Global Policy Forum

Loot Recovery in Nigeria

Excerpts of Testimony by Mobolaji E. Aluko, PhD, President, Nigerian Democratic Movement, Before the US Congressional Subcommittee on Domestic and International Monetary Policy, Committee on Banking and Financial Services
May 25, 2000

Loot Recovery

I am sure that at the back of the mind of everybody listening are the questions: how did Nigeria incur these debts in the first instance, and what has the country got in return? How can we ensure that debt relief will not result into more bad behavior, if that was what cause all the debt in the first instance?

Despite all of the debt, Nigeria remains an under-developed country with very weak physical infrastructure and an outrageously low human development index. Although a lot of money was spent on education, particularly in mid-70s to early 80s, much of the money owed was spent on conspicuous consumption and unproductive salary increases in the public sector. However, more outrageously, for the overwhelming portion of the debt, it is estimated that over the years US $98.8 billion is stashed away by Nigerians in foreign banks, illegally acquired money by its leaders, family members and cronies. During the Gulf Crisis of the early 90s, about $12 billion of Nigeria's oil windfall went missing. In five years alone (1993-1998) General Abacha and some members of his family are now confirmed to have salted away as much as $5 billion in Swiss, German, UK and American banks, among several other countries. Abacha's son, currently on trial in Nigeria for other suspected crimes, recently confessed to moving $700 million in cash from his home in Abuja through several such banks, all on behalf of his father, no questions asked.

It is mind-boggling. One wonders how these large sums of monies from developing countries are moved between banks in Western countries without eyebrows being raised, when within the US, for example, a bank has to report to the US Reserve Bank if more than $9,999 is transferred from a single account!

However, not all the loot was acquired by Nigerians alone. Some of the schemes ostensibly used to reduce the debt, particularly the debt-buy-back schemes, were in fact avenues for loot acquisition both by Western individuals and banks in the West. In this respect, my organization the NDM has recently passed onto the US State Department and the Internal Revenue Service a thick document of dubious-looking schemes from 1988 to 1993, involving US individuals and some otherwise reputable banks involving as much as $6 billion dollars of Nigerian bought-back debt - in promissory notes, government debts and multilateral debts. This is detailed in the so-called "Fashanu Report" after a UK-based Nigerian ex-soccer star named John Fashanu who has taken it upon himself to expose some of the suspected funny financial criminality and international sharp practices, and who has also been in touch with British and Swiss government officials with the same document. One does not know exactly how much of these monies in the Fashanu Report were looted or laundered, but a close investigation of the deal files might reveal the extent.

The Obasanjo civilian regime has made an anti-corruption crusade one of its watchwords, and it must be encouraged by the United States in that direction. It has, (together with the Abubakar military regime before him) already reported recovery or freezing of some of the loot (as much as $2 billion total so far), especially from and in Swiss banks, some directly from the Nigerian crooks and their partners, but there is greater need of multilateral cooperation with Nigeria and relaxation of secrecy laws to speed these recoveries. None has been reported from the US so far, but there must be some bodies buried here as noted above.

If we can recover a substantial part of this loot, it can be used to pay back some of our excruciating external debt. A multilateral approach is clearly needed, because in this digital age, money is readily transferred across capitals with the click of a mouse. If we can plug the complicity of Western individuals and banks in the raping of developing countries such as Nigeria, maybe the continent of Africa will not be described as "hopeless" according to the recent alarmist characterization by The Economist magazine.


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