SPEAKERS CONTENTS INSERTS
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27–648PDF
2006
NIGERIA'S STRUGGLE WITH CORRUPTION
HEARING
BEFORE THE
SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL OPERATIONS
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
MAY 18, 2006
Serial No. 109–172
Printed for the use of the Committee on International Relations
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Available via the World Wide Web: http://www.house.gov/international—relations
COMMITTEE ON INTERNATIONAL RELATIONS
HENRY J. HYDE, Illinois, Chairman
JAMES A. LEACH, Iowa
CHRISTOPHER H. SMITH, New Jersey,
Vice Chairman
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
DANA ROHRABACHER, California
EDWARD R. ROYCE, California
PETER T. KING, New York
STEVE CHABOT, Ohio
THOMAS G. TANCREDO, Colorado
RON PAUL, Texas
DARRELL ISSA, California
JEFF FLAKE, Arizona
JO ANN DAVIS, Virginia
MARK GREEN, Wisconsin
JERRY WELLER, Illinois
MIKE PENCE, Indiana
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THADDEUS G. McCOTTER, Michigan
KATHERINE HARRIS, Florida
JOE WILSON, South Carolina
JOHN BOOZMAN, Arkansas
J. GRESHAM BARRETT, South Carolina
CONNIE MACK, Florida
JEFF FORTENBERRY, Nebraska
MICHAEL McCAUL, Texas
TED POE, Texas
TOM LANTOS, California
HOWARD L. BERMAN, California
GARY L. ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
DONALD M. PAYNE, New Jersey
SHERROD BROWN, Ohio
BRAD SHERMAN, California
ROBERT WEXLER, Florida
ELIOT L. ENGEL, New York
WILLIAM D. DELAHUNT, Massachusetts
GREGORY W. MEEKS, New York
BARBARA LEE, California
JOSEPH CROWLEY, New York
EARL BLUMENAUER, Oregon
SHELLEY BERKLEY, Nevada
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GRACE F. NAPOLITANO, California
ADAM B. SCHIFF, California
DIANE E. WATSON, California
ADAM SMITH, Washington
BETTY McCOLLUM, Minnesota
BEN CHANDLER, Kentucky
DENNIS A. CARDOZA, California
RUSS CARNAHAN, Missouri
THOMAS E. MOONEY, SR., Staff Director/General Counsel
ROBERT R. KING, Democratic Staff Director
Subcommittee on Africa, Global Human Rights and International Operations
CHRISTOPHER H. SMITH, New Jersey, Chairman
THOMAS G. TANCREDO, Colorado
JEFF FLAKE, Arizona
MARK GREEN, Wisconsin
JOHN BOOZMAN, Arkansas
JEFF FORTENBERRY, Nebraska
EDWARD R. ROYCE, California,
Vice Chairman
DONALD M. PAYNE, New Jersey
GREGORY W. MEEKS, New York
BARBARA LEE, California
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DIANE E. WATSON, California
BETTY McCOLLUM, Minnesota
EARL BLUMENAUER, Oregon
MARY M. NOONAN, Subcommittee Staff Director
GREG SIMPKINS, Subcommittee Professional Staff Member
NOELLE LUSANE, Democratic Professional Staff Member
SHERI A. RICKERT, Subcommittee Professional Staff Member and Counsel
LINDSEY M. PLUMLEY, Staff Associate
C O N T E N T S
WITNESSES
Ms. Linda Thomas-Greenfield, Deputy Assistant Secretary, Bureau of African Affairs, U.S. Department of State
Mr. Nuhu Ribadu, Executive Chairman, Economic and Financial Crimes Commission, Federal Republic of Nigeria
Mr. David Goldwyn, President, Goldwyn International Strategies
George B.N. Ayittey, Ph.D., Distinguished Economist in Residence, American University
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LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Christopher H. Smith, a Representative in Congress from the State of New Jersey, and Chairman, Subcommittee on Africa, Global Human Rights and International Operations: Prepared statement
Ms. Linda Thomas-Greenfield: Prepared statement
Mr. Nuhu Ribadu: Prepared statement
Mr. David Goldwyn: Prepared statement
George B.N. Ayittey, Ph.D.: Prepared statement
NIGERIA'S STRUGGLE WITH CORRUPTION
THURSDAY, MAY 18, 2006
House of Representatives,
Subcommittee on Africa, Global Human Rights
and International Operations,
Committee on International Relations,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:05 p.m. in room 2172, Rayburn House Office Building, Hon. Christopher H. Smith (Chairman of the Subcommittee) presiding.
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Mr. SMITH OF NEW JERSEY. The Subcommittee will come to order and good afternoon everybody. When Nigeria became an independent nation on October 1st, 1960, that development was seen as a major leap forward for Africa. Its most populous nation would now govern itself and use its tremendous natural and human resources for the benefit of its more than 100 million citizens, and the rest of Africa would enjoy at least residual benefits. Unfortunately, Nigeria's blessings have not proved to be as widespread as was hoped.
This great nation has gained a reputation for corruption that is difficult to overcome. It is not the only nation consistently ranked high on Transparency International's Corruption Perceptions Index; however the reach of Nigeria's fraud peddlers exceeds that of most other nations. Many of us who use the Internet have received solicitations to claim foreign funds abandoned in some foreign bank account. These schemes, known as 419 scams after the provision in the Nigerian law outlawing them, are among the issues often cited by those who know little else about Nigeria. There are numerous accounts of retirees and even churches losing many thousands of dollars when Internet users respond to these fraudulent requests. Those who try to obtain someone else's money are as criminal as those who initiate the scam.
Moreover, the Nigerian Government has made a serious effort to address this problem. At the heart of corruption in Nigeria, however, are those who wield government authority. According to a report done by Nigeria's Economic and Financial Crimes Commission last year, the country's excessive government stole or misused about $400 billion during the last four decades of the 20th century. That amount is about equal to all of the aid given to Africa by Western donors during the same period of time.
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Nigeria's people are those who overwhelmingly suffer as a result. According to the World Bank, with Nigeria's large reserve of human and natural resources, it has the potential to build a prosperous economy, reduce poverty significantly, and provide the health, education and infrastructure services its population deserves and needs. However, despite the country's relative oil wealth, poverty remains widespread. About 37 percent of the population lives in extreme poverty.
Testimony in prior congressional hearings has cited corruption as Nigeria's biggest single problem. It has not only sapped public trust in government, but it has cost the government and the people of Nigeria billions due to corrupt management of public companies, unrealized public projects and deteriorated infrastructure caused by looted maintenance budgets.
One of the earliest government scams was the cement scandal of the early 1960s in which a grand public housing plan was announced where vast quantities of cement were purchased from foreign contractors, but far more cement was ordered than was needed. Overloaded Nigerian ports saw ships loaded with cement backed up for miles out to sea. Corrupt officials made profits, however, from selling cement import licenses. But the promised housing was never constructed on the scale that had been envisioned.
Another 1960s scandal involved an aluminum smelter that was supposed to be part of the industrialization of Nigeria. Unfortunately, corrupt manipulators drove the cost of the smelter up to $2.4 billion, which was 60 to 100 percent higher than comparable plants elsewhere in the developed world. Once completed, the smelter never operated above a fraction of its capacity.
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More recently, in 2003, a commission of inquiry was appointed to investigate the collapse of Nigerian Airways. That commission found that former top airline officials, Federal cabinet members and high-ranking civil servants were to blame for the nation's airlines collapse through waste and misappropriation of funds.
One of the hallmarks of Nigerian corruption is that top officials most responsible for the looting of public enterprises are almost never punished for their crimes or forced to return the funds that they have stolen. Even President Obasanjo, who is seen as a campaigner for transparency, has failed to bring to justice the many corrupt officials who have yet to answer for their crimes.
Corruption in Nigeria squanders the vast resources available to this nation and has been a factor in the country's brain drain as well.
Tens of thousands of Nigerian professionals have immigrated to America and other developed countries, where they can operate in environments in which those who loot their companies or steal government funds can expect prosecution. Even the officers of Fortune 500 companies such as Enron and WorldCom have faced prosecution, no matter how slow the process.
Fortunately, transparency in Nigeria seems to be catching on. After failing to successfully tackle corruption with the Independent Corrupt Practices Commission, the Nigerian Government in 2003 created the Economic and Financial Crimes Commission. Its initially limited mandate which focused on 419 fraud and other business crime now appears to include government corruption as well.
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Government actions in pursuit of greater transparency seem to indicate a renewed commitment to attacking high-level corruption. In December 2003, several prominent cabinet members were removed, and former ranking members of the ruling party were arrested, following investigation into the questionable national ID card scheme that year.
As positive as this development and subsequent arrests and indictments are, the fact remains that too many high-ranking officials are either not prosecuted or are merely fired. Without accountability, no transparency program can be considered a success. Those who violate the public trust must be prosecuted and made to return the money they have stolen.
Corruption in Nigeria is not merely a problem for that country. Over the past two decades, fraud in programs designed to develop the oil-rich Niger Delta have left its residents bitter and frustrated and lacking in faith for reforms offered by their government. Every oil company official kidnapped or killed and every pipeline ruptured threatens global energy supplies and drives up the price of oil worldwide. Nigerians cannot afford continued fraud, and neither can the rest of the world.
The recent audit of Nigeria's oil industry as part of its commitment to the Extractive Industries Transparency Initiative is a good sign that the Nigerian Government realizes that accountability must be established.
We can only hope that this will lead to greater accountability for those high-ranking officials who continue to enjoy immunity from prosecution and the fruits of their theft.
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The Nigerian Government must understand that their people are watching and the rest of the world as well.
I yield to my friend and colleague, Mr. Payne.
[The prepared statement of Mr. Smith follows:]
PREPARED STATEMENT OF THE HONORABLE CHRISTOPHER H. SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY AND CHAIRMAN, SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL OPERATIONS
When Nigeria became an independent nation on October 1, 1960, that development was seen as a major leap forward for Africa. Its most populous nation would now govern itself and use its tremendous natural and human resources for the benefit of its more than 100 million citizens, and the rest of Africa would enjoy at least residual benefits. Unfortunately, Nigeria's blessings have not proved to be as widespread as was hoped.
This great nation has gained a reputation for corruption that is difficult to overcome. It is not the only nation consistently ranked high on Transparency International's corruption perception index. However, the reach of Nigerian fraud peddlers exceeds that of most other nations.
Many of us who use the Internet have received solicitations to claim a fortune in funds abandoned in some forgotten bank account. These schemes—known as ''419'' scams after the provision in Nigerian law outlawing them—are among the issues often cited by those who know little else about Nigeria. There are numerous accounts of retirees, and even churches, losing many thousands of dollars by responding to these fraudulent requests, but those who try to obtain someone else's money are as criminal as those who initiate the scam. Moreover, the Nigerian government has made a serious effort to address this problem.
