Monday, April 23, 2012

The brotherhood of greed and profits -how UK banks help Politicians to loot Nigeria (II)

Joshua Dariye another fugitive governor loved by UK banks
Joshua Dariye is another governor who use of British banks to launder money was revealed in the Global Witness report. The former governor of crisis prone Plateau State is said to have brought into the UK £2.85 million (N741 million) of suspected stolen funds through two banks, NatWest and Barclays. Following his arrest in 2003, Police also recovered £80,000 (N21 million) in cash from his London home.
Goodluck Jonathan-Nigeria's President
David Cameron-Prime Minister-UK 

The report revealed that about £1.17 million (N304 million) of the £2.85 million funnelled into the UK by Dariye was done through the accounts of one Joyce Oyebanjo at NatWest Bank. From July 2003 to March 2004, Dariye made seven payments into Oyenbanjo’s NatWest Account in different instalments that came to about £1.17 million or £1.48 million (N385 million) including interest. At the time of Dariye and Oyebanjo’s arrest only £198,045 (N385 million) remained in the account.

As the money was transferred to Oyebanjo’s account, she issued several cheques to Dariye on his frequent visits to London. Her account thus became a convenient conduit for Dariye to get money into the UK. In April 2007, Oyebanjo was convicted for money laundry charges and sentenced to three years in prison. Dariye remains in Nigeria a free man after fleeing from justice in UK.

Abacha was another top Nigerian leader known to have used UK banks to launder millions of pounds. According to an FSA report, Abacha used 23 different London Banks to launder about £900 million. A report by the Financial Times identified three of the banks to be Barclays, NatWest and UBS.

An African banker, working in the London financial district, who prefers to remain anonymous, said he was marvelled at the complicity of UK banks in helping launder money despite all the checks that are in place to prevent it from happening.

“One question I need to ask is what the UK police and anti-fraud officials did at the onset of this scheme.”

 “Since the end 2001 and early 2002, there has been anti-terrorist financing laws in the financial world and financial firms have been mandated to report unusual cash transactions and systems are supposed to be in place to alert officials, so where were they, did they look the other way thinking that it will stop? Did they not act because they were afraid of others finding out and as such damaging the image of London as a financial centre?”

Speaking on the Ibori case he said “To think that Ibori could go to Barclays at Knightsbridge and deposit £1.5m in cash is just extraordinary. How did Barclays accept that? But if I travel with more than £2,000 on me, I will be questioned for money laundering and possibly the cash ceased. Is this not double standard depending on your status?

“But Coming to think of it, he was smart enough to have gone to Knightsbridge branch of Barclays where –almost certainly – anyone who opens an account with that branch is likely to be a rich person. He would have been turned away and the cops called had he ventured into any Barclays four miles south in Clapham or Brixton. Makes you wonder if Barclays anti money laundering procedure is tight.”

“Ibori’s case raises serious questions about the due diligence that Barclays and the other banks carried out on Ibori and his associates. What checks did these banks do to ensure that the funds they were handling were not the proceeds of corruption?”

“It is sad what African leaders are doing to us and our unborn children, it is a shame.”

He narrated an experience he had.  “I was at a lunch meeting with some officials from Luxembourg and a convoy of cars drove by, the guy I was at launch with told me that the convoy belonged to an African head of state who came to Luxembourg with his army of ministers to beg money but the funny thing was that the authorities had a dossier of the president and his convoy and how much money they have stashed all over the world which is far more than what they have come to beg for.”

Another banker who also works in the London Financial district however explained why UK banks are so eager to take stolen money from Africa’s political looters with little or no questions asked. 

 “We know how this works, any stolen money moving from one bank to another will lose at least 5%, that coupled with broker and lawyer fees will at least attract another 15% charge and the asset manager’s initial fee of at least 5% tells us that any money taken illegally away will automatically loose at least 25%. This is money we are giving people richer than our people, what are we doing to ourselves” He asked.

However, the Financial Services Authority (FSA), the UK bank regulator, is already taking some action to reduce money laundry in UK banks. They carried a review in 2011 which showed that British banks were systematically failing to carry out the required anti-money laundering checks especially when dealing with senior foreign politicians.  

