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Nigeria: Corruption & Its International Partners
AfricaFocus Bulletin
March 25, 2014 (140325)
(Reposted from sources cited below)
Editor's Note
The Nigerian government has pledged to order a forensic audit of
alleged missing oil receipts, which Central Bank Governor Lamido
Sanusi reckoned at some $20 billion before his suspension by
President Goodluck Jonathan in February. Previous
experience with such audits has led Nigerians to be skeptical of
the outcome. On a much earlier case, however, this month the U.S.
Department of Justice froze some $458 million of assets embezzled
by former dictator Sani Abacha and his colleagues during his years
in office from 1993-1998.
Details revealed in this Department of Justice case, as well as a
new Swiss investigation on sales of Nigerian oil by Swiss trading
companies in 2011, show that such internal corruption is part of
an ecosystem of financial actors extending far beyond Nigeria to
major banks and obscure shell companies in Europe and the Americas.
This AfricaFocus Bulletin contains (1) a press release from the
U.S. Department of Justice and excerpts from the formal complaint
to freeze assets stolen by Sani Abacha, and (2) the introduction
from a report by the Berne Declaration in Switzerland on the
central role played by Swiss trading companies in handling Nigerian
oil exports and providing opportunities for fraud in collaboration
with Nigerian officials.
For background on the latest charges about missing oil funds, see
the blog entry on http://www.cislacnigeria.net / direct URL:
http://tinyurl.com/oc27f5r and a March 10 New York Times article at
http://tinyurl.com/p45vyfb Sites with extensive news coverage
include http://allafrica.com and http://saharareporters.com.
See in particular the roundup of news stories at
http://allafrica.com/view/group/main/main/id/00029460.html
For previous AfricaFocus Bulletins on Nigeria, visit
http://www.africafocus.org/country/nigeria.php
For previous AfricaFocus Bulletins on corruption and capital flows,
visit http://www.africafocus.org/debtexp.php
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U.S. Freezes More Than $458 Million Stolen by Former Nigerian
Dictator in Largest Kleptocracy Forfeiture Action Ever Brought in
the U.S.
Department of Justice Office of Public Affairs
March 5, 2014
http://www.justice.gov/opa/pr/2014/March/14-crm-230.html
The Department of Justice has frozen more than $458 million in
corruption proceeds hidden in bank accounts around the world by
former Nigerian dictator Sani Abacha and conspirators. A civil
forfeiture complaint unsealed today in the United States District
Court in the District of Columbia seeks recovery of more than $550
million in connection with the largest kleptocracy forfeiture
action brought in the department's history.
The restraint of funds announced today includes approximately $313
million in two bank accounts in the Bailiwick of Jersey and $145
million in two bank accounts in France. In addition, four
investment portfolios and three bank accounts in the United Kingdom
with an expected value of at least $100 million have also been
restrained, but the exact amounts in the accounts will be
determined at a later date.
Acting Assistant Attorney General Mythili Raman of the Justice
Department's Criminal Division and Assistant Director in Charge
Valerie Parlave of the FBI's Washington Field Office made the
announcement.
"General Abacha was one of the most notorious kleptocrats in
memory, who embezzled billions from the people of Nigeria while
millions lived in poverty," said Acting Assistant Attorney General
Raman. "This is the largest civil forfeiture action to recover the
proceeds of foreign official corruption ever brought by the
department. Through our Kleptocracy Initiative, we are seizing the
assets of foreign leaders who steal funds that properly belong to
the citizens they serve. Today's action sends a clear message: we
are determined and equipped to confiscate the ill-gotten riches of
corrupt leaders who drain the resources of their countries."
"We will not let the U.S. banking system be a tool for dictators to
hide their criminal proceeds," said Assistant Director in Charge
Parlave. "This action demonstrates the FBI's ability to combat
international corruption and money laundering by seizing the assets
of those involved. I want to thank the special agents, financial
analysts and prosecutors whose hard work over the years resulted in
today's announcement."
The over $458 million in frozen funds and the additional assets
named in the complaint represent the proceeds of corruption during
and after the military regime of General Abacha, who assumed the
office of the president of the Federal Republic of Nigeria through
a military coup on Nov. 17, 1993, and held that position until his
death on June 8, 1998. The complaint alleges that General Abacha,
his son Mohammed Sani Abacha, their associate Abubakar Atiku Bagudu
and others embezzled, misappropriated and extorted billions from
the government of Nigeria and others, then laundered their criminal
proceeds through the purchase of bonds backed by the United States
using U.S. financial institutions.
