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Nigeria: Corruption Undercuts Boko Haram Fight
AfricaFocus Bulletin
May 24, 2017 (170524)
(Reposted from sources cited below)
Editor's Note
"Nigeria's corrupt elites have profited from conflict; with oil prices at a record
low, defence has provided new and lucrative opportunities for the country's corrupt
kleptocrats. Former military chiefs have stolen as much as US $15 billion a sum
equivalent to half of Nigeria's foreign currency reserves through fraudulent arms
procurement deals." - new report on "Weaponizing Tranparency"
This new report, excerpted in this AfricaFocus Bulletin, was released earlier this
month by Transparency International, Transparency International Defence and Security
and the Civil Society Legislative Advocacy Centre in Nigeria: Entitled "Weaponising
Transparency: Defence Procurement Reform as a Counterterrorism Strategy in Nigeria,"
it stresses that considerable progress has been made by the Buhari administration in
its campaign against corruption, but that corruption is still pervasive, not least in
the military. This corruption, the report argues, is one of the major impediments to
an effective counterinsurgency campaign against Boko Haram.
Both topics, corruption and Boko Haram, are frequent themes of both national and
international coverage of Nigeria. But this report is distinctive in closely linking
the two issues, and in presenting specific proposals to strengthening anti-corruption
efforts aimed at arms procurement in particular.
For a press release on the report, launched on May 18 in Abuja, visit
http://tinyurl.com/mel4ozo
Notably, the report has received wide press coverage in Nigeria, but little
international attention and virtually no international news coverage, although it
includes the point that Nigeria's international partners share the blame for enabling
such corruption.
For previous AfricaFocus Bulletins on Nigeria, visit
http://www.africafocus.org/country/nigeria.php
++++++++++++++++++++++end editor's note+++++++++++++++++
Weaponising Transparency: Defence Procurement Reform as a Counterterrorism Strategy
in Nigeria
In Partnership With
Transparency International (TI; http://www.transparency.org)
Transparency International Defence and Security (TI-DS; http://ti-defence.org)
Civil Society Legislative Advocacy Centre (CISLAC; http://cislacnigeria.net/)
May 2017
[full report, with other related coverage, available at
http://allafrica.com/view/group/main/main/id/00051928.html;
Direct link to full report: http://tinyurl.com/lozqbah]
Executive Summary
Defence sector corruption is a major threat to Nigeria's internal security and
political stability. Largely unaddressed, it has weakened Nigerian counterterrorism
capacity whilst strengthening Boko Haram.
Nigeria's corrupt elites have profited from conflict; with oil prices at a record
low, defence has provided new and lucrative opportunities for the country's corrupt
kleptocrats. Former military chiefs have stolen as much as US $15 billion a sum
equivalent to half of Nigeria's foreign currency reserves through fraudulent arms
procurement deals. Defence sector corruption in Nigeria has enabled the political
elite to accumulate and distribute political patronage. Longstanding military
exceptionalism meanwhile, has justified weak and compromised oversight of securityrelated
spending and excessive secrecy.
By far the most significant corruption opportunities are those exploited through
inflating procurement contract values and creating "phantom" defence contracts. Such
contracts are used as a vehicle for money laundering: facilitated via weak or
corrupted Nigerian banks, illicit financial flows are often hidden in property in the
UK, United States, South Africa and Dubai.
President Buhari's government has taken significant steps to identify and prosecute
individuals involved in security sector corruption. And the campaign to focus
international attention on returning stolen assets has been powerful. But however
effective these efforts are, they will not be enough to win the long fight against
corruption. The reality is that Nigeria's attempt to secure the repatriation of large
quantities of illicitly laundered assets from places like the UK makes a better media
headline than it does anti-corruption strategy.
With the President's first term ending in 2019, the window of opportunity for far
reaching change is closing rapidly. Only a holistic reform agenda can deliver the
deep, systemic changes and improvements in transparency and accountability needed to
prevent the next US $15 billion quietly leaving Nigeria through the back door.