Nigerian banks are the other side of a bad coin.

Analysts however say that the British Banks are just one side of a bad coin. The other side of the bad coin are Nigerian banks. Most of the money that end up in British banks is first passed through Nigerian banks who are supposed to know the status of the governors. For example, the Global Witness Report discloses that of the £2.7 million held in RBS bank account by Alams in 2005, £1.6 million (N416 million) was transferred into that account by now defunct Bond Bank, one of the banks that collapsed into the Skye Bank Group during the 2006 bank mergers and acquisitions in Nigeria.

The Financial Action Task Force (FATF) last February classified Nigeria among countries with strategic Anti Money Laundry/Combating Terrorism Financing deficiencies that have not made sufficient progress in combating those deficiencies or have not committed to an action plan to working with the FATF address these deficiencies.
Sanusi Lamido Sanusi-Governor, Central Bank of Nigeria

Insiders in the Nigerian banking industry however note that competition for government deposits is a facilitator of political corruption in Nigeria. Most banks in Nigeria will do anything to get a state government’s account which usually runs into several billions of cash inflows every month as crude oil revenue is shared. To get this state government account, bank managements usually have to incentivise the governors by agreeing to secret terms that ensures that they keep these accounts from competitors.

Some of the bargains reached with the governors who are the ones who decide where these account should be kept include agreeing to facilitate these transfers even when they know it is State funds that are being transferred illegally. The sad part insiders say, is that, the banks also fund the States corruption with loans which costs are then borne by ordinary Nigerians. Most State governments are known to committed their states to significant debts from private banks most of which are transferred into their personal accounts abroad. Most State governments are known to be significantly indebted to banks without the citizens knowing what the money borrowed from the banks were used for.

“The banks just lend the governors money without asking questions. Money is learnt to governors for all sorts of things and at the end of the day, no one accounts for how this money is spent. Yet the State’s future allocations and tax revenues are tied to the repayment of these loans. A good number of States have mortgaged the future and welfare of their citizens to satisfy their present greed. And they are doing these with the active collaboration of Nigerian banks” an insider who prefers to be anonymous said.

Analysts insist that if the governors have to be stopped from stealing their states blind, Nigerian banks and the Central Bank of Nigeria (CBN) has to enforce more stringent anti money laundry legislations.

However, the increased scrutiny from Britain has forced Nigeria’s political looters to start diverting funds to places like China, Brazil, India and other parts of the world where there is less scrutiny. Dubai and other friendly Gulf states in the Middle East have also become a major destination of stolen funds from Nigeria.  Top Nigerian politicians are said to be very active in the Dubai property market where they are said to prefer paying  cash  for properties while living in the most expensive hotels. Taxi drivers on the streets of Dubai are most likely to talk about the escapades of Nigeria's money bags once you identify yourself as a Nigerian in Dubai.

Those who know say that the increased scrutiny is also driving stolen funds into the local Nigerian property market and the over the counter securities trading market in Nigeria. A top Nigerian telecom firm’s over the counter shares is said to be a preferred investment choice for Nigerian politicians because of its high cost and good returns. Its high cost means that politicians can use it to stash away millions of Naira without raising too much interest. It is even more attractive since it is traded over the counter with little scrutiny. Private equity funds are also said to be getting some of these stolen funds from Nigerian politicians who are doing everything to hide their loot in the face of increased scrutiny.

 The UK however still remains a preferred destination by Nigeria's political looters, most of whom cannot resist the assumed prestige of owning a property in London and sending their children to UK schools. This means that Nigerian political looters still want to launder money in the UK.  For financial regulators in Nigeria and the UK, the challenge will remain how to break this brotherhood of the banks and Nigeria’s political looters, oiled by profits and greed, which will endure as long as there are banks to help them cover their tracks for a share of the loot.    

Saturday, April 21, 2012

The brotherhood of greed and profits -how UK banks help Politicians to loot Nigeria (I)

In the dock on Tuesday in cold and rainy London, James Ibori, former Governor of Nigeria’s oil rich Delta State stood alone. “His Excellency”, stood humbly before a judge at Southwark Crown Court. Ibori waited with racing heart for the judge to tell him how long he was going to stay in a cold lonely UK jail. He was eventually told 13 years though likely to serve four and half years.

