“Anatomy of fraud and Corruption in Nigeria: A Search for Pandora Box and Panacea” by Prof. Emma I. Okoye - Part 2

"The worst scenario is the involvement of the legislative arm of government and the judiciary in corrupt practices. This can be seen in a statement credited to General

Ishola Williams of Transparency International when he complained that “Judges are using the tribunals to make money. All those who have gone through election tribunals are multi-millionaires today” (The Nation, June 20, 2010)".  

1.4.1   NOTABLE CORRUPTION CASES IN NIGERIA

In Nigeria, there have been quite a number of disturbing and outrageous corruption cases over the last few years.  It becomes disheartening to see that most perpetrators of fraud go unpunished while some corruption or fraud cases linger in the court for decades and sometimes are struck-off.   A critical look at some corruption cases in the past and present are worth articulating:

Case 1:    N195 Billion Alhaji M. Pension Scam: 

Case 2:    $6 Billion M. A. and M. T. Fuel Subsidy Scam: 

Case 3:    N32.8 billion AAK, UCA and four others Police Pension Fund Fraud:

Case 4:   N255 million S.O. Bulletproof Car Purchase                          Scandal: 

Case 5:    $20billion NNPC Case: 

Case 6:    hundreds of billions of Naira Ex Governors’, Ministers’, Ex Legislators Diversion, Mismanagement and Misappropriation of Public Funds

Case 7:    Famous Halliburton $180million bribery case

Case 8:    Public Officers Involvement in Panama Papers

Case 9:    The Kerosene subsidy scam where Nigerians, under subsidy cover, were supposed to buy Kerosene for N50 per litre, only to get the same at between N100 and N170 per litre.

Case 10: The alleged 3.60 million barrels of oil valued at $13.7bn that was stolen under the watch of the national oil giant, Nigerian National Petroleum Corporation from 2009 to 2012.

Case 11: Alleged diversion of 60% of $1bn foreign loans   obtained from the Chinese by the Ministry of Finance.

Case 12: The alleged 1.9bn naira diverted Ebola fight fund.

2.1      THE ANATOMY OF FRAUD AND CORRUPTION

Anatomy is a branch of science concerned with the bodily structure of humans, animals, and other living organisms, especially as revealed by dissection and the separation of parts. But in the context of fraud and corruption, we intend to portray it as the study of the historical structure or internal workings of corruption in any given society or institution.

Corruption is believed to be a complex social, political and economic phenomenon that is ubiquitous in all countries of the world, occurring in varying degrees and magnitudes. It is undisputable to mention that corruption did not start from Nigeria, neither is it a citizen or native of any locality in Nigeria. It is not practically true to say that corruption was invented by, or is peculiar to Nigerians alone. On the contrary, it is a global phenomenon with deep historical roots, although it manifests itself with significant similarities and differences in different societies, depending on the particular system of power, distribution and legal/moral norms in operation (Ejovi, Mgbonyebi, & Akpokighe, 2013).

Historically, it is difficult to provide the exact date that corruption became a subject of national discourse in Nigeria. This difficulty stems from the fact that corruption is not just as old as the society itself, but the complex nature of the evolution of the Nigerian state makes it difficult for the history of corruption in the country to be provided in the literature. However, Faseke (2010) was able to trace the corruption which is predominant within the country’s civil service to the British colonial legacy inherited by Nigeria. According to him, the transformation of the civil service from an instrument of exploitation in the colonial era to one of corruption and fraud in post-independence period, especially under military rule that created job insecurity, marked the origin of corruption in Nigeria.

During the colonial era, senior civil servants were majorly Europeans who by virtue of their positions controlled luxuries like cars, houses and other remarkable incentives which became the hallmarks of the senior civil service and to which the rest (Nigerians) were denied. There was social disparity between senior civil servants and the rest of the civil servants, thus creating a spiral negative effect on the Nigerian civil service.

The above situation made civil servants in the middle and lower income cadres to find ways of acquiring basic, secondary and tertiary education with the hope of becoming somebody at the end of the day. While some were patient, others were not, thus making them to resort to cutting corners in a bid to get rich quickly. So, under the guise of venting their anger on the British for dominating Nigerians in their fatherland, civil servants at the middle and lower cadres connived to hide files in a bid to force members of the public to pay before files could be found and treated speedily. Although, these acts had negative consequences on the civil service inherited at independence, we must note at this juncture that the foundation of the corruption we have today in the country was actually laid in the public life of Nigeria in this colonial era.