Ex-Air Force Chief of Staff Adesola Amosu was arrested
by the Economic and Financial Crimes Commission in 2016,
and his trial is still ongoing. Photo credit: Premium Times
Introduction
Violent extremism thrives as a result of exploitative governing structures and state
predation. Terrorist groups motivated by radical political and religious ideologies
have destabilized Syria, Afghanistan, Libya, Iraq, Somalia, Nigeria, and other weak
or misgoverned states. These groups have been able to co-opt disaffected populations
by leveraging popular antipathy toward corrupt governments, often by presenting their
own radical agenda as having greater moral value and popular legitimacy than the
secular governments they seek to destroy. Predation by these regimes whether it
takes the form of elite corruption, security force abuses, or ethno-religious
chauvinism serves to validate extremist narratives about the immorality of secular
governance.
The Boko Haram insurgency is now entering its fifteenth year, fed by the notorious
levels of public sector corruption that have eroded the Nigerian state's legitimacy.
Politicians compete for private control of national coffers, rather than delivering
public goods based on the growing needs of Nigeria's booming population - on track to
be the third largest in the world by 2050. Yet for the vast majority, corruption
remains endemic and systemic, warping the social contract between the government and
citizens. Patronage - not performance - is the ticket to advancement.
Securing a prosperous future for nearly 180 million people will be tough. The
continent's largest economy has, since 1970, suffered from the largest per annum
illicit financial outflow on the continent as corrupt actors seek to exploit banking
loopholes to launder and hide their unlawful assets. An estimated US $217.7bn was
illegally transferred out of Nigeria between 1970 and 2008. The same study estimated
that illegal transfers from the African continent have tripled since 2001.
Across the board, public sector corruption is undermining the state's ability to
address Nigeria's many challenges: socioeconomic underdevelopment, unemployment and
insecurity. Nowhere is the failure of governance more evident than in the northeast,
a region that was already impoverished even before it was devastated by Boko Haram.
The conflict has displaced over 2.6 million people and killed as many as 50,000 since
May 2011.
Corruption has been particularly destructive in the defence and security sector.
Overlooked in peacetime, defence sector corruption has devastating real world
consequences when conflict flares. With lower oil prices, corrupt elites have
increasingly exploited alternative illicit revenue streams. The secret nature of
defence and security budgets has made them the easiest and most lucrative opportunity
to exploit. While Boko Haram has constructed a conflict economy geared around
pillage, racketeering, and kidnapping; senior players in the Nigerian security sector
have also profited from the insurgency.
Extra-budgetary spending on counterterrorism has dramatically increased throughout
2014 and into 2015, and with it the scale and scope of corrupt opportunities in the
defence sector. Corruption has hollowed out the Nigerian Army, the largest in West
Africa, and compromised the integrity of the country's Navy, which has been
implicated in the theft of millions of barrels of crude oil in recent years. The
result has been a corrupt war economy that incentivises high- ranking officials and
security personnel to perpetuate conflict for personal gain. War has been a boon to
Nigeria's corrupt.
Since coming to power in May 2015, President Buhari has taken some bold action in
tackling defence sector corruption. Central to his approach have been two ad hoc,
temporary audit committees: one investigating spending by the Office of the National
Security Adviser and one investigating defence arms and equipment procurement. Taking
on the defence establishment was a significant move: the evidence uncovered by these
probes revealed that several of the country's former military chiefs, using dozens of
companies, together stole as much as US $15 billion.
President Buhari's anti-corruption drive is a rare example of senior Nigerian defence
and security officials being exposed to criminal investigation. By signalling that
military impunity is not without limit, it is undoubtedly a positive step forward.
The approach has been coupled with a determined attempt to see the return of
Nigeria's stolen wealth. During the London Anti-corruption Summit in May 2016,
President Buhari demanded the return of illicitly laundered assets from the UK. The
point was powerfully made, but sadly, the chances of success are slim. Asset recovery
is a lengthy and resource heavy procedure. The UK performs relatively well compared
to international peers, but even at the highest estimate, asset freezing and
repatriation are tiny in relation to the vast scale of theft.
Over the past 12 years, UK enforcement agencies have prosecuted just a handful of
cases three state governors and repatriated only a few million pounds to Nigeria.