In jail, Ibori is not going to be alone. He will be with his wife, mistress, sister and even lawyer all serving different jail terms ranging from five to ten years for helping Ibori launder millions of pounds stolen when he was governor of Delta State between 1999 and 2007.

The only partners in crime that Ibori will miss in jail are his bankers. While all close acquaintances that helped Ibori launder the millions he stole as Delta State governor are behind bars, his bankers who facilitated the process are walking free. Yet, they made millions from helping Ibori move the funds around.  

The leading prosecutor in Ibori’s case Sasha Wass QC, revealed in court how Ibori used multiple accounts at Barclays, HSBC, Citibank and Abbey National to launder the millions he stole. The prosecutor revealed that these banks helped pass around millions of pounds, some of which were used to purchase expensive properties in London and South Africa.

 Giving insights into how the money moved around between the banks, the prosecutor revealed how US$4.8 million (N1.25 billion) was transferred from a Barclays account belonging to a company in which Ibori was formerly a director to another account at Barclays controlled by Ibori’s lawyer, Badhresh Gohil who is currently serving a 10 year jail sentence for helping Ibori launder money.

The Prosecutor revealed that the funds were passed through two Swiss accounts, including one at a branch of Schroders in Zurich, a global asset management company which manages about £187 billion on behalf of global clients. This money was used as part payment for a private jet for Ibori.

The prosecutor also revealed how Ibori had numerous Barclay’s accounts. They described how in one case between 1999 and 2006 Ibori deposited £1.5 million (N390 million) in cash in a Knightsbridge branch of Barclays.

Also Ibori had two bank accounts in America at Citibank and was said to have ran up a $920,000 (N143 million) American Express credit bill between 2003 and 2006. He bought a $1.8 million (N279 million) house in Houston, as well as moving at least $500,000 (N78 million) through his lawyer’s client account at now liquidated AIDT bank in Denver, Colorado.
Among the properties that Ibori splashed money include a house in Hampstead, North London, for £2.2m (N572 million), a property in Shaftesbury, Dorset, for £311,000 (N81 million), a £3.2m (N832 million) mansion in Sandton, near Johannesburg, South Africa, a fleet of armoured Range Rovers valued at £600,000 (N156 million), £120,000(N31 million) Bentley, and Mercedes Maybach for 407,000 euros (N69 million) that was shipped directly to his mansion in South Africa.

Though the value of the fraud that Ibori was charged with in court was put at £50 million (N13 billion), but the judge admitted that the actual money stolen by Ibori is unquantifiable and could be as much as £200 million (N52 billion).

UK banks love affair with Nigeria’s political looters
Goodluck Jonathan-President, Federal Republic of Nigeria

Interestingly, in the past many of the banks now named in Ibori’s case were also involved in laundering money on behalf of former Nigerian governors. It would be recalled that Alamieyeiaseigha, (Alams for short) who was former governor of Bayelsa state, had to jump bail and escape from the UK when he was arrested in September 2005 on money laundering charges by the metropolitan police.

Global Witness, an NGO which campaigns for transparency in resource rich countries, in October 2010 released a report titled “International Thief Thief” revealing the details of how UK banks helped Alams launder millions of pounds in the UK when he was governor.  

 The accounts used by Alams in UK to launder millions as a governor include two different bank account in UBS one with £306,000 (N80 million) as at December 2005 and another with £1.05 million (N273 million) as at the same date. He also had three different accounts with HSBC. One of the accounts had £420,000 (N109 million) as at December 2001, another had £110,948 (N29 million) and third one had $178,947.50 (N47 million) as at February 2003. Alams also had £2.65 million (N689 million) as at November 2004 in Royal Bank of Scotland (RBS), which is currently majority owned by the British government.

He had two different accounts with Barclays Bank, one with £205,376 (N53.3 million) as at March 2005 and another with Barclays Cyprus with £3 million(N780 million) (held in six different accounts) as at September 2005. Finally, Alams also had another £290,000(N75 million) in Natwest Bank as at August 2005. All the accounts were opened by him between 1999 and 2003 when he was still the governor of Bayelsa State and he was barred from opening foreign banks accounts.

