Beneficial Ownership – Nigeria

Hiding the beneficial owner and the proceeds of corruption

Project Summary

Corruption is a major inhibitor of economic growth, discouraging domestic and foreign investment and destabilising governments. Global anti-money laundering initiatives emphasise the importance of transparency to prevent the legitimate financial and legal infrastructure from being used to disguise and move the proceeds of corruption. This project investigates how current international anti-corruption frameworks function within Nigeria and how they can be better targeted to reduce opportunities to move and hide the proceeds of corruption around the globe.

Policy and Programming Implications

This work examines how the international anti-corruption frameworks operate on the ground in Nigeria and how Nigeria’s various anti-corruption agencies interact with each other in practice. The project is informed by an examination of a sample of cases of Grand Corruption in Nigeria and a macro-level analysis of international financial flows into and out of the country. The former illustrates how proceeds have been moved through the financial system and how beneficial ownership has been disguised while the latter helps reveal what can be explained by the legitimate claims and liabilities of legal trade and arrangements and what flows are less clear.

This project aims to provide an evidence base for the authorities and other stakeholders that allows an approach that is simpler and more cost effective in preventing the laundering of the proceeds of corruption and to contribute to their recovery. An assessment of what works as a means to prevent corruption in Nigeria will provide valuable empirical evidence of what may be transferable to other developing countries.

Research Question

Can improvements be made to the identification and tracking of Beneficial Ownership to increase likelihood of recovering the proceeds of corruption?

Methodology

The collaborative, mixed methods, and cross-disciplinary  project comprises a series of work packages. Each part of the project provides information from a different  perspective, all of which contribute to the evidence base that will enable us to:

• Contextualise the international normative framework within Nigeria;
• Provide a statistical analysis of international financial flows determining those that are explainable;
• Understand how anti-corruption agencies operate, including their ability to access and share information;
• Identify and share apparent gaps between international expectations and operational reality;
• Provide a sample of illustrative typologies for Nigeria-based on known cases of grand corruption; and
• Recommend where resources could be focussed for greater impact in light of findings and existing operational constraints.

ACE Impact

Findings

• Concerning data access, in order to improve transparency and assist in data management and record-keeping, a unique case record or identification number should be created that links cases prosecuted and convicted to assets recovered. This will be more efficient than the present system, in which the case number is tied to the court, and changes as a case moves through the court system.
• Regarding data management, the inconsistency and unreliability of data urgently call for the establishment of a central database, which should be fed from sectoral registries and databases. It also calls for the recognition of records management as an important discipline and role within the civil service.
• Based on the outcome of our findings, and with respect to Anti-Money Laundering and Combatting the Finance of Terrorism (AML/CFT) policies and coordination, which stand out as the main thrusts of the Financial Action Task Force (FATF) Recommendations 1 and 2, several measures call for specific attention, including management of investigation. We would support and emphasise current initiatives to create and task working groups from the different agencies to focus on particular cases. However, these groups should be kept small to work well – effective operational collaboration is more than just turning up at a task force meeting.

Impact

• We have secured a grant to follow up on our report and recommendations with stakeholders in Abuja, which involves original participants in the project and specifically gauges impact. We are currently working on the approach with plans to collect data, do some analysis, and then follow up with a workshop prior to the end of July 2024.
• We have received financial evidence from the case of Ibori, which was presented in the UK courts, and we have undertaken some analysis of this information.
• A final iteration of ‘Grand Corruption in Nigeria – what can be learned from a review of cases’ will be presented at the virtual 21st Cross-Border Crime Colloquium hosted by the Police University College, Kongsvinger, Norway, postponed from September 2021.
• We have submitted the following for UK parliamentary consultation: How should the Foreign, Commonwealth, and Development Office (FCDO) take account of and mitigate potential inhibiting factors to investment (such as corruption, security, and human rights abuses)? It is specifically focused on the subject of corruption.
• We performed peer review for Open Ownership of their commissioned research paper ‘Beneficial ownership transparency of trusts.’

Research Team Members

• Jackie Harvey, Professor, Newcastle Business School, Northumbria University
• Peter Sproat, Senior Lecturer, Newcastle Business School, Northumbria University
• Alan Doig, Visiting Professor, Newcastle Business School, Northumbria University
• Sinan Gonul, Senior Lecturer, Newcastle Business School, Northumbria University
• Tony Ward, Professor, Northumbria Law School, Northumbria University
• Sue Turner, Senior Lecturer, Northumbria Law School, Northumbria University
• Christopher Mitford, Senior Lecturer, Northumbria Law School, Northumbria University
• Abdullahi Shehu, Managing Director, AML/CFT Consultancy Real Services Ltd. (Abuja)
• Abdullahi Bello, Managing Consultant, Abdubel Consulting Ltd. (Abuja)
• Petrus C. van Duyne, Visiting Professor, Northumbria University and University of Utrecht
• Jan van Koningsveld, Director of the Offshore Knowledge Centre (Netherlands)
• Sam Sittlington, Director, Fraud Company