Role of UK banks in Nigeria’s corruption cases

Posted by admin Africa & World Politics, Headlines Saturday, June 2nd, 2012

As Nigeria celebrates the re-birth of democracy in the country, corruption remains the bane of development in this part of the world. More worrisome is the role played by some institutions in the advanced countries in aiding corruption in the country.

Some commercial banks in the United Kingdom have continued to launder millions of pounds for corrupt Nigerian politicians, more than a decade after the money laundering scandal involving 15 British banks and late Nigerian dictator, Gen. Sani Abacha.

When The Daily Telegraph in London published a report in 2001 stating that 15 banks, including top-notch London banks, such as Barclays, Natwest and HSBC, had accepted about $1.3bn in deposit from the corrupt Nigerian dictator, the response of the UK financial industry regulator, the Financial Services Authority, was disappointing.

Presenting the result of their investigation into the issue, the then managing director of the FSA, Phillip Thorpe said, “The extent of the weakness identified is frankly disappointing. When we launched an investigation we said that we would order banks to take immediate action if problems were found.”

Also, he gave an assurance that when the financial services and market act came into effect later in that year, the body would have “a statutory objective to help reduce financial crime.”

The Financial Services and Market Act 2000 came into effect on the 30th of November, 2001. Since then, the UK’s money laundering regulations have been revised twice, first in 2003, and then in 2007; all in a bid to make money-laundering laws stricter.

One would have thought that with these and other measures put in place to fight financial crime in Britain, the practice would have been reduced to a minimal level. But the reverse is the case.

In 2004, Nigerian politician, Joshua Dariye was arrested in London on money laundering charges. He was the governor of Plateau State between 1999 and 2007.

In 2005, a former Governor of Bayelsa State, Diepreye Alamieyeseigha was arrested in London on money-laundering charges. Bayelsa, one of Nigeria’s oil-rich states, is host to some of the nation’s poorest communities with some of its inhabitants living in huts supported by wooden pillars in water logged areas. However, its governor at the time used UK banks as his medium of embezzling state funds. He accumulated in Britain assets exceeding £10m in value.

The case of James Ibori, a former governor of Nigeria’s oil-rich Delta State is still fresh in our memories. On April 17, 2012, he was sentenced to 13 years imprisonment by the London Southwark Crown Court for money laundering and conspiracy to defraud.

What is most worrying is that most of the banks involved in these money laundering scandals had been indicted in the Abacha money laundering scandal. This raises questions about the seriousness of the FSA to fight financial crime.

Curiosity got the better of me as I put forward a number of questions to the FSA under the Freedom of Information Act. When asked if the banks were disciplined for their role in the Abacha money laundering scandal, the FSA replied, “The Financial Services and Markets Act 2000 came into force on 30th of November 2001 and was therefore not in force at the time this matter was concluded. The banks were not disciplined as the FSA did not have anti money laundering powers at that time.”

Agreed that the UK Financial Services regulator did not have the powers at the time, but what about thereafter? The same banks have been involved in several other money laundering scandals after 2001 as shown above. Why did the FSA do nothing to discipline these banks?

Although the FSA unleashes massive fines on UK banks for poor customer services, it seems rather slow to act when it relates to the banks’ handling of dirty money.

The British government seems to have been long aware of the dismal performance of the FSA in fighting financial crime. On June 16, 2010, the British Chancellor of the Exchequer, George Osborne said there was a plan to abolish the FSA and separate its responsibilities between the Bank of England and a number of agencies. The transition is expected to be completed this year.

But, can the wild and seductive practice of money laundering be tamed by an increase in regulatory bodies? There are fears that the current global economic recession makes that even more unlikely. What then can endow banks in developed countries with the ability to resist the sensuous appeal of money laundering from corrupt politicians from developing countries?

The answer may be to have the right kind of people supervising, the right kind of persons with guts to enforce anti-money laundering laws in addition to an equivalent determination from home countries of defaulters to put an end to money laundering. This is what may probably end this enduring romance between UK banks and corrupt Nigerian politicians.

-Punchwp_posts