As alleged in the complaint, General Abacha and others
systematically embezzled billions of dollars in public funds from
the Central Bank of Nigeria on the false pretense that the funds
were necessary for national security. The conspirators withdrew the
funds in cash and then moved the money overseas through U.S.
financial institutions. General Abacha and his finance minister
also allegedly caused the Government of Nigeria to purchase
Nigerian government bonds at vastly inflated prices from a company
controlled by Bagudu and Mohammed Abacha, generating an illegal
windfall of more than $282 million. In addition, General Abacha and
his associates allegedly extorted more than $11 million from a
French company and its Nigerian affiliate in connection with
payments on government contracts. Funds involved in each of these
schemes were allegedly laundered through the United States.
The complaint seeks to forfeit bank accounts and investment
portfolios with funds located in Bailiwick of Jersey, France and
the United Kingdom. On Feb. 25 and 26, 2014, U.S. arrest warrants
for the assets were enforced in Jersey and France though mutual
legal assistance requests and in the United Kingdom through
litigation brought pursuant to the U.K. Civil Jurisdiction and
Judgments Act. The complaint also seeks to forfeit five corporate
entities registered in the British Virgin Islands.
This case was brought under the Kleptocracy Asset Recovery
Initiative by a team of dedicated prosecutors in the Criminal
Division's Asset Forfeiture and Money Laundering Section, working
in partnership with federal law enforcement agencies to forfeit the
proceeds of foreign official corruption and, where appropriate,
return those proceeds to benefit the people harmed by these acts of
corruption and abuse of office. Individuals with information about
possible proceeds of foreign corruption located in or laundered
through the United States should contact federal law enforcement or
send an email to kleptocracy@usdoj.gov.
The investigation was conducted by the FBI. The case is being
prosecuted by Trial Attorney Elizabeth Aloi and Assistant Deputy
Chief Daniel Claman of the Criminal Division's Asset Forfeiture and
Money Laundering Section, with substantial support from the
Criminal Division's Office of International Affairs. The department
appreciates the extensive assistance provided by the Governments of
Jersey, France and the United Kingdom in this investigation.
Verified Complaint for Forfeiture In Rem
Case l:13-cv-01832-JDB Document 1 Filed 11/18/13
Asset Forfeiture and Money Laundering Section, Criminal Division,
United States Department of Justice 1400 New York Avenue, NW, 10th
Floor, Washington, DC 20005,
[Excerpts only]
I. Introduction
1. This is an action in rem to forfeit corporate entities and more
than $500 million in other assets involved in an international
conspiracy to launder proceeds of corruption in Nigeria during the
military regime of General General his son Mohammed Sani Abacha,
their associate Abubakar Atiku Bagudu, and others embezzled,
misappropriated, defrauded, and extorted hundreds of millions of
dollars from the government of Nigeria and others, including
through the three criminal schemes described herein. They then
transported and laundered the proceeds of those crimes through
conduct in and affecting the United States. The defendants in rem
are subject to forfeiture as property involved in money laundering
offenses in violation of U.S. law.
2. As alleged herein, in one scheme, General Abacha, together with
Mohammed Sani Abacha, Bagudu, and others, systematically embezzled
public funds worth billions of dollars from the Central Bank of
Nigeria (CBN) on the false pretense that the funds were necessary
for national security. After causing the CBN to disperse the funds,
often in cash, General Abacha and Bagudu then moved the funds
overseas, including through U.S. financial institutions (the
"Security Votes Fraud"). In another scheme, General Abacha and his
finance minister, Anthony Ani, caused the government of Nigeria to
purchase non-performing government debt from a company controlled
by Bagudu and Mohammed Abacha at vastly inflated prices, generating
a windfall of over $282 million for Mohammed Abacha and Bagudu
through U.S. financial transactions (the "Debt Buy-Back Fraud").
Finally, in the third scheme alleged herein, General Abacha and his
associates extorted more than million from a French company and its
Nigerian affiliate in connection with payments on government
contracts (the Extortion").
3. Proceeds of the Security Votes Fraud were transported into and
out of the United States in violation of U.S. law and pooled into
bank accounts in London, where they were used to purchase hundreds
of millions of dollars of U.S. dollar-denominated Nigerian bonds.