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At the heart of corruption in Nigeria, however, are those who wield government authority. According to a report done by Nigeria's Economic and Financial Crimes Commission last year, the country's successive governments stole or misused about $400 billion during the last four decades of the 20th century. That amount is about equal to all the aid given to Africa by Western donors during the same period.
Nigeria's people are those who overwhelmingly suffer. According to the World Bank, with Nigeria's large reserves of human and natural resources, it has the potential to build a prosperous economy, reduce poverty significantly, and provide the health, education, and infrastructure services its population needs. However, despite the country's relative oil wealth, poverty is widespread—about 37% of the population lives in extreme poverty.
Testimony in prior congressional hearings has cited corruption as Nigeria's biggest single problem. It has not only sapped public trust in government, but it has cost the government and the people of Nigeria billions due to corrupt management of public companies, unrealized public projects and deteriorated infrastructure caused by looted maintenance budgets.
One of the earliest government scams was the cement scandal of the early 1960s, in which a grand public housing plan was announced, and vast quantities of cement were purchased from foreign contractors. But far more cement was ordered than was needed, and overloaded Nigerian ports saw ships loaded with cement backed up for miles out to sea. Corrupt officials made profit from selling cement import licenses, but the promised housing was never constructed on the scale that had been envisioned.
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Another 1960s scandal involved an aluminum smelter that was supposed to be part of the industrialization of Nigeria. Unfortunately, corrupt manipulations drove the cost of the smelter up to $2.4 billion, which was 60–100% higher than comparable plants elsewhere in the developed world. Once completed, the smelter never operated above a fraction of its capacity.
More recently, in 2003, a commission of inquiry was appointed to investigate the collapse of Nigerian Airways. That commission found that former top airline officials, federal cabinet members and high-ranking civil servants were to blame for the national airline's collapse through waste and misappropriation of funds.
One of the hallmarks of Nigerian corruption is that the top officials most responsible for looting public enterprises are almost never punished for their crimes or forced to return the funds they've stolen. Even President Obasanjo, who is seen as a campaigner for transparency, has failed to bring to justice the many corrupt officials who have yet to answer for their crimes. Nigerian officials can and should go after the late dictator Sani Abacha and seize his ill-gotten wealth. But they also must not exempt from justice other former leaders, who are not only shielded from prosecution, but even now are considering running again for the Presidency of Nigeria.
Corruption in Nigeria squanders the vast resources available to this nation and has been a factor in this country's brain drain. Tens of thousands of Nigerian professionals have immigrated to America and other developed nations where they can operate in environments in which those who loot their companies or steal government funds can expect prosecution. Even the officers of companies such Fortune 500 companies as Enron and WorldCom have faced prosecution, no matter how slow the process.
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Fortunately, transparency in Nigeria seems to be catching on. After failing to successfully tackle corruption with the Independent Corrupt Practices Commission, the Nigerian government in 2003 created the Economic and Financial Crimes Commission. Its initially limited mandate, which focused on ''419'' fraud and other business crime, now appears to include government corruption as well.
Government actions in pursuit of greater transparency seem to indicate a renewed commitment to attacking high-level corruption. In December 2003, several prominent cabinet members were removed and a former ranking member of the ruling party was arrested following an investigation into the questionable national ID card scheme that year. As positive as this development and subsequent arrests and indictments are, the fact remains that too many high-ranking officials are either not prosecuted or are merely fired. Without accountability, no transparency program can be considered a success. Those who violate the public trust must be prosecuted and made to return the monies they have stolen.
Corruption in Nigeria is not merely a problem for that country. Over the past two decades, fraud in programs designed to develop the oil-rich Niger delta region have left its residents bitter and frustrated and lacking in faith in reforms offered by their government. Every oil company official kidnapped or killed and every pipeline ruptured threatens global energy supplies and drives up the price of oil worldwide. Nigerians cannot afford continued fraud, and neither can the rest of the world.
The recent audit of Nigeria's oil industry as part of its commitment to the Extractive Industries Transparency Initiative is a good sign that the Nigerian government realizes that accountability must be established. We can only hope that this will lead to greater accountability for those high-ranking officials who continue to enjoy immunity from prosecution and the fruits of their theft. The Nigerian government must understand that their people are watching, and the rest of the world is too.
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Mr. PAYNE. Thank you very much. Thank you for calling this very important hearing. The issue of corruption in Nigeria is very timely. And we look forward to the witnesses and their testimony.
As it has been indicated by the Chairman, and as we know, Nigeria is a major United States ally, a regional leader economically and in terms of mediating conflicts and peacekeeping and in terms of its supply of energy to the United States.
Besides being the most populous country on the continent, it is only twice the size of the State of California, although it has 132 million people living in its borders.
Nigeria is composed of over 250 different ethnic groups, the largest of these groups, the Hausa, Fulani, Yoruba and Ibo. And although English is the official language there, there are at least four other major languages and dozens and dozens of more dialects that are spoken in this country. And so this is a country that is large and difficult to manage. This country is about 50 percent Muslim, 40 percent Christian and about 10 percent in traditional beliefs.
Suffice to say, Nigeria is a country of great diversity which has led to severe ethnic and religious tensions and great—and a nation of great wealth and oil and gas which has tragically led to abject poverty and unrest.
As I indicated, it is a country that has been very helpful in mediating conflicts. When the conflict in Liberia broke out initially, under ECOWAS, Nigeria went in to stabilize Liberia before Taylor took over.
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Following the situation in Liberia, Nigeria was called to go to Sierra Leone to fight the RUF and Foday Sankoh and those brutal terrorists who chopped off limbs of children and wreaked havoc on their population, and once again, it was leadership of the Nigerians that went in recently into Sao Tome and Principe, the government was almost overtaken by a planned coups d'etat, but it was Nigeria's President Obasanjo who sent word to Sao Tome and Principe that they needed to go back into the barracks, and there would not be a military takeover because of the newly found oil in the Gulf of Guinea. And that was settled. And even in Togo, where the son of the President decided that he would take the leadership of the country without due elections, it was Nigerian President Obasanjo who said there is a process and you cannot become President because your father has died. There is a process, and the process won out.
And so we have a regional leader that has done tremendous good on the continent. And as we know, with the dependence on oil, 20 percent of oil from Africa will be consumed in the United States, and it is the crude, that is the sweet crude, it is called, which is the most valuable oil.
And so we do have a country that is very significant and important.
This is a nation which we simply cannot ignore. In fact, the United States relies on Nigeria and has strong interests in its welfare and that of other Gulf of Guinea States in particular due to our dependence, as I mentioned, on their natural resources, cooperation of African governments and the United States global fight against terrorism, Nigeria has been very helpful in the need to work jointly in the struggle to prevent the further spread of HIV and AIDS and the increasing number of Americans who are of African birth, many, many Nigerians, tremendous number of physicians in the United States who are originally from Nigeria.
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According to a Bank of America report in 2005, Africa surpassed the Middle East in United States oil imports at close to 19 percent. Nigeria, of course, provides the lion's share, and as we always look at oil, we feel that it is the Middle East. But that was yesterday, and today it is Africa.
Nigeria's oil boom of the 1970s led to the neglect of the agricultural sector and contributed to urbanization, an overwhelming trend we are seeing throughout the continent at an alarming rate. And that is something we need to encourage—and I asked the USAID—to encourage Nigeria to get back into the agricultural sector. They can not only do two crops a year, they can do three crops a year in some places. And this can be a tremendous boom to their economy. However, people have left the rural areas, and urbanization has become a strangle hold around cities. Communities in the Niger Delta oil-producing region have felt left out of the benefits of Nigeria's oil wealth because, despite Nigeria's growing oil wealth, the region has seen little development and bears the brunt of the detrimental environmental impact caused by the oil industry.
Since Nigeria's independence from Britain in 1960, it has been plagued by political and economic crises at different intervals. In 1999, after 16 years of military rule which was particularly brutal under the leadership of General Sani Abacha, who died in 1998, Nigeria adopted a new constitution and transitioned into a civilian government under General Abubakar who was the one who decided it was time to rid the country of military dictators.
The current President Obasanjo was elected in 1999 and again in 2003.
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He has done a great deal, but there is criticism about the poor economic conditions that have continued under his tenure, and there is much debate over the third term presidency issue which interestingly enough was struck down by the Nigerian Senate on Tuesday, which really shows democracy at work, and hopefully, that will be able to be enforced.
I mention the history briefly because it is impossible to talk about corruption without talking about General Sani Abacha who is believed to have stolen over $3 billion during his brutal 5-year reign. His security adviser was accused of stealing close to $3 billion from the Nigerian Central Bank. Some of the funds stolen under Abacha are still in Swiss banks; though, in recent years, about $64 million was returned, and the Abacha family has agreed to return $1 billion. But the damage done to the Nigerian people and to the fabric of Nigerian society is still there.
Corruption is still a major problem in Nigeria, in the private sector and in the government, and in response, President Obasanjo lost an anti-corruption campaign. In the past year alone, at least three ministers have been fired as a result of the United States, and the SEC is investigating an allegation of bribery, a case with the Nigerian Natural Gas Project involving foreign countries, France, Italy, and the United States Halliburton subsidy, Chicago Bridge & Iron.
So we see too many hands are involved in the corruption in Nigeria, and we need to wipe it all out.
As I conclude, this is a reminder that while we encourage our allies to root out corruption, we must also make sure that we deal properly with the corruptors. All eyes are on Nigeria right now as the third term debate continues in lead up to the 2007 elections. This is a critical time for Nigeria, and I am encouraging strong, effective and fair engagement by our Government. We must look beyond our oil interests and invest more in education, agriculture, health in Nigeria, particularly for the people of the Niger Delta and the other poor regions of the country.
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Thank you very much, Mr. Chairman.
Mr. SMITH OF NEW JERSEY. Thank you.
Ms. Lee.
Ms. LEE. Thank you, Mr. Chairman.
I want to thank you and our Ranking Member for this very important hearing, and I want to welcome our witnesses here today.
And I want to associate myself with the remarks of our Ranking Member and just make couple of additional points.
Yes, we all recognize that Nigeria has faced numerous challenges in its path toward democracy, human rights and investment in people, and there are still many challenges to overcome.
Nigeria has 70 percent of its population living on a dollar a day, and 91 percent live on less than $2 a day.
In Africa, on a per capita basis—it is one of the poorest countries in the world actually, but it is the second country in Africa, that is the second in terms of per-capita that is one of the richest countries.
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So this doesn't make much sense. And so, given the vast oil reserves and given the fact that it is the fifth top supplier to the United States, I for the life of me can't figure out why many don't benefit from really the wealth that Nigeria really has in terms of oil wealth.
