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#Financial Crime Prevention

Switzerland to return $380 million to Nigeria in Abacha case

International Compliance Association

funds , Nigeria , prosecutors , Switzerland , World Bank

Swiss prosecutors have announced that $380 million is to be returned to Nigeria as funds linked to the ex-dictator Sani Abacha.

General Sani Abacha assumed the leadership of Nigeria in 1993 following a coup d’état. During his five year rule he was estimated to have stolen up to $5billion (TI, 2004).

The decision to return the funds follows a deal between Nigeria and the Abacha family under which the funds would be confiscated and returned to Nigeria, while the Nigerian authorities would drop their case against the deceased dictator's son Abba Abacha.

But where will the money go? With Nigeria ranked at 136 out of 175 countries in the 2014 Transparency International Corruption Perception Index, there will naturally be concerns as to whether a proportion of the funds will disappear into the pockets of those currently in power. But it might not all be doom and gloom.  

Having achieved a successful asset recovery order the process can begin to realise the assets and repatriate them to the victim country. The return of assets that have been stolen by corruption to a victim country is described as a ‘fundamental principle’ of the UN United Nations Convention Against Corruption (UNCAC), as opposed to general confiscation of property in other crimes when assets are retained by the enforcing state unless a bilateral agreement is in place.

When funds are returned to the Treasury of a victim country they are often moved to a specific capital reserve created to administer repatriated assets. These separate reserve accounts seek to demonstrate transparency, both to civil society within the victim country and on the international stage, and to encourage future return of assets. This approach has met with varying success. In the case of funds previously repatriated to Nigeria, the process appeared to work effectively, whereas in the case of the Philippines for example there were concerns as to the appropriate use of a significant proportion of repatriated funds.

In the case of Nigeria, allocation of recovered funds has had monitoring from the World Bank and this will again take place with the latest tranche of $380 million. This has appeared to work effectively in the past with the funds mainly being used to fight poverty (UN/World Bank, 2007, p.18). The result of inadequate monitoring is the risk that funds will go to inappropriate projects or they may be corruptly acquired by those managing the funds. An example is the use of $624 million repatriated from Switzerland to the Philippines in 2004, which was initially monitored by the Swiss government who were involved in investment decisions. It was later transferred to an ‘Agrarian Reform Fund’ which resulted in a significant proportion being used ‘to finance excessive and unnecessary expenses’.

Over 62% of Nigeria's 170 million people live in extreme poverty. The impact of asset recovery by developing countries cannot be underestimated; $100 million of stolen funds recovered would fund the full immunisation of four million children or provide water to 250,000 homes or provide up to four million treatments for malaria. Let us hope that monitoring of the latest $380 million continues to be effective so that it makes a real difference.

References:
Transparency International (2004) Global Corruption Report 2004. Special Focus: Political Corruption London: Pluto Press  
United Nations/World Bank (2007), Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities and Action Plan Washington DC: World Bank


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