The bonds generated tens of millions of dollars in interest paid
through Citibank in New York and guaranteed by the United States;
in effect the conspirators lent money stolen from Nigeria back to
Nigeria with zero risk and at enormous profit. By 2007, the bonds
were liquidated, and the proceeds from the sale of the bonds,
together with the proceeds of the Debt Buy-Back Fraud and
Extortion, were deposited into the defendant accounts, using the
defendant corporate entities and through U.S. financial
transactions, as described herein. The defendant corporate entities
are registered in the British Virgin Islands, and bank accounts and
investment firms holding the other defendant assets are located in
the United Kingdom, France, and the Bailiwick of Jersey.
IV. Factual Allegations
A. Key Participants - General Abacha, his Associates, and their
Corporate Entities
8. General Sani Abacha was a military officer in Nigeria who
assumed the office of the President of the Federal Republic of
Nigeria through a military coup on November He held the office of
the President until his death on June 8, Prior to assuming the
presidency, he served as Chief of Army Staff (1985-1989), Chairman
of the Joint Chiefs of Staff (1989-1990), and Minister of Defense
(1990-1993). As described herein, General Abacha conspired with
others to steal and defraud hundreds of millions of dollars from
Nigeria, extort money from third parties wishing to do business in
Nigeria, and launder the proceeds of that theft, embezzlement,
misappropriation, and extortion throughout the world.
9. Ibrahim Sani Abacha was the first son of General Sani Abacha.
Ibrahim Abacha participated in the conspiracy to steal hundreds of
millions of dollars from the Nigerian government and launder the
proceeds around the world. He died in a plane crash in January
1996.
10. Mohammed Sani Abacha is the second son General Sani Abacha.
After Ibrahim death, Mohammed Abacha assumed his brother's role in
the conspiracy to steal hundreds of millions of dollars from
Nigeria and launder the criminal proceeds throughout the world.
Mohammed Abacha received and helped to launder more than $700
million in cash stolen directly from Nigeria's public coffers. He
also is a signatory and/or a corporate representative designated on
many of the defendant assets.
11. Abubakar Atiku Bagudu was an associate of General Abacha and
his sons who participated in the conspiracy to steal and launder
hundreds of millions of dollars. Among other things, Bagudu played
an instrumental role in setting up and executing the complicated
financial transactions used to launder the proceeds of the
conspiracy. He is also a signatory and/or corporate representative
designated on many of the defendant assets.
12. Ismaila Gwarzo held the position of National Security Advisor
(NSA) during the presidency of General Sani Abacha, and Gwarzo
participated in the conspiracy to steal and launder hundreds of
millions of dollars. Among other things, Gwarzo prepared and
executed the false paperwork that caused the CBN to release
hundreds of millions of dollars worth of U.S., U.K., and Nigerian
currency as part of the Security Votes Fraud described below.
13. Alhaji Ahmadu Daura was an associate of the Abacha Family and
operated the Sunshine Bureau de Change, a money exchange business
located in Nigeria. Daura participated in the conspiracy by moving
criminal proceeds out of Nigeria to accounts he controlled in
England and by transferring criminal proceeds into and out of the
United States to accounts controlled by the Abacha Family.
14. Anthony Ani held the position of Minister of Finance during the
presidency of General Abacha. Minister Ani authorized the
disbursement of Nigerian government funds in furtherance of the
Security Votes Fraud and the Debt Buy-Back Fraud, both described
below.
15. David Umaru was an attorney and associate of the Abacha family.
Umaru participated in the conspiracy by communicating General
extortion demands to third parties wishing to do business in
Nigeria, including as described below to the owners of Group, a
French-based construction company.
[Points 16 to 24 list the names of companies used in these
transactions, including Doraville Properties Corporation,
incorporated in the British Virgin Islands; Eagle Alliance
International Limited, incorporated in Ireland; Harbour Engineering
and Limited, incorporated in the British Virgin Islands; Mecosta
Securities, Inc., incorporated in the British Virgin Islands and
holding accounts in London, Zurich, and Geneva; Morgan Procurement
Corporation, incorporated in the British Virgin Islands and holding
accounts in London; Rayville International, incorporated in the
British Virgin Islands, and holding an account in Paris; Ridley
Trust, registered in Guernsey, Channel Islands; Ridley Group
Limited (Ridley Group),incorporated in the British Virgin Islands
on June 10, 1997; and Standard Alliance Financial Services,
Limited, incorporated in the British Virgin Islands.]
[Official complaint goes on to detail the mechanisms used for
obtaining the funds and laundering them through various accounts.