We spend a lot of, in terms of our companies spend quite a bit with regard to oil in the region, and I am not sure what the impact of these expenditures are on the people of Nigeria.
Finally, let me just say, I remember on one visit to Nigeria, we were talking about the whole issue of corruption. And certainly we have got to figure out what that is about, because it further inhibits the government's ability to serve people, and this hearing is focused on that. I know, however, that it takes two to tango, and in the private sector, when I was in Nigeria, we talked about those companies for example that are trying to make a quick buck, whose companies that see Nigeria as an opportunity, and it is an opportunity in terms of its oil wealth. But if in fact we have had any kind of charges or allegations of multinational companies really violating anti-corruption laws, as it relates to Nigeria, because we have got to root out corruption wherever we find it. And certainly, when there is corruption, some go to places where they know corruption exists, and they very clearly engage in that with those countries.
And so I would like to get a sense from you of how you see that as it relates to multinational companies, especially any companies from the United States. Thank you, very much.
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Mr. SMITH OF NEW JERSEY. Thank you, Ms. Lee.
It is now my privilege to welcome on the Committee Ms. Linda Thomas-Greenfield who was appointed Deputy Assistant Secretary in the State Department's Bureau for African Affairs in January 2006. Prior to this, she served as the Deputy Assistant Secretary in the Bureau of Population Refugees and Migration. Her Africa-focused assignments include Nigeria Gambia and Kenya.
Ms. Thomas-Greenfield was the 2000 recipient of the Warren Christopher Award For Outstanding Achievement in Global Affairs.
Ms. Secretary, the floor is yours.
STATEMENT OF MS. LINDA THOMAS-GREENFIELD, DEPUTY ASSISTANT SECRETARY, BUREAU OF AFRICAN AFFAIRS, U.S. DEPARTMENT OF STATE
Ms. THOMAS-GREENFIELD. Thank you, Mr. Chairman, and thanks to all the Members of the Subcommittee for inviting us here. I am very honored to testify before you here today. If you will allow me, I will summarize my testimony and request that the written statement be entered for the record.
Mr. SMITH OF NEW JERSEY. Without objection, your full statement will be made a part of the record.
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Ms. THOMAS-GREENFIELD. Thank you.
United States policy goals in Nigeria are strengthened social stability through pluralism, democracy and good governance, to promote market-led economic growth as the best means to reduce poverty in a sustainable way and to enhance Nigeria's ability to act as a responsible, regional and bilateral strategic and trade partner.
Combatting corruption and improving transparency are two cornerstones of this policy. The United States raises this issue at the highest levels of the Government of Nigeria both in Abuja and in meetings here in Washington. Evenhanded and transparent prosecution of corrupt politicians strengthens Nigeria's democracy by holding public officials accountable. Good governance reinforces effective use of public and donor resources and encourages increased investment in growth in Nigeria. Nigeria's President Obasanjo and Finance Minister Ngozi have done much at the national level to improve Federal public expenditure management. More clearly needs to be done, especially at the state government level.
We strongly support greater transparency in the budget process to lock in economic reform.
And on this account, we commend minister Ngozi for her decision—and it was a brave one—to make public for the first time the national and state budgets.
We also are assisting Nigeria in its anti-corruption efforts through the Africa Growth and Opportunity Act, the U.S.-Nigeria Trade Investment Framework Agreement, support for the African Union Peer Review Process and also through the G–8.
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At the Evian summit in June 2003, the G–8 endorsed a comprehensive anti-corruption and transparency action plan that included a commitment to help developing countries build their capacity to strengthen domestic institutions and enhance transparency and accountability.
President Bush expanded on this at the Sea Island Summit by joining President Obasanjo and launching an anti-corruption and transparency compact to support efforts to improve transparency in the government budget process, procurement and the awarding of concessions.
The United States is working closely with Nigeria, a co-member of the International Advisory Group of the Extractive Industries Transparency Initiative. Nigeria is playing an important role, having volunteered to pilot the new disclosure and validation methodologies and has just completed a comprehensive audit of oil sector payments and government revenues for the period 1999 to 2004.
Our anti-corruption efforts with Nigeria represent a true international partnership. We are working together with Nigeria's law enforcement agencies to improve international financial regulations.
If the international community joins forces to combat financial crime in Nigeria, we will see important benefits from a reduction in the diversion of resources and in 419 e-mail scams and in more effective action to block other criminal finance schemes. In accordance with standards established by the Financial Action Task Force, the international standard-setting body, Nigeria is working toward implementing an effective national regime for combatting all source money laundering and finance of terrorism.
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Corruption affects many aspects of the business climate in Nigeria.
By improving economic governance, Nigeria can set itself on the path toward attracting new investment and achieving sustainable economic growth.
The Nigerian Government's struggle against corruption is a crucial element in our efforts to promote sustainable development in the Niger River Delta. The region is deeply impoverished and subject to destabilizing violence. We are working in partnership with the Nigerian Government, the United Kingdom, oil companies and other stakeholders to strengthen rule of law in this crucial region.
On April 28th, we met in Washington for the third round of discussions on addressing energy security in the Niger Delta through community development, improved coastal security and increased control of financial crimes and small arms trafficking. Combatting crime is a crucial element of restoring law and order in the oil-rich Niger Delta. This includes the critical needs for community police and training to ensure respect for human rights and to increase public trust, confidence and cooperation with Nigerian security forces.
Democracy promotion is our foremost policy objective. Corruption undermines democracy in Nigeria.
Good governance and accountability builds trust in the democratic system and elected officials.
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It is important for Nigerians to see their elected officials held accountable for wrong doing if the rule of law and accountable democratic government are going to flourish in Nigeria.
The 2007 Presidential and legislative elections in Nigeria pose a unique opportunity for democratic consolidation.
Members of the Nigerian House and Senate, as Mr. Payne mentioned, recently voted again, against the constitution national amendment that would have allowed the President to run for a third term, despite reports of votes being bought to influence its passage. Notwithstanding the controversy surrounding this contentious issue, the greatest United States concern regarding corruption and democracy in Nigeria is that serious work remains to be done to realize genuinely transparent and legitimate elections in 2007.
The National Democratic Institute Assessment Team that visited Nigeria in May shed light on some of the areas requiring improvement. The department will propose spending about $10 million in fiscal years 2006 and 2007 to provide voter education and strengthen the ability of national and state electoral commissions to implement the elections.
Nigeria's primary anti-corruption agencies, the EFCC and the Independent Corrupt Practices Commission, have taken on corruption by government officials. They have identified and recovered ill gotten gains from notable Nigerian officials, and their activities have contributed to the prosecution or removal of several of these officials. These are important and symbolic measures even though much still remains to be done.
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The United States has helped the EFCC and the ICPC in its effort with a $1 million contribution for technical assistance.
ICPC has also benefitted from the assignment of a United States prosecutor to assist in both procedural and conceptual matters. We have trained more than 800 prosecutors. And we congratulate Nigeria's anti-corruption agencies for obtaining results and doing so in a very tough environment.
I am pleased that Mr. Ribadu is here to brief you on the accomplishments of the EFCC. Under his leadership, the EFCC has emerged as a formidable law enforcement agency. But it has a very difficult balancing act. It must prosecute corrupt public officials while avoiding politically motivated prosecutions. Without this transparency, its hard work will fail in its major mission, which is creating a new culture of accountability and opposition to corruption.
We welcome steps the Nigerian Government has taken in the past year to fortify mechanisms for identifying and prosecuting corruption. We urge Nigeria to continue its efforts in this regard. And we support the Nigerian Government's efforts to include addressing corruption at the local level.
Mr. Chairman, all these initiatives point to the robust bilateral law enforcement cooperation we have had with Nigeria. But more needs to be done.
The Administration is pleased to have this opportunity to highlight Nigeria's importance as an increasingly close and strategic bilateral and regional partner of the United States. We look forward to hearing Chairman Ribadu's comments on what Nigeria is doing to solidify that partnership. And I am available to answer your questions. Thank you.
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[The prepared statement of Ms. Thomas-Greenfield follows:]
PREPARED STATEMENT OF MS. LINDA THOMAS-GREENFIELD, DEPUTY ASSISTANT SECRETARY, BUREAU OF AFRICAN AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Chairman and members of the subcommittee, I am honored to testify before you today on Nigeria. The Administration views the Economic and Financial Crimes Commission (EFCC) as an important partner in the effort to combat corruption and promote good governance in Nigeria.
U.S. policy goals in Nigeria are to strengthen social stability through pluralism, democracy, and good governance; to promote more market-led economic growth as the best means to reduce poverty in a sustainable way; and to enhance Nigeria's ability to act as a responsible regional and bilateral trade partner. Combating corruption and improving transparency are two cornerstones of this policy optic. The United States raises this issue at the highest levels of the Government of Nigeria, and reminds Nigerian officials that engaging in corrupt activities to promote their political positions is unacceptable. Evenhanded and transparent prosecution of corruption in politics can build Nigerians' confidence in the accountability of their elected officials and strengthen Nigeria's most recent transition to democracy. Good governance will strengthen the transparent and effective use of public and donor resources and encourage increased investment and growth in Nigeria.
Nigerian President Obasanjo and Finance Minister Ngozi Okonjo-Iweala have done much at the national level to improve federal public expenditure management. We strongly support greater transparency in the budget process to lock in economic reform. We have worked with the National Assembly's Budget and Research Office, and are encouraging overall fiscal transparency and fiduciary management. We also are assisting Nigeria in its anticorruption efforts through the Africa Growth and Opportunity Act (AGOA), the U.S.—Nigeria Trade and Investment Framework Agreement (TIFA), support for the African Union Peer Review Process, and through the G–8.
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At the Evian Summit in June 2003, the G–8 endorsed a comprehensive anticorruption and transparency action plan that included a commitment to help developing countries build their capacity to strengthen domestic institutions and enhance transparency and accountability. President Bush expanded on these commitments at the Sea Island Summit by joining Nigerian President Obasanjo in launching an anticorruption and transparency compact to support country efforts to improve transparency in government budget processes, procurement, and the awarding of concessions.
As a result, the United States is working closely with Nigeria, a co-member of the International Advisory Group of the Extractive Industries Transparency Initiative (EITI). Nigeria is playing an important role in EITI, having volunteered to pilot the new disclosure and validation methodologies, and has just completed a comprehensive audit of oil sector payments and government revenues for the period 1999–2004. Nigeria must continue to fully implement EITI and ensure transparency on the revenue expenditure side at the federal and state levels for this effort to truly be a success.
