Remi Ogunmefun
21 September 2008
opinion
Lagos — I have spent twenty six years in the management and enforcement of Nigeria financial laws. I have given depositions at the United States Federal Courts on money laundering and advance fee fraud cases emanating from Nigeria . I have also within the same period worked with United States attorneys and the Interpol on advance fee fraud and other financial crimes cases perpetrated by Nigerians and foreign nationals. Arising from these experiences and the issues involved in financial crimes, it is absolutely important that persons who have knowledge of this terrain offer advice on how to defeat these crimes in Nigeria .
If we are to conquer this menace then the first point of call is to urgently review the current practice and action process employed in combating our financial crimes in Nigeria . It has been observed that money laundering and corruption related trials run prominently in our financial crimes proceedings at the moment. One may ask if we have other areas of financial crimes that are very critical to the success of any nation but at the moment are receiving less attention. We have all kinds of financial abuses in our system which is very inimical to the welfare of our people. For example, there have been published false accounting statements which are only misleading. We have institutions that issue false financial products, collecting money from innocent Nigerian investors. We also witness tax evasion which is currently an indefinable financial crime, which calls for concern. There are numerous cheques and debit card frauds and perhaps stock manipulation running in our system. These financial crimes are harmful to the economy of our nation and ought not to be receiving less attention. We cannot tackle our financial crimes selectively. We must be look at the problems holistically, by drawing up a standard and comprehensive financial law that captures all areas of our financial crimes to achieve the synergy required to protect our economy and the welfare of our people.
In our financial crimes proceedings today, we see a lot of activities in the prosecution of money laundering and embezzlement of state fund cases but seldom do we hear of prosecution of other areas of breach of our financial laws which has same catastrophically consequence(s). This situation tends to give the impression that all is well with our financial system and that the supervision of our financial Institutions is working excellently. But this may just be far from the truth. Financial institutions should be the major and the most important link in combating and defeating financial crimes in our country. The reason is simple. No serious financial crime can be successful without the involvement of a financial institution as either a victim, perpetrator or as facilitator. It is the financial institution that receives, keeps and transfer money that are proceeds of crime. Financial crimes such as money laundering, cheques, debit cards and securities fraud, issuance of fraudulent financial products, insider dealings, and misappropriation of depositor's funds, embezzlement and advance fee fraud are all committed through the facilities of a financial institution. Therefore to get to the root of our financial crimes, we must begin to look critically at the regulation, structure, inspection and auditing procedures of our financial institutions.
At the moment the Central Bank of Nigeria supervises all the financial institutions in the country. Apart from its other critical duties, it performs this function through its banking supervision department which is staffed by hard working men and women of great talents. I think it is time to strengthen this unit to carry out wider range of activities which are useful and necessary to the monitoring and reporting of all our financial transactions. One of the best ways to achieve this objective is to excise the Banking Supervision and Examination Departments of the Central Bank out of the current Central Bank structure and set up a Financial Institutions Supervision Board or Commission or whatever name we choose to call it, with its own legislation, board, management and functions. This Commission should be adequately tooled and funded to perform its functions excellently. To fund the commission, a percentage of the annual profits of all licensed financial institutions in Nigeria could be appropriated to meet it expenses and for those financial Institutions that are not making profit, a fixed annual charge could be levied. Where we have a strong and independent Commission as suggested monitoring our financial institutions, which includes the transactions at the Central Bank, it will complement the activities of our law enforcement agencies and the existing vacuum in the combating financial crimes would be successfully bridged.
Where our financial institutions are unchecked of abuses or where the supervisory activities are less than efficient, what we get are the negative consequences of a system that produces poor macroeconomic performance and a welfare programme that suffers. Ultimately, we begin to see a serious damage to our economy and our reputation as a country diminish.
Today many of our financial institutions are going global. But globalization has its own responsibilities. We cannot have a bad reputation at home and assume that we would be respected outside. It is generally assumed that globalization and the integration of financial market facilitates financial abuse. The question is whether we appropriately structured within our regulatory framework to prevent any damage to our reputation as a country from any financial abuse by our financial institutions in their globalization program.
I believe that preventive actions are the best ways of reducing and defeating financial crimes in Nigeria . Drawing from my experience, I know that combating financial crimes largely from the punishment side will not lead to the defeat of this problem in Nigeria . If we continue to place more of our time on the prosecution side instead of preventive actions, what we get are actions that only assuage public feeling in the short term but will hurt our long term goal of defeating these criminal activities. What we must quickly do is to strengthen our current regulatory framework, to prevent and block off all processes of successful financial crimes in Nigeria .
We need a well structured supervisory framework that monitors and regulate on daily basis transactions passing through all our financial institutions including the Central Bank of Nigeria . Similarly, this suggested commission can be empowered to monitor all financial transactions leaving government institutions to the financial institutions for disbursement.
The American government has been very useful in assisting us to combat our financial crimes. They have committed funds and resources to ensure that we are successful in this regard. The current gap as I see it is that we have not imported their system that throws out fraudulent and unlawful transactions targeted at public or private sectors even before consummation. This is the reason why under their system every one whether President or the lowest executive or government official respects their financial law. It is impossible under the US system for the Governor of a State to divert State funds to his private account. He cannot even issue instructions outside the approved budget that will honored by other officers of government. Financial abuses in Government and their financial institutions are very minimal. This is the reason when a breach occurs, they bring the full weight of the law on the accused, whether Governor, Congressman, Senator, CEO of a major company, City Mayor or a Bank Executive. But applying the American model of going for prosecution to Nigeria without first strengthening our regulatory pillars appears to weaken the battle.
Nigerians will remember that the battle against financial crimes started in 1995. It is now 13 years old. Yet we still have these enormous challenges in combating this menace. It is either that the strategy is not working or there is a systemic problem. When we look at the various charges of money laundering and embezzlement of state funds being filed against public officials in Nigeria , one wonders how these transactions pass through in a system we all assume to be regulated. Some of these transactions that we see on record were perpetrated over a period of three to seven years. A well regulated system should ordinarily not allow such transaction to pass through. If the transaction passes at the corridors of government, it should not pass through at the financial institution where the government account is held or where we have in place the commission I recommended above.
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You are telling Nigerian Cititens that for the past 13 years, you and your team had been fighting for financial crimes. You must be kidding me. What have you ahieved since then? Point to Nigerians one Government official or rich Nigerian in jail for financial crimes. I know you have couple of poor innocent nobody, picking and petty thieves in jail. Please, Just please crime booster.