This is a fraction of what has surely been stolen. The extent of misappropriation of
public funds by former General Sani Abacha is notorious. Listed as one of the top
four most corrupt world leaders, during five years in office Abacha is estimated to
have embezzled between US $2 and 5 billion. Despite unprecedented cooperation between
UK, USA, Swiss and Nigerian authorities to return these stolen assets, the case is
on-going 19 years after Abacha's death.
Abacha and these three governors all plundered defence and security budgets. Nigeria
suffers from the continent's highest illicit financial flows because it offers the
most opportunities for corruption. To stop today's assets being misappropriated,
defence sector reform must be an equal priority to enforcement and repatriation, or
Nigeria's leaders will always be chasing the past. Since independence, every civilian
and military administration has come to power promising to root out corruption.
Without progressing its approach to anti-corruption reform, Nigeria's current and
future governments will at best be destined to the same media headlines as its
predecessors.
1. The context for defence sector corruption
"Corruption in Nigeria is not mindless...it is calculated and systematic." former
Central Bank Governor Lamido Sanusi
Political patronage
With evidence uncovered by the two ad hoc audit committees established by President
Buhari, the Economic and Financial Crimes Commission (EFCC), Nigeria's main anticorruption
agency, has indicted over 300 individuals and companies for defence sector
procurement theft and misappropriation.
Fifty-five people, including former government ministers, military chiefs, state
governors, and bankers were reported by the committees to have stolen 1.34 trillion
naira ($6.8 billion) over a seven-year period in the shape of arms equipment deals. A
further $2 billion was allegedly stolen from the National Security Budget under the
watch of National Security Advisor, Colonel Sambo Dasuki. What these investigations
illustrate is a system of kickbacks, where billions of dollars were diverted from
procurement spending, through the use of 'briefcase' companies, in order to fund the
ruling party's supporters and ensure electoral success for the People's Democratic
Party (PDP) in the 2015 general elections. 11
The amounts stolen are shockingly bold. Yet the misappropriation of budgets to buy
political support is not new. Successive Nigerian leaders, both civilian and
military, have built governmental power structures around the country's main income
stream: oil. And until recently oil revenues have typically accounted for up to 70
per cent of government revenues - feeding powerful patronage networks. Obasanjo did
not even appoint an oil minister, preferring to supervise the ministry directly
himself. Successive administrations have maintained the same structure: former PDP
president Goodluck Jonathan, a civilian, appointed his close ally Diezani AlisonMadueke
as Oil Minister. Madueke who has recently been charged with money
laundering was described by one Nigerian Extractive Industries Transparency
Initiative (NEITI) official as, "the oil institution."
The drop in Nigeria's state oil revenues has hit oil sector rents hard, and this has
led Nigeria's corrupt elites to raid defence and security sector budgets to maintain
their power bases. With defence budgets forming close to 20 per cent of total
government spending in 2017, the sector offers lucrative rewards to Nigeria's corrupt
elite. Much of this has been hidden through large value contracts. According to the
former Head of the Bureau for Public Procurement (BPP) the agency established to
monitor, oversee and set standards for government procurement spending 90 per cent
of bribes in Nigeria occur through procurement. Both the size and opacity of the
defence sector has made it an attractive veil for fake corporate activity.
While some of this money is stolen for individual profit, a great deal is dispersed
through complex patronage networks. As former Central Bank Governor Lamido Sanusi
phrased it, "corruption in Nigeria is not mindless...it is calculated and
systematic." Sustaining political patronage is a system, a system that was previously
predominantly funded by the oil sector but is now increasingly relying on plundering
of the defence and security budget. Former President Goodluck Jonathan expended
unprecedented amounts of patronage, even beyond historical norms, to improve his
electoral chances. One former adviser observed that President Jonathan and his allies
acted "with a siege mentality" within an unstable PDP. The oil and defence sectors
were exploited to record levels in order to sure up an extensive patronage network
and safeguard President Jonathan's political future. These kleptocractic networks
have yet to be disabled.