Our anti-corruption efforts are a true international partnership. We are working together with Nigeria's law enforcement agencies, and also with international entities dedicated to improving international financial regulation. If the international community joins forces to combat financial crime in Nigeria, we will see important benefits from a reduction in the diversion of resources and in ''419'' (advance fee fraud) email scams and more effective action to block potential terrorist finance. In accordance with standards established by the Financial Action Task Force, the international standard-setting body, Nigeria is working towards implementing an effective national regime for combating all-source money laundering and financing of terrorism.
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Our international partners have an important role to play. The European Union has just offered Nigeria more than $30 million for assistance managed by the United Nations Office of Drug Control. The UNODC Global Program against Money Laundering (UNGPML) is managing the assistance to the EFCC.
The United States through the Financial Crime Enforcement Network (FinCEN), the US Financial Intelligence Unit (FIU) and other appropriate agencies, will work with the UNGPML, the UK and World Bank and IMF to develop a state-of-the art Nigerian Financial Intelligence Unit (NFIU). FinCEN is sponsoring the NFIU for admission to the Egmont Group of FIUs. Part of this process requires assessments of the NFIU and its abilities to combat financial crimes, money laundering and terrorist financing. FinCEN is providing training to the NFIU in analysis, methodologies and typologies and regulatory issues. FinCEN is assisting the NFIU in meeting Egmont standards, which will enable the NFIU to receive, analyze and disseminate suspicious transaction reports to domestic agencies and sharing vital financial information with foreign FIUs. All vetted law enforcement agencies will be electronically linked to the FIU.
Corruption affects many aspects of the business climate in Nigeria. By improving economic governance, Nigeria can set itself on the path towards attracting new investment and achieving sustainable economic growth. In this regards, it is especially important to implement a transparent regulatory framework governing public safety and public infrastructure. Speedy ratification of pending Nigerian legislation on EITI, public procurement, and fiscal transparency are key first steps that will diminish the potential for graft and bribery and improve Nigeria's business climate. The Nigerian government's struggle against corruption is a crucial element of our efforts to promote sustainable development in the Niger River delta. This region produces a sizeable proportion of Nigeria's GDP and 11% of our own petroleum imports. Yet, the region is deeply impoverished and subject to destabilizing violence.
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We are working in partnership with the Nigerian government, the United Kingdom, and other stakeholders to strengthen rule of law in this crucial region. Our strategic objective in the oil-producing Niger Delta is to address the root causes of the region's security problem. By addressing insecurity in the Niger River delta, we also contribute to stability in the international oil market. On April 28, the governments of the United States, United Kingdom, and Nigeria met in Washington for the third round of discussions on addressing energy security in the Niger Delta through community development, improved coastal security, and increased control of financial crimes and small arms trafficking. Nigeria is considering offers by the United Kingdom and United States for targeted technical assistance in these areas.
Combating crime is a crucial element of restoring law and order in the oil-rich Niger Delta. This includes the critical need for community policing training, to ensure respect for human rights and to increase public trust, confidence, and cooperation with Nigeria's security forces. Establishment of a Police Service Commission to investigate police corruption in the Delta is another vital need.
Democracy promotion is our foremost policy objective. Corruption undermines democracy in Nigeria. Good governance and accountability build trust in the democratic system and elected officials. It is important for Nigerians to see their elected officials held accountable for wrongdoings, if the rule of law and accountable, democratic government are going to take further hold in Nigeria.
Nigeria's primary anti-corruption agencies, the EFCC and the Independent Corrupt Practices Commission (ICPC), have taken on corrupt government officials. They have identified and recovered ill-gotten gains from notable Nigerian officials, and their activities have contributed to the prosecution or removal of several officials, including five former ministers and two former governors. These are important and symbolic measures, even if much remains to be done.
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The Government of Nigeria continues to combat corruption on various levels and in several areas. Our support of the EFCC is part of a broader effort to work with Nigerian law enforcement agencies to combat corruption and international crime. The United States has helped the EFCC and ICPC in this effort with one million dollars in technical assistance. ICPC has also benefited from the assignment of a U.S. prosecutor to assist in both procedural and conceptual matters. We have trained more than 800 prosecutors. We congratulate Nigeria's anti-corruption agencies for obtaining results, and doing so in a tough environment.
Under the leadership of Chairman Ribadu, who is on the second panel, the EFCC has emerged as a formidable law enforcement agency. The EFCC has a broad mandate to investigate and prosecute all forms of financial crimes in Nigeria and the legal authority and resources to begin to address Nigeria's corruption. While we congratulate the EFCC for these successes in combating political corruption, we also take note of the considerable challenges it faces, especially in the upcoming election year. The EFCC has a difficult balancing act; it must prosecute corrupt public officials while avoiding politically motivated prosecutions. The public must see the EFCC's operations as credible, impartial and fair. Otherwise, its hard work will fail in its major mission of creating a new culture of accountability and opposition to corruption.
Addressing corruption also supports our efforts to combat the scourge of narcotics trafficking in Nigeria, in the United States and the world. Nigeria remains a major transit hub for global narcotics distribution. Cocaine and heroin are transshipped through Nigeria by well-established international criminal networks. Nigerian law enforcement has had some modest success in interdicting narcotics in small shipments of hard drugs. Enhanced screening procedures at Nigeria's international airports have helped, and we continue to work with Nigerian officials to improve narcotics interdiction.
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The corrosive impact of corruption continues to hamper Nigeria's capability to address these challenges. We welcome steps the Nigerian government has taken in the past year to fortify mechanisms for identifying and prosecuting corruption. We urge Nigeria to continue its efforts in this regard, and we support the Nigerian government's efforts to include addressing corruption at the local level. Until recently, we have not seen significant numbers of large-scale seizures, and Nigeria's success in apprehending and prosecuting major traffickers has been limited. With the appointment of dedicated new leadership in Nigeria's National Drug and Law Enforcement Agency (NDLEA) and National Police, Nigeria's cooperation with U.S. law enforcement agencies is now much stronger, as is Nigeria's participation in regional counter-narcotics efforts.
Mr. Chairman, all these arguments point to the need for more robust bilateral law enforcement cooperation. The Administration is pleased to have this opportunity to highlight Nigeria's importance as an increasingly close and strategic partner of the United States, to hear Chairman Ribadu's comments on what Nigeria is doing to solidify that partnership, and to answer your questions. Thank you.
Mr. SMITH OF NEW JERSEY. Thank you so very much, Madam Secretary, for your testimony.
Let me begin the questioning first. You mentioned in your testimony that AGOA is being used to promote transparency and to fight corruption. I wonder if you might elaborate on exactly what we are doing with AGOA.
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Secondly, you rightfully pointed out that state governments need to be focused upon as well, and I think that is a universal problem. You know, the Federal Governments everywhere get scrutiny, but state is where the big money often is to be made as contracts are being offered, as other kinds of bribery occurs.
How would you assess the Federal versus the local in terms of a progress meter? Would you say the local is far behind, because obviously there are so many more people who potentially could be bribed or corrupted in some way?
And then, if I could ask you with regard to what the U.S. Government is doing to help the Extractive Industries Transparency Initiative in Nigeria. As you know, approximately 70 civil society organizations have asked that mining be included in that. What is the Administration's view on that?
And in his testimony, later on today, David Goldwyn, the president of Goldwyn International Strategies, makes the point, and I quote him: ''The United States has been an observer but not a supporter of EITI in general, or the NEITI effort in particular.'' And it is a criticism, as if we were observing, but not embracing and pushing. If you can give some insights on that as well. I have one other question after that.
Ms. THOMAS-GREENFIELD. Good. Thank you very much. On AGOA I have been working on that on planning for the AGOA conference which is going to take place in Washington in June.
And what AGOA does to deal with corruption, we look at issues related to how business is done in these countries and what we can do to promote better practices to allow business to flourish and investments to take place.
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For example, in many countries, the number of days and the number of signatures that are required to open a business are just—it is a breeding ground for corruption.
And we make countries aware of those issues. And Nigeria is one of the countries where I think it is about 30 days. I am not sure of that number. But again, the number of signatures required really is an opportunity to breed corruption.
And bringing that to the attention of many governments who are just not aware that these opportunities are out there is a way that AGOA has contributed to this.
You ask about the state government versus local government or Federal Government in terms of what is being done on corruption. I think with the leadership of the finance minister, having published the budgets of state and local governments, that was a very important effort that allowed the normal citizens to see how much money was going into the coffers of state and local governments and also allowed those citizens to ask where that money is going.
I think more progress is being made at the national level, but I think also efforts are being made to address issues of corruption at the local level.
And on NEITI, you asked what we are doing on that. I think the record will show that we have been extremely supportive of this effort. President Bush expanded the commitments that were made at the Evian G–8 by joining with President Obasanjo. I mentioned that, in my statement, we have given $1.7 million in fiscal year 2005 funds to support a Nigerian pilot; USAID in Abuja has about $1.1 million for supporting training for these efforts. So, again, I think we can do more. But, certainly, we are not sitting as observers. We are really actively involved in this progress.
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Mr. SMITH OF NEW JERSEY. Should mining become a part of that portfolio?
Ms. THOMAS-GREENFIELD. I don't know the answer to that question, but it is something I will look into for you.
Mr. SMITH OF NEW JERSEY. If you get back to us, we will add your answer to the record.
As you know, over the past decades, various plans to develop the oil-rich Niger Delta were sabotaged by the theft of untold millions of dollars from such projects as the Petroleum Trust Fund. Obviously that leads to a great deal of discontent among the local population.
What is your view on that? Because it seems to me that, you know, given the volatility of that region, had that money been spent and spent wisely, people would have been—I won't say a stable middle class would have ensued, but there would have been much better roads, bridges, houses, infrastructure. What is your take on that? And is it too late to resurrect that and save it?
Ms. THOMAS-GREENFIELD. Let me start with the last comment. It is not too late. It is never too late. I have been actively involved with the Niger delta initiative and the Gulf of Guinea initiative with the Nigerians. It was one of the first things I did when I started in my position.
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And we have had two meetings since I have been there, and the third meeting, as I mentioned, of the Niger Delta Group, the governor of River State, for example, committed to giving $20 million for supporting development in River State. We think that is a very positive initiative. It is small change, but I think it says to people in the community that the government, the state government is willing to make a commitment.
We are trying to encourage this in other states in the delta region. And we are also trying to encourage accountability. We see the impact of neglect in this region. And the impact is seen in the lack of education, the lack of health care, the lack of infrastructure, and the increase in violence that we have seen in recent months.
So we are working with the Nigerian Government. It is not about us giving them money, because we think they have enough money to do it themselves, but giving them support and encouragement and capacity to deal with some of these issues. And we are hoping that this will start to bear fruit soon.