For the full text visit
http://www.justice.gov/opa/pr/2014/March/14-crm-230.html]
Swiss traders' opaque deals in Nigeria
Berne Declaration
Lausanne, Switzerland
[Excerpts only. Full text at http://www.evb.ch/en/p21687.html]
Introduction
The number one producer of crude oil in Africa, the Federal
Republic of Nigeria is having trouble lifting its population out of
extreme poverty. For the last ten years the country has experienced
strong growth, largely due to oil revenues. And yet this West
African country, the most populous of the continent with around 173
million inhabitants, has hardly benefited. Both the percentage of
children in full-time education as well as life expectancy are
significantly below the average for sub-Saharan Africa. Moreover,
the Gini coefficient shows that Nigeria is one of the most
inegalitarian countries in the world. Oil, which makes up 58 % of
State income, is clearly not contributing to the development of
this country as much as it could and above all as much as it
should.
This situation owes a great deal to the corruption that is rotting
the State, which ranks 139th out of 179 countries in the
Transparency International classification for 2012. The allpowerful
national company, the Nigerian National Petroleum
Corporation (NNPC), categorised as the most opaque national oil
company on the planet, itself is evidence of Nigeria's 'resource
curse' at work. The extent of the problem is illustrated by the
fact that the NNPC has not published detailed financial reports
since 2005! But this company, with its dozen subsidiaries operating
at all levels of the supply chain, from production to distribution,
cannot be ignored by anyone wanting to produce, export or import
crude oil or petroleum products in Nigeria. It is here that Swiss
commodity traders occupy a position of choice. The breadth of their
activity in this country extends from the exporting of crude oil the
subject of the first part of this report - to the delivery to
local importers of petroleum products necessary for Nigeria's
domestic consumption - the subject of the second part. In effect,
this country is in a paradoxical situation: despite being the
thirteenth largest producer worldwide, the structural failings of
its refineries oblige the country to import petrol, kerosene and
fuel oil.
In the export business, the top Swiss traders are dominant:
according to the figures compiled by the Berne Declaration (BD), in
2011 they bought up no less than 36% of the 223 million barrels
put up for sale by the NNPC. In value, the proportion of Nigerian
oil exports allocated to Swiss firms reached 35.05% (8.731 billion
dollars out of a total of 24.9 billion - see table in appendix). If
Nigerian companies with a Swiss subsidiary are added to the Swiss
traders, this proportion even rises to 56.22% (14.004 billion
dollars). The Swiss traders operating in Nigeria appear to be
closely in business with the badly managed NNPC.
The Geneva companies Trafigura and Vitol outclass their competitors
thanks to opaque partnerships with the NNPC established in Bermuda.
Instances show that sales between the NNPC and its two Swiss
partners were carried out at prices lower than the market rates.
This type of operation appears incongruous: why would the NNPC sell
its crude oil at a discount? Who benefits from these transactions?
The opacity of these arrangements and the frequent involvement of
subsidiaries domiciled in tax havens make it impossible to answer
these questions.
Swiss traders also play an important role in imports. They supply
Nigerian importers with petroleum products necessary for domestic
consumption. In this case it is difficult to know their market
share, because the Nigerian authorities do not attribute their
imports to the Swiss traders, but rather to local operators who act
as intermediaries, and whose transactions are often performed
outside of Nigeria.
In order to guarantee that petroleum products are sold at an
affordable price on the internal market, imports are massively
subsidised. But this importing system has given rise to one of the
most massive frauds that the African continent has experienced. No
less than 6.8 billion dollars of unjustifiable subsidies were paid
out in 2009 and 2011 - that is the equivalent of nearly four times
the Nigerian health budget for 2013. Police investigations carried
out by the Economic and Financial Crimes Commission (EFCC), the
Nigerian squad in charge of financial crimes, show that the Swiss
traders do not hesitate to deal with questionable Nigerian firms,
firms which in fact have no operational capacities or which are
ultimately owned by politically exposed persons (PEPs). In this
context, five Swiss trading firms are the object of a request for
mutual legal assistance submitted by the authorities of Abuja to
Berne. Moreover, as we will see in the third part, at least seven
of the Nigerian 'importers' involved in this fraud have a
subsidiary in Switzerland.
[The full 19-page report details the mechanisms and the lack of
transparency in Swiss trading in Nigerian oil, and calls for
transparency on ownership and trade as a first step to limiting the
extensive fraud the system makes possible.]]
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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