Kleptocratic capture of the defence sector
What is overwhelmingly clear from the results of the ad hoc audit committee
investigations is the extent of unmonitored, systemic control over the defence sector
by senior government elites. The lack of clear separation between the executive and
the military is a long running problem. Despite the formal end of military rule in
1999, the military has played a significant role in political life. With control of
the armed forces and a monopoly on access to arms, military generals have the power
to protect access to resource rents and ensure their place within the ruling elite.
Kleptocratic capture of the defence sector rests on three pillars: capture of defence
budgets and income, capture of defence spending and procurement, and capture of
senior military posts. Facilitating this capture are powerful senior figures
godfathers who select and appoint personnel to defence sector positions, in order
to operationalise systemic control over security finances. The system facilitates
control from the highest levels of the political party to the lowest levels of the
military.
Appointments can also be used as political bargaining chips: former President
Jonathan cemented a pre-election political alliance with former head of state Ibrahim
Babangida by appointing Aliyu Mohammed a long-time Babangida loyalist, ex-Army
chief, and NSA to two presidents as minister. As one Nigerian Army officer put it,
the "selection of officials [both civilian and military] is done politically and
based on who is who. Even when personnel are picked to oversee certain aspects that
involve anything in procurement, it is done based on the gain expected or to be
reaped by the 'godfather' who does the selection."
Among the rank-and-file, chronic pay shortfalls, inadequate training, and dilapidated
facilities create powerful incentives for corruption by undercutting the overall
professionalism and morale of the military. As the military's esprit de corps has
eroded, so too has its sense of purpose and focus on its core missions. Over time
individual officers and soldiers have come to prioritise their own personal wellbeing
- or even their mere subsistence - over the needs of the service. Perceiving
themselves to be victims of corrupt behaviour, such as the skimming of allowances or
embezzlement of essential operational funds, many have lost faith in the legitimacy
of the system and the patrimonial guarantees made to them when they joined it.
Excessive secrecy
In any country, a proportion of spending must remain confidential for security
reasons; typically 15 per cent, including among states in conflict. Yet Nigeria
classifies nearly all defence contracts and budgets, and considers any broadlydefined
security-related matter 'secret' by definition.
Even according to the Nigerian government, the Ministry of Defence (MOD) ranks among
the agencies least compliant with the 2011 Freedom of Information (FOI) Act. Civil
society, meanwhile, ranks the Office of the National Security Adviser (ONSA) among
those security agencies most resistant to disclosing information in response to FOI
requests. These opaque habits are cultural remnants of the decades Nigeria spent
under military rule that have been preserved by contemporary military and civilian
leaders keen to forestall outside scrutiny of their activities. As a result, Nigeria
ranks among those countries at the highest risk of corruption due to the overclassification
of budget data and weak oversight of secret budgets.
This culture of secrecy is often openly hostile or vengeful towards journalists and
civil society. In December 2015, soldiers reportedly perpetrated gross human rights
violations during two separate military crackdowns in Zaria and Onitsha. In response
to these allegations the Nigerian Army has labelled its critics as "unscrupulous and
unpatriotic". Meanwhile President Buhari's government has failed to take any action
to hold the military to account for incidents such as the deaths of several thousand
detainees due to starvation, torture, and disease at the Giwa Barracks military
prison between 2011 and 2014.
Similarly, in June 2016 Nigeria's Minister of Defence condemned media reports about
the Chief of Army Staff's links to high-end property in Dubai describing them as
"disgruntled and unpatriotic elements" and warning the media that they should show
more "professionalism [when reporting on] security and defence related matters". In
September 2016, military soldiers and officers of the State Security Services
allegedly stripped and beat ten journalists and media workers with barbed wire before
arresting them.
The Nigerian military's hostile response to scrutiny reinforces the perception that
it is distinct from other state institutions and can play by a different set of
rules. Moreover, there has been a long standing culture among senior officers that
rank has its privileges and that promotion to top echelons comes with the prerogative
to use one's position for personal gain. This heavily undermines public trust.
Military exceptionalism
Despite Nigeria's 1999 return to democratic rule, the oversight exercised by civilian
officials and other watchdogs over the military and security agencies remains very
weak. Weak accountability has enabled powerholders along the entire defence spending
chain to misappropriate state funds, from the Presidency down to unit commanders at
ground level.