Mr. SMITH OF NEW JERSEY. I would just note parenthetically that, several years ago, I led a delegation to a Parliamentary Assembly in Europe in Bucharest as part of the OSCE Parliamentary Assembly. We had about 358 members of parliament from 55 countries that make up the OSCE. And the interesting topic for almost 5 days of discussion was corruption as the hijacker of democracy or emerging democracies. Corruption is just as lethal to an emerging democracy as the most barbaric dictatorship because of the corrosive effects. And it was a very interesting interchange. You don't just look askance at this kind of thing. And I know we are not. And I know you are not. But it is just that some people fail to see that this is as much a potential threat as dictatorship is. So it often leads to dictatorship as well.
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Mr. Payne.
Mr. PAYNE. Thank you very much. As you indicated, the transition in Nigeria trying to, as you know, 28 of the 43 years, it was under military rule and the feeling was that with democracy coming in, Nigeria could flourish. And I guess with Babangida that started the process when MKO Abiola was elected June 12, and then the election was aborted, Sani Abacha then taking over—I mean Abubakar, I guess who finally said, enough is enough, and we are trying the democratic regime.
This whole question of 419 and other kinds of corrupt policies is really something that the government claims it is trying to work on. Of course, in many instances, unfortunately, people's own greed in a lot of instances is what gets them caught in the trap. Many people feeling there is a tremendous amount of money that could be made. This country here must not be up to stuff on what is going on, and so I will put this little contribution in this fund, and I am going to reap all these benefits. So it is once again challenging individuals' own greed to feel they could get something for nothing. And it is unfortunate that there are so many people out there that fall into that gap.
So somehow we have got to work on people to get them to be more realistic about life. No one is going to give you a million dollars if you give them $100,000 and you might have a little criminal mind yourself because that sounds illegal to me.
But any way, 419. What is your assessment of what will happen on this whole debate of a third term? Do you think it is good? I know the Senate rejected it. Is that the final end? Does it go on? We had a meeting that was supposed to be with President Obasanjo when he came to Washington, some members of the Black Caucus, because we were going to urge him to live up to the constitution and step down. However, he left town before we could meet with him. However, do you think that there will be a, that he will conclude with the Senate vote or is there another process, or how does it work? Is there going to be a referendum?
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Ms. THOMAS-GREENFIELD. Thank you for that question. I will go do my best in answering it.
I think I should start out by just saying it is our view that term limits should be respected. And we have made that view known not only in Nigeria but in other places in the world. Leaders need to groom new leaders to take over.
We were pleased not—we were pleased with the fact that a vote was made, and it reflected, as you said in your remarks, it reflected democracy in Nigeria.
And it is, I think, the best hint that we have that democracy is there in Nigeria and it has taken root.
We are not sure what this means as far as any future desires on the part of the President to seek a third term. I think the legislature has spoken, and the amendments were not approved. What happens after that, we are all interested in seeing and hearing, and we will be watching it very, very closely, and we are hoping that whatever happens, that it is constitutional and nothing extra-constitutional is done.
Mr. PAYNE. Thank you. What is our current relationship with Nigeria? I know that our—the current Administration requested that Nigeria receive Charles Taylor before the United States would go—well, the United States wasn't really going in any way, but before there could be any move on the part of the United States, it was President Bush said, we will not go in until Taylor is out, and Nigeria agreed to that.
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What is the, in your opinion, relationship between Nigeria and the United States Government with the military also, and Obasanjo at the present time? And do you think that the generals are starting to get anxious again in the barracks, as has happened in the past in Nigeria?
Ms. THOMAS-GREENFIELD. I think we have a good relationship with the Nigerian Government. We have to, and I think in your statement, you made reference to the very positive role President Obasanjo and the Nigerian Government have played in the region. And even the fact of the Nigerian Government taking Taylor and helping to end the civil war in Liberia is something very important that we have to give President Obasanjo and the Nigerian Government credit for.
We have not heard any reports, and I am not aware of any reports that the military is beginning to get uneasy. I hope that is not the case. Nigeria is a burgeoning democracy. And I think they have seen some of the benefits of having a democratically elected President and not a military government.
President Obasanjo has made his views known in the region about the problems with the military government having interjected himself and in making his views known in Togo and other places in the world. So I would hope that, in the case of Nigeria, we don't see that happen again.
Mr. PAYNE. Well, thank you very much.
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I do think that, hopefully, the era of the generals are over.
I was in a meeting once with General Babangida, General Abubakar and General Abacha and former General Abiola, and we really don't want once again to have people in uniforms making the decisions for a country as important to Africa and the world. And so that is our hope, that we can keep the military out but also have the current President abide by the constitution.
Thank you very much.
Mr. SMITH OF NEW JERSEY. Thank you.
Mr. Tancredo.
Mr. TANCREDO. Thank you, Mr. Chairman.
Just one very quick question. You mentioned in your testimony that the—you were referring to the Evian summit in 2003 where the G–8 endorsed a comprehensive anti-corruption and transparency action plan and then went on to say that President Bush expanded on these comments at sea Island summit by joining President Obasanjo in the anti-corruption and transparency compact.
What I am really hoping to hear beyond the description of what they actually agreed to is what has happened in the 2 years or almost 2 years subsequent to that last meeting? Certainly we hope there has been some progress, and I wonder if you could give us some specific evidence of that progress.
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Ms. THOMAS-GREENFIELD. Yes, sir. Thank you for that question. There has been some progress. Again, as I said throughout my speech, more needs to be done.
President Obasanjo in February 2004 established a working group to guide the implementation of Nigeria's participation in the Extractive Industries Transparency Initiative and to encourage revenue transparency.
The Nigerian Senate still has to vote on the bill. And the bill would mandate that the Nigerian Government and oil companies disclose certain information about how much oil is being extracted and how much is being paid. And it would also provide a permanent basis for some budgetary funding of annual audits.
Nigeria, because of this, is playing a very, very active role in EITI and the Nigerians volunteered to pilot the new disclosure and validation methodology, as I mentioned in my statement, and has just completed a comprehensive audit of the oil companies. So we are seeing progress. The EITI issued an audit report, identified certain problems that the government was facing. The government has now decided that it will audit the Niger Delta Development Commission, and we are looking forward to seeing the result of that audit.
Again, more can be accomplished.
Mr. TANCREDO. Have there been any indictments brought or arrests made?
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Ms. THOMAS-GREENFIELD. I think there has been one, but I will have to get back to you on that, or, it is possible that Mr. Ribadu may have an answer to that when he gives his testimony. But I am aware that there has been one indictment.
Mr. TANCREDO. Thank you very much.
I have no other questions, Mr. Chairman.
Mr. SMITH OF NEW JERSEY. Thank you, Mr. Chairman.
Ms. Lee.
Ms. LEE. Thank you, Mr. Chairman. I want to pursue this whole issue with regard to United States anti-corruption laws, RICO. What have you found in terms of any violations or prosecutions of any individuals or United States companies that are engaged in the corruption that is taking place in Nigeria?
Ms. THOMAS-GREENFIELD. I am not aware of any United States companies that have been engaged in direct corruption in Nigeria. I am not saying it doesn't happen. I am just not aware of it.
I think our companies are so consciencious of our own laws in Nigeria they have—I have heard them complain that they are disadvantaged because of our laws, and the law is the law, but they are disadvantaged because other companies from other countries don't have the restraints that they have on providing bribes to other governments.
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Ms. LEE. Let me tell you, one company told me when I was there, you know, we pay marketing representatives and we pay consultants in the United States to help us get a contract. Here, that is considered bribery, and we can't pay somebody to do that.
How—what is the difference as you see it between paying a sales rep or consultant to do marketing versus paying a bribe in Nigeria to help get a contract?
Ms. THOMAS-GREENFIELD. Well, my response to that is, it is not illegal to get a sales rep but it is illegal in Nigeria as well as in the United States to pay bribes. Now Nigeria doesn't enforce it, but we would.
So I think companies are very consciencious of that.
Ms. LEE. So companies can pay a sales rep as long as they comply with the anti-corruption laws and have arranged agreements; that is the difference.
Ms. THOMAS-GREENFIELD. That would be my understanding.
Ms. LEE. Okay because I heard this several times come from United States companies, and I am glad to hear that none have, could been, or you don't know of any that have been investigated or prosecuted. Because like I said earlier, when I was there, and this was years ago. Over and over I was told it takes two to tango, and many companies from abroad would come to Nigeria for the express purpose of engaging in certain types of business deals that were totally inappropriate and corrupt but they went there because they knew they could make a quick buck and get away with it.
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Let me ask you about the HIV/AIDS pandemic that is taking place. Again, the rates now are over 5 percent. Several years, again when I was there, the reported rates were 4 percent, but in a country with what, 131 million, people, that is pretty high.
One of the tragedies in Nigeria was that a large percentage of the cases were as a result of not having a safe blood supply. And HIV, the virus, was contracted through blood transfusions. Do you know or can you give us an update on any strategies that we are working on with the Nigerian Government to make sure that there is a development of a safe blood supply as it relates to a part of a strategy to address the HIV and aids pandemic?
Ms. THOMAS-GREENFIELD. Thank you for that question.
HIV/AIDS is a major problem in Nigeria. I think our statistics show that there are about 4 million adults affected, and Nigeria has the largest number of AIDS orphans.
We have a very large PEPFAR program in Nigeria, and included in that PEPFAR program are programs to support prevention. It does not specifically mention blood supply, but I would assume that prevention would include dealing with issues related to the blood supply.
Ms. LEE. Is there a way you could check on that? Because, again, I was there within the last few years, and there was no program strategy or piece in place. And we had several discussions with high level ministry officials. We discussed that. And we have even talked about the Red Cross maybe coming over to try to help figure that piece out.
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Ms. THOMAS-GREENFIELD. I will definitely get back to you on that. But our program is $138 million. So, hopefully, some of that is going in that direction.
Ms. LEE. Thank you very much, and I look forward to receiving your response.
And let me ask you finally about the conflict in the delta region in terms of how you see that now as it relates to threatening oil and gas production.
Ms. THOMAS-GREENFIELD. The conflict in the delta has had a major impact on Nigeria's production of oil. Right now, the figures indicate that about 400,000 barrels of oil per day are shut in because of what is going on in the delta region. And the insecurity in that region continues.
This is a region where we have been working closely with the oil companies, with the Nigerian Government at the national level but also with the government at the state level to try to develop programs that will improve security in the region. But security is not the only issue. The biggest issue in that region that I think we need to deal with is the lack of infrastructure, the poverty, the lack of education, and the lack of tangible benefits going into those communities, and that has led to the insecurities.
Ms. LEE. Are the oil companies paying fair wages and providing economic development for the region, providing for environmental protections, are they providing for health benefits and that type of real quality of life that they deserve?