Military rule in Nigeria is an era that coincided with the oil boom of the 1970s, which paved way for large public works and construction, which again were unparalleled in the socioeconomic development of Nigeria. What provided the impetus for the large scale construction was the rehabilitation and reconstruction policy of the General Yakubu Gowon’s regime just after the end of the civil war. 

During this era, the economy of Nigeria experienced a sort of considerable mismanagement which was occasioned by a situation where higher senior civil servants were found serving both as Chairmen and key Board members of Public Entities that were under their supervision. This questionable acts of transferring the attitudes and practices of civil servants to the industrial and commercial concerns got worsened by the fact that some Permanent Secretaries were made to serve in as much as four Boards at the same time with the Permanent Secretary of the Federal Ministry of Finance having the record of being on more than fifty Boards at the same time (Allison, 1973).

To this day, impunity, stealing, large scale fraud, bribery and corruption including other forms of malpractices have eaten deep into the civil service and the fabric of the Nigerian society. This can be seen in the large scale fraud perpetrated by the present civilian governments in the various States in Nigeria. These corrupt practices have permeated the entire spectrum of the Nigerian system.

Indeed, it has been argued that the military institutionalized corruption in Nigeria, no doubt, the civilian governments beginning from 1999 to date were found to have carried on with corrupt practices in diverse ways in an unprecedented and increasing magnitude. The depth of corruption as a social ill can be seen in the huge budgets by the three tiers of government without a corresponding development of infrastructure and social services such as education, health, electricity, portable water, transportation; and communication sector among other public utilities.

The worst scenario is the involvement of the legislative arm of government and the judiciary in corrupt practices. This can be seen in a statement credited to General Ishola Williams of Transparency International when he complained that “Judges are using the tribunals to make money. All those who have gone through election tribunals are multi-millionaires today” (The Nation, June 20, 2010). 

Moreover, Okoye, Nwoye, and Egbunike (2014) strongly believe that the survival and actualization of every good national vision largely depends on the level of transparency upheld in the implementation process, the effectiveness and consistency of the monitoring and evaluation techniques utilized. For instance, at our tertiary institutional level, the country’s six months Industrial Training (I.T.) programmes which is one of the most available medium of attaining the Federal Government’s all-important goal of raising young entrepreneurs right from our tertiary institutions, is presently a mess, lacking adequacies, transparency, and thorough oversight approach in every respect, as well as credibility because of lack of proper monitoring and biased evaluation coming from compromised lecturers (Okoye, Nwoye, Obiorah, & Uba, 2014).

2.2      Key Corruption Channels in the Nigeria Public sector

These have been rated from core sensitive harmful ones to least harmful ones.

1.      Nigerian Police

2.      Political Parties

3.      National and State Assemblies

4.      Local and Municipal Governments

5.      Federal and State Executive Councils

6.      Traffic Police and FRSC

7.      PHCN

8.      NNPC

9.      Nigeria Customs

10.  FIRS

Source (Wikipedia, 2016)

2.3 The Fraud Tree

The ACFE has developed a model for categorizing known frauds that it calls the fraud tree, which lists about 49 different individual fraud schemes grouped by categories and subcategories (see Figure 2.1). The three main categories are (1) fraudulent statements, (2) asset misappropriation, and (3) corruption.

Figure 2.1: The ACFE Fraud Tree

Source: Report to the Nation, 1996. Institute of Certified Fraud Examiners. See the full report at www.acfe.com

3.0      Theoretical Perspective

3.1      The Fraud Diamond

The Fraud Diamond was initially presented by Wolfe and Hermanson in the CPA Journal in December 2004.  It is an enlargement of the fraud triangle by introducing another dynamic: Capability (Okoye & Gbegi, 2013).  Wolfe and Hermanson (2004) contended that while perceived pressure may coexist with an opportunity and a rationalization, it is improbable for fraud to take place except the fourth dynamic (capability) is likewise in existent.  Thus, the potential fraudster must have the dexterities and ability to commit fraud.  In the absence of this, there is the likelihood that fraud may not be perpetuated by the fraudster. Using the four elements of Fraud Diamond, a fraudster’s thought process according to Wolfe and Hermanson (2004) might proceed as follows:

·         Incentive: I want to have a need to commit fraud.