Although the Senate and the House of Representatives have several security committees
(National Security and Intelligence, Defence, Army, Navy, Air Force, and Police
Affairs), members of these panels rarely undertake in-depth oversight activities.
With defence sector spending shrouded in secrecy, entities such as civil society
groups, media organisations, the Bureau of Public Procurement (BPP), the Auditor
General of the Federation, and National Assembly committees are similarly unable to
marshal sufficient information to play watchdog, even if they have the formal legal
authority to do so.
By establishing two ad hoc investigatory committees to audit the ONSA and past
defence procurement, President Buhari has attempted to sidestep existing undeveloped
or ineffective oversight institutions. Official announcements from the Presidency
declared the probe would investigate contracts entered into from 2007 to 2015, but
critics claim that current ruling party members implicated in fraud have been allowed
to pay to evade charges, while opposition supporters have been held without bail and
charged. Whether or not accusations over political manipulations are true, the
reality is that these ad hoc bodies lack the legitimacy and credibility to be a
successful long-term solution.
The acquiescence of international partners
International military partners have a part to play and have done precious little to
disincentivise Nigerian security-sector corruption. By failing to integrate effective
anti-corruption measures into their security engagement policies, partners are
inadvertently diminishing the impact of their military assistance. US military and
police aid to Nigeria, totalled US $45.4 million from 2010 to 2014, but was just a
small fraction of the more than US $2 billion in security funds that was allegedly
stolen by Nigeria's previous National Security Advisor who for three decades
enjoyed a close relationship with Washington.
Key international suppliers of Nigerian military hardware are facilitating fraud by
agreeing to uncompetitive or unorthodox contracts. In 2013, Nigeria officials
reportedly skimmed US $20 million from an internet surveillance contract directly
awarded to an Israeli company in defiance of public procurement competition rules.
Likewise, a former air-force chief admitted embezzling millions via seven arms
contracts directly awarded to a Ukrainian company.
International partners are missing opportunities to encourage reform. The United
States' efforts to sell 12 A-29 Super Tucano light attack aircraft to the Nigerian
Air Force whose last three chiefs, along with other senior officers, are currently
on trial for embezzlement and procurement fraud looks like business as usual.
Contracts such as this are opportunities to prompt change, yet it is not at all clear
that the Nigerian Air Force has become more transparent about its finances and
procurement; and the senior air force officer invited to Washington in July 2015 to
discuss the Super Tucano sale, has since been charged with corruption.
The widespread use of both international and Nigerian agents to facilitate such deals
also increases opportunities for inflating contracts and paying bribes, as
illustrated by the recent investigation into Rolls-Royce. Although this case is a
good example of how strong, coordinated international enforcement efforts can make
businesses accountable for unethical conduct.
Disrupting financial crime
The most effective action against asset flight is to prevent it occurring in the
first place; and here the Nigerian and international financial sectors could play a
much greater role. Recent evidence from the Presidentially-appointed ad hoc Audit
Committees has shown that stolen funds often pass through multiple accounts before
being moved offshore beyond the reach of domestic authorities. As facilitators of
corrupt funds, both Nigerian and international banks need to raise their standards of
governance and control. Those that repeatedly fail should be sanctioned or shut down.
But this is not currently happening: Skye Bank has been consistently implicated in
the EFCC's corruption and fraud prosecutions, such as the current N22.8 billion trial
of three former air force chiefs and an Air Force Director of Finance for money
laundering. Skye Bank has been indicted alongside the defendants, yet the Central
Bank of Nigeria has not used its sanctioning powers to hold board members to account.
Instead, the Central Bank allowed board members to announce they had "voluntarily
resigned" - despite evidence of gross insider malpractice, including by the Chairman
Tunde Ayeni. Ayeni is a close associate of President Jonathan and convicted PDP
governor Diepreye Alamieyeseigha. Whilst chair of Skye Bank, Ayeni was also chair of
Joint Aviation Services Limited - a briefcase company involved in bidding for
inflated defence procurement contracts - highlighting the high level of elite control
of defence spending and money laundering.
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.
AfricaFocus Bulletin can be reached at africafocus@igc.org. Please write to this
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