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Ms. THOMAS-GREENFIELD. I think they have gotten that message, and yes, they are. But again, it is just, it is small potatoes compared to the needs. But they are taking very seriously the approach that we have taken in our cooperation with the Nigerian Government to look for programs to assist the population. They also participate in development programs, and they have contributed to this Rivers State program that I described earlier. So I think they are—they have gotten the message.
Ms. LEE. Are they exploiting the workers or not, as you see it?
Ms. THOMAS-GREENFIELD. I can't say that they are exploiting workers. They are paying salaries in a place where unemployment is very, very high. There is a perception on the part of many workers that they are being exploited because they are seeing people benefit in a much better way than they are able to benefit. But I also think the companies are trying to address this.
Ms. LEE. Thank you very much, Mr. Chairman.
Mr. SMITH OF NEW JERSEY. Ambassador Watson.
Ms. WATSON. Thank you so much, and I thank you, Mr. Chairman, for holding this hearing. I am going to go back some time in the past when Shell Oil was down in the Abomey Delta Region and following the testimony from the locals in that area, the local farmers, that their farm land had been almost destroyed by the siphoning of the gasoline and the flow into the fields. And as you know, several of the farmers had complained, and there was a battle and, some of the military ended up getting killed. And then there were hangings in the square. We happened to be in South Africa at the time. And Mandela came on, and I had never seen him so furious. And so he hung it on the fact that the oil companies come in and, indeed, themselves corrupt the land.
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I know they paid off Abacha, I understand, $4 billion, and so he persecuted his own people.
Since that time, there has been a very bad feeling that grew up within that West Coast of Africa, particularly Nigeria. And people have held very hostile feelings toward the oil companies. Now going back and forth through Lagos, and that is a place that I don't like to go to because of the dash, but I am wondering what we can do to improve the perception that locals have of our oil companies who come in, not only oil, but they mine gold and they mine diamonds and so on, and very little turns back to the government.
So can you comment on what is happening now in this decade in terms of those—now they say, the Shell division of Royal Dutch in that area. And they control everything that happens there, but it is still under the umbrella of shell.
And I am just wondering if our companies are any more responsible or responsive to Nigeria and the other countries where they are? I know the history in South Africa, and I have said this to the headquarters on the West Coast, and we have got a little bit out of them because of the abuse.
So, tell me, how are our companies becoming responsible corporate citizens there in Nigeria? And in turn, is the government under Obasanjo reacting in a more positive way, and are they training their young to do the work of these companies, not only the mining but diamond gold miners so on?
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Ms. THOMAS-GREENFIELD. I think the oil companies were shocked by the response that you described in the Ogoni region, and I think, having worked on this issue only for 3 months but spending a tremendous amount of my time with oil companies, that they do see this as an important effort to improve their image. We are having oil companies participate in these meetings at various senior levels, sending their CEOs from Nigeria, and every single oil company participated in the last meeting, which was even a surprise to us.
Now, they are concerned about their security, but they also are very conscious that in order to deal with the security issues that they are experiencing, that they are going to have to deal with environmental issues, and they are going to have to deal with development issues, and they are going to have to deal with the discontent of the people in the communities that they are working in, and I think they are taking it seriously.
Ms. WATSON. Do you, as the Department of State, have requirements that they have to comply with? You know, our companies that go over there, and they reap the benefits, and the people get very little of the bottom line.
Ms. THOMAS-GREENFIELD. Yes.
Ms. WATSON. So I am just wondering what your programs are and what your requirements are as they relate to businesses, or are they completely independent?
Ms. THOMAS-GREENFIELD. No, they are not. I will mention that the office that deals with human rights, Jeff Krilla is going to Nigeria on the 21st through 25th on a task force visit to Nigeria to look at voluntary principles for these companies, and all of the companies are participating in this, and the Nigerian Government has decided to participate in this with NGOs. The head of the Nigerian National Petroleum Corporation has also agreed to participate, and the Nigerians have expressed a real interest in trying to address some of these issues, but we are holding United States companies that tend to have a very positive image, we are holding them accountable, and they know that we are holding them accountable, and because of that they have a much more positive image than some of the other companies.
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Ms. WATSON. My final comment, Mr. Chairman, if I may, if there are a set of principles would you share them with us? I have connections and friends from back in the 1970s in Nigeria, and I have followed some of the challenges that the locals have had, and they have really suffered greatly because of the hunters and the change and it is a coup every other year. You know the history. But I think it is a two-sided problem. So I think that the principles need to be shared, and we need to raise these questions. We, as the Congress, need to raise these questions with our companies that make great profit abroad, and I do know the dark cotton, the cotton of Africa is the cotton of the future because they have the natural resources that we need and there is going to be closer relationships with that cotton and its 54 nations. So I would hope that we would all understand the principles and in our places, see that our companies that go over there, live up to those principles. So you can give those to me at another time, and thank you very much for being here.
Ms. THOMAS-GREENFIELD. Thank you.
Mr. SMITH OF NEW JERSEY. Thank you. I can just conclude, and I know Mr. Payne has one final question. In his testimony Mr. Goldwyn points out that the NEITI committed to conduct audits under international accounting standards with a reputable external auditor and points out that the order years were 1999 to 2004, the duration of the Obasanjo administration. And I quote him here:
''Those audits set an unequal precedent for other resource-rich countries. Nigeria was the first to insist that all such revenues be published in a disaggregated fashion, company by company, category by category, and well by well. All of the results, including interim reports, were posted on the Web at www.neiti.org. Nigeria was the first government to look intrusively at its own entities, not just at the conduct of private companies. It was first and still the only country to look at physical systems in business processes as well as financial flows. NIETI's ability to achieve success and future successes is due, in large part, to constant support of the President.''
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My question is about elections. First, do you agree with that assessment? Second, elections are, by definition, volatile events. Elections can either result in a right turn, left turn or U-turn. And my question is, are you confident that Nigeria's commitment to transparency is sustainable?
Ms. THOMAS-GREENFIELD. That is a hard question. I hope it is sustainable, and I think the Nigerian Government hopes that it is going to be sustainable. We met with the Finance Minister recently, and she is trying to put measures in place that will leave a legacy when she is gone, and one of those measures is, again, publishing those budgets. Now people have an appetite for knowing exactly how much money is going into the coffers of the government. So again, we are hoping it is sustainable. We are hoping it becomes institutionalized. It requires leadership. If it is not institutionalized by the next administration of the Nigerian Government, we will be raising it with them in very tough terms.
Mr. SMITH OF NEW JERSEY. Thank you. Mr. Payne?
Mr. PAYNE. Yes. Just once again, on the problem with the oil company, as you may recall, just on Sunday a hundred people were burned to death in a fire which occurred as they were siphoning off oil, and the oil was ignited and the people perished, but my—and that was very tragic. But my question more relates back to the oil companies themselves. During Obasanjo's regime, as you may recall, the oil companies cooperated with the government. In other words, there was a time when they needed some pursuit, boats and the oil companies, the oil company there, the main company allowed them to use their speed boats to try to apprehend some people, and the other thing too, that complaint of course of the Ogoni people and the Ogoni aid. I think there was eight of them that were hung because they were protesting, and there were some deaths that followed the protests and therefore, the hanging of these Ogoni people occurred and—went the Ogoni folks. And they were protesting about the exposure of oil pipes, the degradation of the oil, of the pipeline, which were above ground, not below ground like in many places. And the soot that comes down when the rain comes because there is so much smoke in the air, that soot comes down, and the problems of the asthma and other kind of diseases that come from this environmental degradation.
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Has there been any significant improvement in, one, the companies' cooperation with the military, it was a military government at that time, but with the government illegally allowing them to use their assets?
And secondly, has there been any improvement in the poor quality of the environment that the oil companies have as a legacy in Nigeria, creating, you know, serious health problems?
Ms. THOMAS-GREENFIELD. I think the companies, and we are very conscious of some of the environmental impact of the oil production areas in Nigeria. They have done a tremendous amount of work to reduce flaring, which has caused problems for people in those areas, and I think they are working closely with the government to try to address some of those issues. I also think they are very conscious that this is not a military problem. And if it becomes a military problem or a military solution to addressing this, we end up with some of the problems we had when Shell Oil Company allowed those boats to be used by the government. Fortunately, most of the U.S. companies' extraction is offshore and they are—they have not been affected by this as much as Shell Oil Company, but I think again, we are working to try to address the root causes and not see this as just a security and military solution.
Mr. PAYNE. Thank you.
Mr. SMITH OF NEW JERSEY. Thank you.
Ms. LEE. One more very quick—thank you, Mr. Chairman. I just learned that last week, two Global Fund HIV/AIDS grants were canceled as a result of some allegations of corruption. I wanted to find out if you know anything about that, what that was about, and what will happen now—well, first of all to the grants and the money, which ultimately means what happens to the people who are going to—should have benefited from that. And then secondly with regard to the oil companies, I know in South Africa, many United States businesses actually have established very fine health care centers, support centers, HIV/AIDS prevention, you know, programs, the distribution of anti-retroviral drugs, what have you. Are the oil companies in Nigeria doing such—are they following the companies in South Africa, or what do you know about that?
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Ms. THOMAS-GREENFIELD. I am not aware of the Global Fund corruption issue that you raise. I can look into it, but I haven't seen anything on that one. The companies are putting in hospitals. I don't think it is on the scale that we have in South Africa. But in a meeting with Shell Oil Company recently, they mention that in some of the areas they are working in they have put clinics and they have put hospitals, but again, not on a very large scale.
Mr. PAYNE. Also would you yield?
Ms. LEE. Yes.
Mr. PAYNE. Just on a problem that we were having being involved with the eradication of polio, and as you know, polio has been eradicated in most countries, only in about three or four countries, only about 4 or 5 years ago. There has been a resurgence again, but one of the countries was Nigeria. Now, there was a rumor in the northern part that the vaccine was, you know, poison or it was not—it was used to infect the people, and it was not being distributed up in the north.
Has that—and the feeling is that because it has gone unchecked in northern Nigeria, that polio, the spread of polio, once again is starting to move into other countries, and there are more reported cases this year than we had 2 years ago. Do you know if that situation has been settled in regard—and whether the governors in the north are allowing the vaccine, the oral polio or whatever way they use it, to be distributed?
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Ms. THOMAS-GREENFIELD. I am aware of the situation, and I am not—I don't know the answer to the question, whether the governors are allowing it to be used, but it is an issue that we have on our agenda for the World Health Assembly that is taking place in Geneva and working with WHO and other international agencies to address the concern in Nigeria. But it is something that we are quite concerned about, when polio has been eradicated in most places in the world.
Mr. SMITH OF NEW JERSEY. Okay. Secretary, thank you so much for your testimony, and it is great to have you here again.