In the detailed report, the Global Witness describes how UBS helped Alams launder millions of pounds in UK. It shows that Alams started stealing money from the accounts of Bayelsa State just three months after becoming a governor when he approached UBS to open an account at its Mayfair Offices on Curzon Street, London.

Shortly after opening the account, Alams is said to have told UBS staff that “he anticipated a sharp rise in his deposits from $35,000 (N9.1 million) to $1.5 million (N390 million). Alams is said to have filled a form stating that before he became governor, he was a financier and fertilizer magnate who made his money before he became governor. He said that he had never held accounts outside Nigeria before but because of rising tension in the country, he seeks to safeguard his vast wealth by transferring money outside the country.
Diepreye Alamieyeseigha-laundered billions through UK banks 

Following the opening of the account, in early 2001 one Aliyu Abubakar, identified in court documents simply as Aliyu, who was said to have been given a £19 million (N4.9bn) contract to construct the Bayelsa State government lodge paid $1.5 million into Alams UBS account. These payments were said to have been made at the same time, Aliyu was also arranging to buy a £1.4 million (N364 million) house in Kilburn area of London for Alams.

Also Alams is said to have told UBS, when asked for the sources of these funds that he sold a palace he owned in Abuja to Aliyu who Alams described as an oil businessman. Yet, when Alams made his asset declaration forms in 1999, he declared his total assets to be worth just £210,000 (N55 million) and he had no property in Abuja in his asset declaration forms.  Later, when Alams tried to prevent the forfeiture of his money in UBS accounts to the Nigerian government, he is said to have claimed that the money were donations from his close friends towards the education of his children.

The Global Witness Report states that “By December 2005, Alams account in UBS had a balance of $1.8 million (N279 million) in an account that was in the name of a trust named Falcon while in another account in his personal name, he had $535,000(N83 million). This was despite declaring in his 2003 asset declaration form that he was worth only £485,400 (N126 million) with an expect income of £22,680 (N6 million).

In 2001, Aliyu was said to have facilitated the purchase of £1.4 million (N364 millin) property on 14, Mapesbury Road, in Kilburn in North West London for Alams using his account with HSBC. The house was bought in the name of a British Virgin Island registered Shell company called Salomon and Peters which was wholly owned by Alams.

Also eight months after Aliyu bought a property for Alams, he is said to have approached HSBC to open an account with the bank with an opening balance of £420,000(N109 million) paid in by Aliyu. In total, Alams is said to have opened six different accounts with HSBC between December 2001 and 2003, all at the same branch.

Alams taste for London properties grew more expensive the longer he stayed as governor. The Global Witness report shows that in December 1999, few months after becoming a governor, he bought  flat 202 at Jubilee Heights in Cricklewood, northwest London in the name of his company, Salomon and Peters and paid for by one Mr Soberekon “who had received a contract to repair and overhaul two gas turbines in Bayelsa State” The payment was made through London Trust Bank Plc. Interestingly though London Trust Bank describes itself as non-bank financial institution registered with the HM Revenue and Customs, the company is also listed by the UK Financial Services Authority (FSA), which regulates the financial system in UK as a “unauthorised internet bank”

Also in July 2003, Alams bought a fourth London property for £1.75 million (N455 million), a luxury penthouse apartment, 247 The Water Gardens in the heart of London’s West End. This was the house that Alams was arrested and when searched, the metropolitan police recovered £1.0 million (N260 million) in cash.

Another Bank that received bribes on behalf of Alams was the Royal Bank of Scotland (RBS) which received £1.5 million(N390 million) paid into an RBS account held in the name of another offshore Shell company registered owned by Alams called Santolina. Alams was the sole shareholder and director of Santolina.  Between January 2004 when the Santolina Account was opened and March 2005, the account received 26 deposits totalling £2.7 million (N702 million). On 1 November 2004, a transfer of £949,000 (N247 million) was made out of this account to pay for a penthouse apartment in the upscale Waterfront development in Cape Town.

Alams in 2007 pleaded to six counts of corruption in Nigeria. He was sentenced to two years in imprisonment on each count but spent just a few days in prison on the excuse that he had served part of the time already. His stolen assets were sold and the money returned to Bayelsa State government. Though the Bayelsa state government claimed that the money will be used to build what it called a Transparency Plaza in the state, it is not clear if this plaza was ever built.

