Fraud File

Fraud File
Delta blues: recovering the Ibori loot The recent high-profile conviction of James Onanefe Ibori has been hailed as a landmark success in the transnational fight against corruption. On 17 April 2012, the charismatic fraudster and former Delta State governor was sentenced by a London court to 13 years' imprisonment after pleading guilty to ten counts of fraud and money laundering. During his eight-year tenure as governor of Delta State, Ibori allegedly stole more than £200 million in public funds. Much of this was channelled into properties, luxury vehicles, and offshore accounts used to finance Ibori’s remarkably flamboyant lifestyle and those of his inner circle. On 10 September 2012, confiscation proceedings began at Southwark Crown Court for the estimated £50 million in assets tied to Ibori’s guilty plea. The next step in the process will be to determine a suitable destination for the confiscated assets. While there is a legal framework and limited precedent to offer some guidance, this part of the recovery process is largely uncharted territory. Of the handful of treaties that provide a framework for international asset recovery, the most widely recognised is the UN Convention against Corruption (UNCAC). This legally binding document came into force in December 2005 and has 130 signatory states (including Nigeria). The convention sets out a framework in both civil and criminal law for the freezing, recovery and repatriation of corrupt funds. According to the UNCAC, embezzled public funds that are recovered by a signatory state should be returned to the country of origin (though in some cases funds may be returned to individual victims). However, the recipient must prove ownership and there are no provisions within the convention to address the possible circumstances that the country of origin may be ruled by a corrupt regime or may lack the capacity to administer repatriated funds. Under the UNCAC framework, the Nigerian government could request that the funds be repatriated. Nigeria’s Economic and Financial Crimes Commission (EFCC), which launched the investigation into Ibori, is understandably keen to have the funds returned to Nigeria. But while it has the authority to request assistance from, and work with, international law enforcement agencies – as it did in the Ibori case and several other recent asset recovery initiatives – it cannot formally request that funds be repatriated. This is the prerogative of the Nigerian attorney general’s office, which has not yet expressed any intentions to make such a request. Until the UK confiscation proceedings conclude, however, that office is unlikely to take any formal steps to recover assets held by the UK and US authorities. In theory, the most appropriate destination for the recovered funds is the Delta State treasury. It is, after all, the source of Ibori’s confiscated wealth. Statements from the ruling judge in the Ibori trial and the Metropolitan Police team that led the preceding investigation suggest that the funds should be returned to Delta State. Because of current circumstances, however, this is a concerning prospect that risks undermining the success of the Ibori investigation and conviction. The current governor of Delta State, Emmanuel Uduaghan, was a health commissioner and state secretary under Ibori and has been investigated by the EFCC for corruption. Uduaghan, who is a cousin of Ibori and enjoys prosecutorial immunity as a sitting governor, previously denied that any funds were missing from the Delta State treasury and has refused to launch an audit of the government’s finances during the Ibori years. Uduaghan also played an instrumental part in establishing the Delta State court that acquitted Ibori of some 170 corruption-related charges brought in 2007 by the EFCC, in what has been widely perceived as a politicised ruling. That case is now pending before a Nigerian court of appeal. Uduaghan has voiced intentions to pursue the funds seized in the UK proceedings, though a formal claim has yet to be registered. Unsurprisingly, there is widespread concern that if the Ibori loot was repatriated to Delta State it might once again be siphoned off for the benefit of a powerful few. An independent oversight mechanism agreed by governments involved – in this case the UK, US and Nigeria (and perhaps also Delta State) – may provide some assurance that repatriated funds are used responsibly. There is some precedent for contracting the World Bank to oversee projects in good governance, health care and education. Such a project is currently being implemented in Kazakhstan and a similar mechanism was used in Nigeria to oversee the repatriation of funds embezzled by Sani Abacha. However, this type of agreement can be seen as intrusive and is dependent upon the political will of the state of origin. It is unclear at this stage whether the requisite political will exists within the administration of President Goodluck Jonathan. Concerns over corruption and inadequate governance can also be used as a basis for refusing to repatriate assets. The UK and US authorities may well hold custody over Ibori’s assets until they can be reasonably assured that repatriated funds will not be misappropriated. Unfortunately, this is the norm for international asset seizures; according to the World Bank, between 2006 and 2009 only four of 30 countries that recovered state-owned assets repatriated funds to a foreign country. The repatriation of corrupt funds is the weakest link in global asset recovery initiatives. In spite of the challenges and complexities involved, establishing effective frameworks to repatriate assets is a vital part of the recovery process and a key incentive for anti-corruption enforcement in developing countries. By Adam Ross Associate, Litigation Support, London 
Published: 17th October 2012