Ms. THOMAS-GREENFIELD. Thank you very much.
Mr. SMITH OF NEW JERSEY. I would like to now welcome our second distinguished witness to the witness stable, Mr. Nuhu Ribadu, who is the Executive Chairman of the Economic and Financial Crimes Commission for the Government of Nigeria. Previously he served for 18 years in the Nigeria Police. Mr. Ribadu has been the recipient of several awards, including the triple Inspector General of Police Award. Notable Nigerian newspapers, including This Day and the Nigerian Tribune, declared him the Man of the Year in 2004 and 2005.
And I especially want to thank him for flying in to be here to present this testimony to our Committee. We are most appreciative of that. The floor is yours, sir.
STATEMENT OF MR. NUHU RIBADU, EXECUTIVE CHAIRMAN, ECONOMIC AND FINANCIAL CRIMES COMMISSION, FEDERAL REPUBLIC OF NIGERIA
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Mr. RIBADU. Good afternoon, Chairman Smith.
Mr. PAYNE. There is a button there, and pull that closer to you.
Mr. RIBADU. Thank you. Thank you very much. A very good afternoon to you, Chairman Christopher Smith, Ranking Member Donald Payne, and other distinguished Members present.
I appreciate the opportunity to testify before you, the House Subcommittee on Africa, Global Human Rights and International Operations. It is indeed a privilege, an honor for me to really have this chance to share with you our experience on what is going on in Nigeria today.
The history of corruption in Nigeria is a topic we are talking about, is strongly rooted in the 29 years of military rule my country has experienced since achieving independence in 1960. Successive military regimes subdued the rule of law, facilitated the wanton looting of the public treasury, decapitated public institutions and free speech and instituted a secret and opaque culture in the running of government business. The result was total insecurity, poor economic mismanagement, abuse of human rights, ethnic conflicts, and capital flight.
Democracy was started in Nigeria only in May 1999, with the election of the civilian government of President Obasanjo.
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One cardinal program is the fight against corruption and waste in the public service. This he has demonstrated by the establishment of the two major anti-graft institutions, the Independent Corrupt Practices (And Other Related Offenses) Commission and the Economic and Financial Crimes Commission, which I am privileged to head. It is important to note that the fight against corruption is situated within the larger economic reform program of government, the National Economic Empowerment Development Strategy, a home-grown medium-term poverty eradication strategy. NEEDS is an economic and structural reform program designed to bring improved macro-economic stability, better public expenditure management, reduced corruption, increased transparency and improvement in key sectors, including the financial sector.
The anti-corruption strategy of the Government of Nigeria. The government's target is zero tolerance for corruption. This it has pursued through promulgation of laws, anti-graft laws, Independent Corrupt Practices—I have a very long statement. I am just going to go through and briefly summarize some of the major points that are reflected in the report.
The promulgation of the new most stringent laws, anti-corruption, economic crimes, institutions for effective law enforcement, prosecution and conviction of high-ranking public administration officials, judicial and justice sector reforms, tracing, seizing and confiscation of all proceeds of crime, public reorientation through targeted advocacy, institution of the Due Process Mechanism in public sector procurements, transparent privatization of failing public institutions and creating an enabling environment for effective private-public partnerships, monthly publication of distributable revenue from the Federation Account to the different tiers of government, institution of transparencies and accountability in the oil and gas sector through the work of the Nigerian Extractive Industries Transparency Initiative, which has opened up the oil and gas sector through a landmark independent audit, conducted by the Hart Group.
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Institution of the three services saved the nation over 3 billion U.S. dollars, which would have been lost through inflated contracts, and introduced local-international competitive bidding for government contracts.
Formalization of due process through a law. That law is now awaiting passage by the National Assembly of Nigeria. The establishment of Nigerian Financial Intelligence Unit, NFIU, helps in the detection of suspicious transactions.
Nigeria is one of the 21 most improved nations in 2005. More importantly, the 2005 World Economic Forum and World Bank Governance Surveys by Daniel Kaufman indicated significant improvement on corruption, public procurement, public finances and taxation.
Indeed, the Transparency International Report for this year has also clearly shown resolve. Some of the steps taken in Nigeria are beginning to show. This, indeed, if we address the problem of corruption, has a chance of changing the country.
Economic and Financial Crimes Commission—this is the commission I am heading. I will give you a brief overview of what it is and what we are doing. The EFCC, which is today the arrowhead in the fight against corruption in Nigeria, was established in 2003 as a part of a national reform program, as I have told you earlier. Yes, this is an interagency commission comprising a 22-member boardroom from all Nigerian law enforcement agencies and other regulators. I am just going to talk very briefly on some of the positive steps and measures that have been so far achieved from the work of the EFCC.
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Fundamentally, the most important thing I can see is the change of attitude. We have been able to show really for us to move forward, for us to be able to solve the problems facing us, we have to first of all change, change in the way—really we have to start more or less from the beginning, clean, sanitized, and establish due process and transparency in our system. We have to just do that. Otherwise, there is no chance for us to really make any headway.
EFCC has been involved in the investigation of cases ranging from high-profile corruption cases, investigating fraud, money laundering, tax evasion, contract scams, identity theft, illegal oil banking, bribery, looting, and foreign exchange practices.
EFCC is also at the forefront in the drive to sanitize and clean key government agencies. We have been able to more or less put a case for the change of obligations in most of these important government agencies, for example, Nigerian Police Force, the Customs Department, Drug Law Enforcement, Ministry of Justice, and now we are in the maritime sector as well.
The work of the EFCC somehow more or less sees the possibility of removing the very bad people who have been in control of these agencies, put in new people, and then through them will be able to somehow have a new way of handling things.
Prosecution and conviction of corrupt government officials and cleansing of the banking sector. This is extremely very important in the work we are doing. We believe that unless we start bringing people to justice, unless we start showing that there is rule of law, order, unless we start bringing the bad people who are responsible for the bad things that happen in the country, those who brought disrepute, abominate, somehow responsible for the failure. Unless we bring them to justice, there is no way, no chance for us to really move forward. Nobody will believe whatever step or intent we mean to take. In that we are doing fairly well.
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As a result of the work we have done, we have been able to, for example, bring the most important, number one law enforcement officer in the country, the Inspector General of Police, to justice. We seized over $151 million from him. We have brought the President of the Senate, the Leader of the National Assembly, the three most important persons and popular Senators and Representative members in Nigeria to justice. We have been able to bring two Governors. One of them is a prior State Governor, the one that we caught earlier. He is a Governor of one of the oil-producing states in Nigeria. We got from him today over 18 billion naira, we got from him 23 million pounds, and this we did through the assistance and support of the U.S. Government. We are reporting a fairly good, impressive number of convictions so far, particularly with the cases of foreign corruption. We have about 56 convictions in a country that never had one up to September 2003. For well over 40 years of own our independence, we have never had one single conviction for corruption in our country. Today I am proud to tell you that we have had 56. It is a real indicator that things have changed in our country.
We have made huge recoveries in terms of money. The work we have done today, we have recovered well over $5 billion, money that ordinarily would have gone down the drains. Some of the money belonging to innocent victims of 419 scams all over the world. We are returning such money. We have returned money to Brazil, we have returned to Singapore. We have returned to Hong Kong and even to the United States. Right now I am planning to hand over well over a million dollars to a victim of 419 fraud. We are showing by that that Nigeria will no more be a safe haven for fraud or fraudulent activities.
We have helped in setting up the FIU, Financial Intelligence Unit. This is very important and critical. It helps us to have control and understanding of the finance sector in Nigeria. Through that we have been able to understand really the nature of corruption in the country, what is going on. And through that, we have been able to bring some of the major cases that we have today in our courts. We are prosecuting well over 350 cases in our courts, and somehow the establishment of the FIU has helped greatly in helping us with that initiative.
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We were setting up initially for monetary activities in the oil industry and prevention of illegal banking. We have done fairly well in that, the EFCC addressing the problem of illegal banking of crude oil. In 2003 we had a record of up to 100,000 barrels of oil stolen daily in the country. We went in, we were able to bring so many of them—we have got up to about 10 convictions. We went after about 23 companies. We seized well over 40 tankers. And for the first time, for the first time I think we have got a report from the LMPC Nigerian oil, national oil company, that the incident of theft of crude oil reduced to less than 20,000 barrels a day. These are some of the things that we have been doing.
The lesson with law enforcement agencies, excellent working relationship with law enforcement agencies all over the world. When we started working, we believed that for us to really start making headway forward, we have to move forward for us to make an impact, we have to ensure that we build a reputation, to be able to have the confidence of the international community, particularly the law enforcement agencies, and we have got that. We have been working closely with, for example, the Metropolitan Police of the U.K., the FBI, INTERPOL, and particularly the FBI. It has been really, really helpful.
We have had joint control delivery operations. We have had working relations with the United States Drug Enforcement Agency, joint investigation with the Regional Security Office on general fraud and visa/passport fraud and FBI Legal Attache in Lagos. Several training courses have been organized by United States officials and in different departments of the U.S. Government.
There exist serious challenges to the continued successful prosecution of the war on corruption in Nigeria. These include: Relatively slow judicial system, the technological complexities in fighting economic crimes in cyberspace, lack of capacity and investigation tools, such as analysis.
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And of course, some of the problems are also external. The availability of safe havens for corrupt Nigerian officials outside the country to keep their loot. And this is probably one of the biggest problems that is facing fighting corruption, not just Nigeria but indeed African countries. Most of this grand corruption that does take place in the country does go out, 80 percent of it. And the moment it is out, we have no control over it. And unless you address such, chances are you won't win the war back home. Revising the bad image and real bad position of the country. Lack of cooperation from some countries.
Request of the U.S. authorities. The U.S. and members of the G–8 should be—and we are acting strongly—be in the forefront of building a global coalition against corruption. Make transparency and accountability and the fight against corruption the primary basis for relating with any government.
We also ask you to speak out against governments that provide safe havens for proceeds of corruption from Nigeria and other developing countries and deny for all persons indicted of graft in Africa.
The U.S. should also consider the deployment of additional FBI agents and other officials or law enforcement officials at the United States Embassy in Nigeria and starting collaboration with Nigerian law enforcement agencies. This is really helping us greatly. We have seen the result of the work we have done with the Metropolitan Police of London. Some of the major cases that we have been able to really achieve is as a result of the support they have given us.
In conclusion, I want to end by drawing attention to the grievous harm that corruption has done to Nigeria and Africa over the years. Corruption is the reason there has been a perpetual collapse of structures and institutions. It is the cause of the endemic poverty in Africa. It is the reason for the underdevelopment and the cyclical failure of democracy to take root in Africa. Corruption can be as destructive as terrorism. Public officials who are corrupt should receive equal treatment reserved for terrorists. Probably if you ask me, it has caused more damage than anything. If you see what is happening in Africa, in the last few years alone, I can assure you we have lost well over two million people simply because of the mismanagement, simply because of the way our leaders handle their own countries. And this is as a result of directly primitive, crude corruption that is really more or less the order of the day that is happening.