Please, is there anyone reading this blog, who is sure what this recovered loot from Alams was ever done with in Bayelsa State? Your comment will be appreciated. It is also interesting that Timipre Sylva, the last governor of Bayelsa State is also now facing a six count charge of stealing N2.6 billion (£10 million) from the State.

Read the second part of this post tomorrow on how UK banks helped Joshua Dariye and Abacha launder money in UK and the role played by Nigerian banks.

Why do you think corruption is so endemic in Nigeria? Please share your comments below.. 

Monday, April 9, 2012

What does Boko Haram really want?

It is usual to hear that Nigeria’s deadly Boko Haram sect wants the implementation of sharia in Nigeria. In the past one year, the group has launched a bloody campaign that has claimed the lives of about 1000 Nigerians.

Interestingly, if a critical break down of the lives claimed by Boko Haram attacks is done, it may surprise many to know that more Muslims may have died from Boko Haram attacks than Christians. Yet the common assumption is that Boko Haram is fighting for an Islamic state in Nigeria. If that is the case, then the group must be defeating its own fight by killing the same people it is claims to be fighting for.

It is usual to see in media reports that Boko Haram demands the adoption of Islamic law or Sharia in Nigeria. This statement seems to lack merit. Is it the media that is not getting right the demand of Boko Haram or Boko Haram that is not sure of what exactly it wants from Nigeria and Nigerians?

My confusion about Boko Haram’s demand for Sharia implementation in Nigeria is because Sharia law is already implemented in Nigeria. As at last count, 12 states are already implementing Sharia law. Nine of these states implement Sharia law in full. These States are Zamfara which kicked off the implementation of Sharia law as far back as 2000. The other states that implement sharia fully in Nigeria are Kano, Sokoto, Katsina, Bauchi, Borno, Jigawa, Kebbi and Yobe State. Three other States have imposed Sharia law in parts of their States because of the large segments of non-Muslims in parts of their states. These States are Kaduna, Niger and Gombe State.

Most of these states have been implementing Sharia law for several years now. These States are predominantly Muslim states and have chosen to do so. It is therefore confusing if Boko Haram will be said to be fighting for the implementation of Sharia law. Where else do they want Sharia Law? All over Nigeria? Will that be fair considering that there is a predominance of Christians in other parts of the country? Would it be fair if Christians were demanding that all Muslims become Christians even if they did not want to?

Then there is these other claim in the media that Boko Haram hates western education and wants it abolished. This demand by Boko Haram, if true is also confusing. This demand is confusing because all over the North, Koranic schools are run concurrently with western schools. There are parents who voluntarily choose to send their children to only Koranic schools or Western Schools or both? What is wrong in having a choice to decide what form of education or knowledge to pursue? Is it not true the mathematics, the foundation of western education has Arabic origins? Why would such valuable knowledge that has benefitted the West be a taboo to those that gave it to the world?

It is regrettable that an initial effort at dialoguing with Boko Haram was discontinued because it was leaked to the Press. In as much as it was regrettable that the negotiation process was leaked, it is even more regrettable that it was abandoned because of the leak. Now more people are dead. Families are being destroyed, business activities in Northern Nigeria are at standstill and the violence is taking a heavy toll on the economy and social activities in the North. No one is safe any longer in Northern Nigeria, not even Muslims who are equally being attacked by Boko Haram.

As I am writing this, a day after Easter Sunday when Boko Haram detonated a car bomb that has claimed 38 lives, most of whom were poor Okada riders and taxi drivers, Reuters report that in Yobe state, where Sharia law is already in operation, suspected members of Boko Haram on Sunday stormed the home of local policeman Hassan Isa and shot dead his 6-year old daughter, injuring two of Isa's other children, a police spokesman there told Reuters. Even Children   yet to understand what Boko Haram stands for, are now in the line of fire.