·         Opportunity: There is a weakness in the system that the right person could exploit (fraud is possible)

·         Rationalization: I have convinced myself that this fraudulent behaviour is worth the risks.

·         Capability: I have the necessary traits and abilities to be right person to pull it off. I have recognized this particular fraud opportunity and can turn it into reality.

Fig. 3.1: The Fraud Diamond

4.1      Pandora Box

The coinage ‘Pandora's Box’ is usually used to represent a collection of evil in a locked form, told in ancient Greek mythology. The "box" was actually a large jar (pithos) given to Pandora (all-gifted, all-giving), which contained all the evils of the world, which she eventually opened and all the evils flew out, leaving only “Hope” inside after she had closed it again.

Today the phrase "to open Pandora's box" is usually used to mean to perform an action that may seem small or innocent, but turns out to have severe detrimental and far-reaching consequences (Wikipedia, 2016).

The corrupt and fraudulent events witnessed daily across the nation have continued to betray every good intention and selfless effort made by true patriotic Nigerians towards restoring the lost economic glory of Nigeria that once thrived in the 1980s when the US national currency (the Dollar) had unreserved respect for the Nigerian Naira at the international market.

Both the public and private sectors of the economy seem to be at loss of a guiding principle defining good governance in either sector. The World Bank in 2007 stated that the dysfunctionality of public sector governance is considered to be the root cause of corruption, inefficiency, and waste in developing countries. This dysfunctionality is attributed to a lack of citizen empowerment to hold the government to account.

 One of the Big Four Audit Firms in the country, in its Report noted that corruption in Nigeria could cost up to 37% of GDP by 2030 if it’s not dealt with immediately. This cost is equated to around $1,000 per person in 2014 and nearly $2,000 per person that leaves in Nigeria by 2030 (PricewaterhouseCoopers [PwC], 2016). 

The flaws in the system tend to be evenly distributed among the three arms of government in the country. Thus, in practice the principle of separation of the powers of the different arms of government has been impracticable with an overlap in numerous government regimes.

4.2      Executive Lapses

Laski (1992) sees the “Executive as occupying a very crucial position in the administration of a state, first and foremost, the Executive decides on the final choice of policy to be submitted for acceptance to the legislative assembly; and, secondly, it is its business to see to it that the public services fully apply to that policy as intended by the legislature; and thirdly it ensures that it delimits and also coordinates the activities of the different Departments of State”.

4.2.1   Compromised Democratic Process

The country’s leadership seems to be at the mercy of an undemocratic process, which has produced leaders not in the best interest of the masses. Though the Constitution clearly states that, “the Federal Republic of Nigeria shall be a state based on the principles of democracy and social justice” (Section 14(1)), the Nigerian state has been constantly struggling between the forces of democracy and authoritarianism, characterized by ‘the push for development and the pull for underdevelopment, the burden of public corruption and the pressure of accountability’ (Kesselman, Krieger, & Joseph, 1996), and, has ‘deviated from the known curve of consolidation to de-consolidation” (Odion-Akhaine, Chizea, & Oriakhi, 2007).

Blood bath and unnecessary loss of lives now count at our National and State elections as the votes of Nigerians are used to satisfy international and local observers without duly reflected in the election process. Aside the spotted recent outcome of the 2015 election, “selection” not “election”, seems to have remained the order of Nigeria politics since 1999 when the country was returned back to democratic rule. A situation whereby a qualified experienced Nigerian is denied appointment at the National, State, Local Government, private sector, tertiary institutional levels etc., on religious or tribal grounds is unwelcomed.

4.2.2   Insurgency

The growing rate of insurgency in the country has also been a source of macro-economic destabilization. The inhabitants of Niger Delta region justified their grievances by reference to the extensive environmental degradation and pollution from oil activities that have occurred in the region since the late 1950s. The destruction of farm land, fish ponds and rivers radically altered the economic life of the once self-reliant and productive region for the worst (Okonta & Oronto, 2001). The oil has wrought poverty, state violence and a dying ecosystem (Okonta, 2005). The worsening state of socio-economic conditions in the region caused an uproar which resulted in the creation of militant groups in the region.

