nigerian financial sector is the Central Bank of Nigeria (CBN). The relevant Legislative Oversight Committees also have roles to play here. Banks are legally required to report and or disclose normal and abnormal deposits/lodgements above certain limits as set by extant banking laws to the CBN.


Nigerian banks are in breach of compliance with the applicable laws and regulations in this regard. If not, treasury looting of the type and magnitude that took place in some states of the federation would have been long detected and foiled by the combine forces of the CBN, EFCC and other law enforcement agencies.


The question is how vigorously, if at all, are the relevant applicable banking laws and regulations enforced by the CBN and other statutory monitoring and enforcement agencies? This is where the role of the vibrant Nigerian civil society is crucial. The Nigerian civil society should therefore use the failures by those statutory agencies to sanction these banks to publicly shame them.


They can do this by picketing their premises and launch sustained nationwide mass boycotts rallies and campaigns against them in order to make them to equally account for their sordid roles in perpetuating poverty and partaking in illegal acts against the good peoples of Nigeria.


Therefore, forced banking consolidation may be necessary but it is not sufficiently enough without instituting new and or enhancing existing appropriate monitoring and enforcement mechanisms of extant banking laws, regulations and mechanisms for corporate social responsibility (i.e., accountability, transparency and anti-corruption and internal controls etc).


Thus, left without sufficient checks and necessary monitoring and enforcement mechanisms, the Nigerian financial sector is like a Car with a broken Steering! The rest is the typical Nigerian “anything goes syndrome” - conniving at corruption and corrupt practices all in cut-throat and rat race competition in the sector at the expense of Nigeria’s own “bottom 100 million” (analogous to Paul Collier’s world’s “Bottom Billion”).