 The BIG question for Boko Haram is if the killing of fellow Nigerians is the best way they prefer to advertise their ideology or beliefs? Is the best advertisement of their beliefs the blowing into pieces  innocent Okada riders, worshipers and gunning down people walking on the streets of Northern Nigeria struggling to make a living in a country that has offered them little or nothing since they were born? When will the killing stop? Is it when no one can walk safely in any city in Northern Nigeria or when they have killed everyone that does not agree with the Boko Haram ideology? Is killing the Boko Haram answer to the inability to convince others of the righteousness of their ways?

Definitely, blowing up and shooting down unarmed civilians is a poor advertisement of any ideology  that Boko Haram stands for. Whatever BoKo Haram demands may eventually be, that demand will only make sense when they realize that other Nigerians have a right to life, just the same way they do and that blowing up innocent Nigerians leaves them with no Nigerian to support their cause, whatever that may be. 

Friday, April 6, 2012

World Bank Presidency-Okonjo-Iweala’s Challenge

Ngozi Okonjo-Iweala wish to emerge the President of the World Bank, a job with $420,920 per annum pay package excluding a lucrative pension package, is really much like the proverbial camel attempting a passage through the eye of the needle. Standing tall against her ambition is America’s might and Obama’s pride as well as long years of tradition.
Ngozi Okonjo-Iweala

The tradition has always been for America to nominate the President of the World Bank while Europe nominates the Managing Director of the International Monetary Fund. This tradition has been maintained for decades despite the fact that as at when it was put in place, the World Bank and IMF’s membership were nowhere near its current 187 member countries.

The tradition of America and Europe maintaining their traditional leadership of both world bodies is maintained by the voting structures in place. The World Bank President is elected by the 25 member Executive Directors of the World Bank which represent its 187 member states. The United States, Germany, Japan, United Kingdom and France are each allowed to nominate a member of the Executive Board of the World Bank. Recently, also Russia and China and Saudi Arabia have joined the countries that nominate a member to the Executive Board.

The remaining 180 members of the World Bank are then allowed to elect the remaining 17 members to the Executive Board of the World Bank with each member representing several countries.  

Voting among the Executive Board for the President is not also done by one man one vote or by one country, one vote. Voting power is distributed among member states according to the financial contribution of each member state to the capital of the World Bank.  In this wise, the US has the largest votes among the Executive directors followed by each of the European Countries and Japan that are allowed to select an Executive Director. The United States, Germany, Japan, United Kingdom and France, between these five countries hold 35% to 45% of the votes at the World Bank Group.

Europe will most certainly vote for the US nominee for the World Bank President. It is a tradition and also pay back time since the US also will always support the European nominee for Managing Director of the IMF. Japan will traditionally vote with the US as a traditional ally and besides the US nominee is originally from a neighbouring country in Asia.

Okonjo-Iweala may have had a chance if all emerging countries were to back her up. However, with the backing of Russia, which is also represented by a single member at the Executive Board, other emerging economies have put forward Jose Anthonio Ocampo, a well-respected economist from Brazil as their nominee for President of the World Bank.  Jose was recently endorsed as the best candidate for the job by 100 economists even as Ngozi has been endorsed for the job by former staff of the World Bank, the Financial Times  and The Economist  all respected publications.

Even without another candidate dividing the votes of the emerging markets, it would have been an uphill task for Okonjo-Iweala to emerge World Bank President purely based on the merit of her position. The truth is that the moment Obama nominated Jim Yong Kim for the World Bank job, any other person seeking that job effectively was non-starter.  The large voting power held by the US in the other multilateral institutions of the World Bank ensures that the US has a strong leverage  on other member countries of the world bank who may desire favours in future in other institutions of the World Bank.
Secretary of State Clinton and Kim and President Obama (Pic from Carnegie Council Website) 

The only way the US nominee will lose in this race is if the US voluntarily withdraws its candidate from the World Bank job. The chances of that happening in an election year, most US commentators say, is zero.

Nonetheless, Okonjo-Iweala’s and Jose Ocampo’s entry into the World Bank race is a  strong signal to the developed world that it is no longer business as usual in the multilateral institutions. It is no longer permissible for citizens of any country to be denied a global job just be because he is not from the US or Europe despite the fact that he is well qualified for the job.  Emerging economies may just be forced to float parallel organisations if they are continually treated as second citizens in the existing global institutions.