4.2.3   Civil Service Decadence

The Civil Service is the administrative bureaucracy which occupies an essential position in the political system of nations (Anazodo, Okoye, & Chukwuemeka, 2012). Abba and Anazodo (2006), argued that civil service in Nigeria comprises workers in the various ministries or Departments apart from those who hold political appointments. The Nigerian Civil Service however seems to be at the heart of corruption in the country with individuals charged with managing public funds engaging in unscrupulous and deviant behaviours. Bureaucrats who occupy leadership position in the Civil Service imbibe the mentality of wealth acquisition for self-superiority, rather than working to improve the lot of the country. In 2001, a Permanent Secretary of the Ministry of Defence was accused of embezzling funds amounting to N450 million. The Chairperson of the Educational Tax Fund (ETF), and the Accountant General of the Federation, the former Chairman of the Inland Revenue Services were alleged to have embezzled funds of the ETF to the tune of N40 billion between 1993 and 2000 (Anazodo, Okoye, & Chukwuemeka, 2012).

Another pandemic experience in Nigeria’s Civil Service is the entrenchment of mediocrity over meritocracy. Briggs (2007) stated that the recruitment process of the Civil Service lacks equity and transparency, making it difficult if not impossible to recruit the best qualified applicants for available jobs in the service. The perceived problems of recruitment in Nigerian Federal Civil Service could be attributed to factors such as inadequate and invalid standards for evaluating job candidates (as a result of absence of job analysis), sources of locating the potential applicants, transparency and independence of the recruiting authority, and the administrative machinery for determination of qualifications (Briggs, 2007).

In a speech by the President of the Country, who was represented by the Vice President Yemi Osinbajo, at the Old Banquet Hall of the Presidential Villa in Abuja said (Vanguard, 2015):

“Many who mourn the decline of the civil service today from its days as ‘primus inter pares’ in the Commonwealth to one which has earned a reputation for inefficiency, low productivity, corruption and insensitivity to the needs of the public fall into the error of thinking that the problem is a poverty of ideas and capacity on the part of the civil service; whereas, it is the inability to clearly articulate a vision, ensure that the service develops the required capacity to articulate and implement the various components of the vision”

4.2.4   Plea Bargain

The Act of the Economic and Financial Crimes Commission (EFCC), Section 14[2] provides for an option of plea bargain, where an accused is made to agree with certain arrangements as to his release. This arrangement usually of a monetary nature results in the payment of amount far less than what the person was accused of. In a suit filed by the EFCC against former Governor of Edo state, on the charges of corruption, money laundering and embezzlement to the tune of N2.9b, the prosecuting counsel was asked to reduce the 191 count charge to a one count charge because of Plea Bargain, The plea bargain arrangement was for the Governor to plead guilty to the one count charge and pay the sum of N500M and return three property, which he subsequently did and was left scot free.

The consequence of this provision provided by one of the Anti-Graft agencies in the country was the fact that political office holders, who engage in fraudulent activities and caught, may during prosecution invoke the provision of this section resulting in a refund of amount far below that which was stolen.

4.2.5   Executive Hijack of Anti-Graft Agencies

The two prominent anti-graft agencies in the country are the ICPC and the EFCC. The two agencies however seem to be rigged with challenges that hamper their performance, issues ranging from funding inadequacy, independence of objective, transparency and systematic performance over the years. For instance, while comprehensive and comparative data on the finances of both the EFCC and the ICPC are unavailable, anecdotal evidence points to a superior level of finance for the EFCC compared to ICPC (Enweremadu, 2012).

The fact that no legislative provision was made for the independent funding of these bodies, at least directly from the Federation Account, clearly tells us the extent of harsh exposure of the agencies to financial pressure and high tendencies of external influences that could affect their operational integrity, competence and quality service delivery to Nigeria masses.  Though, Section 3(14) of the Corrupt Practices and Other Related Offences Act, Cap. C31 LFN 2004 declares that the ICPC shall be independent and thus “shall in the discharge of its functions under the Act, not be subject to the direction or control of any other person or authority”.  This seems to be a literal statement lacking any valid cause.

Of course, Nigerians are not blind. We know that the transparency of EFCC and ICPC has long being compromised and is still being compromised. If not, why are most of the accused perpetrators of fraud and corruption in Nigeria still walk freely among other Nigerians, and recklessly using and spending their stolen public monies in fuelling terrorism and other crisis in the country. The worst case is even where such unpatriotic individuals are allowed to continue to hold public offices while on trials or even after the trial has being carefully swept under carpet.