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It is high time we refocus and give issues of corruption the attention they rightly deserve. The challenge before us is to set our sights on making corruption, which is a fundamental cause of the poverty of the African nations, a part of Africa's history. Corruption has been the missing piece in this worrisome puzzle, and as soon as it is tackled everything else will fall into place and poverty will definitely become a part of our history.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Ribadu follows:]
PREPARED STATEMENT OF MR. NUHU RIBADU, EXECUTIVE CHAIRMAN, ECONOMIC AND FINANCIAL CRIMES COMMISSION, FEDERAL REPUBLIC OF NIGERIA
INTRODUCTION
The history of corruption in Nigeria is strongly rooted in the over 29 years of military rule, out of 46 years of her statehood since 1960. Successive Military regimes subdued the Rule of law, facilitated the wanton looting of the public treasury, decapitated public institutions and free speech and instituted a secret and opaque culture in the running of government business. The result was total insecurity, poor economic management, abuse of human rights, ethnic conflicts and capital flight.
Democracy was restored in Nigeria only in May 1999, with the election of the Civilian Government of President Olusegun Obasanjo.
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One cardinal Programme of the Obasanjo administration is the fight against corruption and waste in the public service. This, he has demonstrated by the establishment of two major anti-graft institutions, the Independent Corrupt Practices (And Other Related Offences) Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) in 2000 and 2003 respectively.
It is important to note that the fight against corruption is situated within the larger economic reform programme of the Government, the National Economic Empowerment and Development Strategy (NEEDS), a home-grown medium-term poverty eradication strategy. NEEDS is an economic and structural reform programme designed to bring improved macro-economic stability, better public expenditure management, reduced corruption, increased transparency and improvement in key sectors, including the financial sector.
THE ANTI-CORRUPTION STRATEGY
The Government's target is zero tolerance for corruption. This, it has pursued through—
Promulgation of laws against graft—Independent Corrupt Practices And (Other Related Offences) Commission (ICPC) Act, Economic and Financial Crimes Commission (EFCC) Act, Money Laundering (Prohibition) Act 2004
Strengthening of anti-corruption and other economic crimes Institutions for effective law enforcement
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Prosecution and conviction of high ranking administration officials
Judicial and justice sector reforms
Tracing, seizing and confiscation of all proceeds of crime
Public reorientation through targeted advocacy
Institution of the Due Process Mechanism in public sector procurements
Privatisation of failing public institutions and creating an enabling environment for effective private-public partnerships
Monthly publication of distributable revenue from the Federation Account to the different tiers of government
Institution of transparencies in the oil and gas sector through the work of the Extractive Industries Transparency Initiative (NEITI)
Economic and Financial Crimes Commission
The EFCC which is today the arrow-head in the fight against corruption in Nigeria was established in 2003 as part of a national reform programme to address corruption and money laundering and in answer to the Financial Action Task Force (FATF) concerns about Nigeria's Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws.
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EFCC is an inter-agency Commission comprising a 22-member Board drawn from all Nigerian Law Enforcement Agencies (LEAs) and Regulators. The Commission is empowered to investigate, prevent and prosecute offenders who engage in
''Money laundering, embezzlement, bribery, looting and any form of corrupt practices, illegal arms deal, smuggling, human trafficking, and child labor, illegal oil bunkering, illegal mining, tax evasion, foreign exchange malpractices including counterfeiting of currency, theft of intellectual property and piracy, open market abuse, dumping of toxic wastes, and prohibited goods''
(Section 46, EFCC Establishment Act, 2004)
The Commission is also responsible for identifying, tracing, freezing, confiscating, or seizing proceeds derived from terrorist activities. EFCC is also host to the Nigerian Financial Intelligence Unit (NFIU), vested with the responsibility of collecting suspicious transactions reports (STRs) from financial and designated non-financial institutions, analyzing and disseminating them to all relevant Government agencies and other FIUs all over the world.
In addition to any other law relating to economic and financial crimes, including the criminal and penal codes, EFCC is empowered to enforce all the pre-1999 anti-corruption and anti-money laundering laws. Punishment prescribed in the EFCC Establishment Act range from combination of payment of fine, forfeiture of assets and up to five years imprisonment depending on the nature and gravity of the offence. Conviction for terrorist financing and terrorist activities attracts life imprisonment.
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POSITIVE RESULTS SO FAR
Since the establishment of EFCC in 2003, it has been involved in the investigation of cases ranging from high profile corruption cases, advanced fee fraud, money laundering, tax evasion, contract scams, identity theft, illegal oil bunkering, bribery, looting, and foreign exchange malpractices.
Cleansing of the Banking Sub-sector
EFCC has contributed to the sanitization of the banking sector through investigation and prosecution of Chief Executives and other officials for Money Laundering and other frauds. Bank failures which were rampant in the past have now become a thing of the past.
Reorganization of Critical Agencies of Government
EFCC has led the drive to clean up and reorganize key agencies and institutions of government in Nigeria. The Commission's work has led to the change of leadership of the most critical agencies such as the Nigeria Police, the Customs and the National Drug Law enforcement Agency (NDLEA). The new leadership are driving necessary reforms of these vital agencies that were hitherto steeped in corruption.
Prosecution and Conviction of Corrupt Top Public Officers
The Commission has successfully prosecuted and secured convictions against top government functionaries, including the former chief law enforcement officer of the nation, the Inspector-General of Police (IGP). Investigation by EFCC has caused the removal from office and prosecution of a Senate President, a Governor, Ministers, National Assemblymen, Bank Chief Executives, etc.
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Record Convictions for '419', Money Laundering and Terrorism
So far, 56 convictions have been recorded on corruption, money laundering, oil pipeline vandalism and related offences. Assets well over $5 billion have been frozen and seized from corrupt officials, their agents and cronies.
Recovery and Return of Proceeds of Crime
The fight against advance fee fraud (419) and identity theft has been aggressively pursued, leading to the prosecution and conviction of kingpins including the celebrated $242 million case involving a Brazilian Bank. Much of the sum has been recovered and returned to the Bank in Brazil.
The EFCC also recovered and returned the sum of $4 million to a victim of 419 in Hong Kong and has seized and returned over $ 500,000 to sundry US citizens. It is in the process of returning $1.6 million (already blocked) to a victim in Florida.
Setting up of the FIU and Taking Action against Terrorist Financing
The fight against money laundering, terrorism and terrorist financing has heightened with the establishment of the Nigerian Financial Intelligence Unit (NFIU) by the EFCC. This has helped in the detection of Suspicious Transactions in financial institutions.
The EFCC is coordinating the implementation of the National Strategy Plan Against Money Laundering and Terrorist Financing. This has no doubt impressed the Financial Action Task Force (FATF) of the G8 whose Review Team only recently concluded an on-site visitation to the country with a view to assessing her level of compliance in order to have her delisted from its list of Non-Cooperating Countries and Terroritories (NCCTs).
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Nigeria is fully in compliance with the UN Convention Against Corruption and UN Resolutions on terrorism and terrorist financing particularly Resolution 1247. The EFCC on March 3, 2006, froze the assets and properties of Ahmed Idris Nasreddin and his associated companies, NASCO Group Nig Ltd. The value of the assets frozen is worth over N100 million ($787,402). Two (2) convictions on terror have been recorded and the 5 convicts are presently serving 10 years and 3 years imprisonment respectively. EFCC also maintains a database on Terrorist Groups, individuals, Non-Governmental Organizations (NGOs), etc, and is constantly profiling them.
EFCC has extended the fight against Money Laundering to the Economic Community of West African States (ECOWAS) Sub-region by facilitating the operationalization of the FATF-style regional anti-money laundering outfit, the Inter-Governmental Action Group Against Money Laundering in Africa (GIABA).
Setting up Machinery for Monitoring Activities in the Oil Industry and Prevention of Illegal Bunkering
EFCC is vigorously addressing the nagging problem of illegal oil bunkering and pipeline vandalism in the Niger Delta Region. Over 10 convictions on pipeline vandalism have been recorded, 25 trailers (instrumentalities of crime) seized and confiscated and accounts of beneficiaries blocked.
Partnership with Microsoft against Internet Scam and Identity Theft
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EFCC has deployed technology to combat cyber crimes and is presently working in partnership with Microsoft to find appropriate software to definitively address the problem.
Capacity Building for Law Enforcement and Judicial Officials
Capacity building is key in the fight against graft. EFCC has responded by establishing a state-of-the-art Training and Research Institute in Karu, Abuja, for the training of its officials and those of other stakeholders.
EFCC has also assisted through donor agencies with the training of judges handling cases of corruption, money laundering and other financial crimes. This has helped to reduce the trial cycle-time.
RELATIONSHIP WITH LAW ENFORCEMENT AUTHORITIES (LEAS)
EFCC has excellent working relationship with major Law Enforcement Agencies all over the world. These include the INTERPOL, the UK Metropolitan Police, FBI, Canadian Mounted Police, the Scorpions of South Africa, etc.
The relationship with the FBI has been particularly special. This has manifested in the following:
Joint Controlled delivery operations and investigations with officers of the US Postal Inspections Service
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Joint Investigations and collaboration with the Resident Regional Agent of the United States Secret Service, Pretoria, South Africa, especially in cases of document and currency counterfeiting
Working relationship with the United States Drug Law Enforcement Agency
Joint Investigation with the Regional Security Office on general fraud and Visa/passport fraud
Joint Investigation with the FBI Legal Attaché and the FBI Internet crime Complaint Centre
Extradition proceedings commenced in respect of a Suspect (Nigerian-American) wanted in the United States for child abuse
Collaboration and information sharing with the Attorney's Office, Brooklyn, New York
Several training courses organized by the US officials on Cyber-crime, Money Laundering, Public Corruption, Counterfeiting, Identity Theft, etc.
OTHER ANTI-CORRPUTION INITIATIVES OF THE NIGERIAN GOVERNMENT
The work of the Nigeria Extractive Industries Initiative (NEITI) has opened up the oil and gas sector through its landmark independent audit conducted by Hart Group. The audit had a three-pronged component—Physical, Financial and Process. The result of the audit revealed discrepancies in physical hydrocarbon balances and declared volumes for royalty purposes, physical hydrocarbon balances and the declared volumes for Petroleum Profit Tax (PPT) purposes, deductions claimed by Companies for PPT purposes against the expenditures in their audited accounts and differences between the amounts reported by the Companies a