Nigeria justifiably has a reputation for corruption and criminal networks, explains Professor Keith Somerville, but it is by no means one of the two most corrupt countries in the world.
Just before May’s anti-corruption summit in London, British prime minister David Cameron, made his now infamous public gaffe when he boasted to the Queen in a rather a silly, school-boyish way that, ‘We’ve got some leaders of some fantastically corrupt countries coming to Britain… Nigeria and Afghanistan, possibly the two most corrupt countries in the world.’ Apart from the rudeness and stupidity of the remarks, given that they were made in front of TV cameras, they were also inaccurate.
Nigeria justifiably has a reputation for corruption and criminal networks, but it is by no means one of the two most corrupt countries in the world. Somalia and North Korea hold that distinction, according to Transparency International. Nigeria also ranks as less corrupt as key British and American ally in the war against Islamists in East Africa, Kenya – Kenya is ranked 139 out of 167 countries and Nigeria 136.
That error of fact is perhaps not surprising, though one would hope that a prime minister would check his facts before telling the Queen that a fellow Commonwealth country is so fantastically corrupt. Nigeria has long had a reputation for corruption in politics, business, and its military establishment, and for being heavily involved in the infamous international 419 financial scams, in drug and sex worker trafficking.
The reaction of President Muhammadu Buhari of Nigeria was one of shock – rather a faux shock for the media, I suspect, as Buhari is involved in cranking up an anti-corruption drive, that has seen the arrest of major politicians and army officers, and an investigation into the corrupt diversion of funds that were to have purchased weapons to fight Boko Haram but ended up funding political campaigns and in the pockets of political, military and business insiders connected with the previous administration of Goodluck Jonathan.
President Buhari said he didn’t want an apology from Cameron over the remarks but instead the return of assets stolen from Nigeria and banked in Britain, or via Britain, in offshore banks in British territories like Guernsey, Jersey and the Cayman Islands. The very off-shore banking network revealed, to David Cameron’s embarrassment, in the Panama Papers that detailed the vast international network of tax avoidance, money laundering and investment of stolen or criminally-obtained assets. And Buhari has a point.
The British are in no position to preach, if one takes seriously the comments at the Hay Festival at the end of May by the world-famous expert on the mafia and other forms of organised crime, Roberto Saviano. The journalist and author of crime bestsellers Gomorra and ZeroZeroZero, appeared at Hay-on-Wye flanked by security guards, given the threats against his life from criminal organisations he has investigated and whose activities he has reported.
He told his audience at the literary festival that British financial institutions enabled what he called ‘criminal capitalism’ to operate through the network of offshore banks, investment funds and other holdings in British territories. He said that his research into criminal networks and money laundering showed that the City of London operated in a way that made possible the working of financial systems that eluded investigation, let alone taxation, and effectively made Britain the most corrupt country. He was quoted by the Guardian and Telegraph as saying ‘If I asked what the most corrupt place on Earth is, you might say it’s Afghanistan, maybe Greece, Nigeria, the south of Italy. I would say it is the UK. It’s not UK bureaucracy, police, or politics, but what is corrupt is the financial capital. Ninety per cent of the owners of capital in London have their headquarters offshore.’
It is no coincidence that the late and sorely missed journalist, academic and expert on crime and corruption in West Africa, Professor Stephen Ellis, devoted an important part of his posthumously published book, This Present Darkness*, to the role of British, American and Swedish companies (among others) in bribery, avoidance of the payment of royalties, false accounting and illegal capital flight in Nigeria and in aiding and abetting domestic corruption.
Professor Ellis, in his superbly researched and incisive study, details how British bankers saw the end of empire as both a threat and an opportunity and developed existing offshore banking networks using the ‘archaic jurisdictions’ of British dependencies in the Channel Islands and the Caribbean to exploit ‘the disconnection between the physical location of a transaction and the legal space where it is recorded’, through which the cunning or corrupt could ‘exploit the gap between law and reality’ (p.73).
Not only did British and other foreign companies take advantage of this in their looting of resources or trading relationships with countries like Nigeria, by hiding the money falsely obtained through concealing the real earnings from exports or inflating the costs of imports, but wealthy Nigerians who were also milking the system, often through deals with foreign companies, got their corruptly obtained riches out to offshore banks. Politicians, civil servants or senior military officers who took kickbacks for signing contracts or their cut from inflated trade deals moved their money out of Nigeria into these offshore repositories.
But corruption in Nigeria, though much is connected with the notoriously corrupt international oil industry and with foreign companies that encouraged or acquiesced in the face of demands for kickbacks, is not something that can blamed solely on multinationals. As Ellis painstakingly explains, it is much, much more complex.
One major factor is the tradition of gift-giving to holders of public office, and then also the expectation that holders of office – the emirs and sultans of northern Nigeria, the obas, oonis or other chiefs of Yorubaland, or the modern holders of political office – would use their position to distribute largesse to their followers (pp. 11 and 75). These traditional systems of mutual benefit and patronage were not swept away by colonial rule but often distorted and developed by it through Lugard’s system of Indirect Rule. Networks remained, gifts were given but the social and political context changed.
One thing that happened is that new classes of politicians, public servants and businessmen were created in the process of decolonisation, often linked with traditional sources of power, and they retained the exchange of gifts or distribution of wealth through social and political networks or through the ubiquitous secret societies in some parts of Nigeria, but it became divorced from its original societal context. Old networks persisted in new contexts, creating informal or hidden patronage/client systems that were still important to the exercise of political power and formal state institutions. The weakness of Nigerian legal and formal political institutions – as evidenced by the repeated coups – meant that these informal networks became more rather than less powerful. This situation was reinforced by the very diverse and fragmented nature of Nigeria and the importance of local powerbases for politicians.
The oil industry and sudden influx of substantial royalties that could be controlled and utilised by those in power, also created opportunities for corruption and the expansion of networks of corruption and misuse of state funds or natural resources. Oil fuelled the operation of a new class of local middlemen, who acted as agents for the oil companies and saw greater personal or group advantage in playing this role of facilitators rather than becoming involved in industrial development or management – ‘mediation required no capital, did not compete with foreign companies, and offered easy profits’ (p.96). Contracts for state-funded projects connected with the oil industry became a new form of patronage. What was important in amassing influence and wealth was access to nodes of political power nationally and locally, and to ways of tapping the resources of the oil. At first this was through the military – whose officers benefitted hugely from the political power that flowed from the barrel of a gun as well as from barrels of oil.
Today, although there is now a competitive electoral system, the power and influence of the military or of former military leaders is still paramount. Three of the four presidents since the handover of power by the military have been former generals or military rulers, and the use of the army as a power base and a source of embezzled funds through the oft-plundered security vote has enabled the continuation of corruption linked to the armed forces.
Current networks of power and corruption can be seen to link back to the established northern or Kaduna mafia, as it was known, that was at the heart of military rule and massive corruption. The major corruption case currently being investigated is that of the diversion of funds voted to buy arms to fight Boko Haram. It has been dubbed ‘Dasukigate’, after former President Jonathan’s National Security Adviser, Sambo Dasuki – accused of being at the centre of the illegal use of the funds for political purposes and personal aggrandisement of leading officers and businessmen. Dasuki had been aide-de-camp to the notoriously corrupt President Ibrahim Babangida; Dasuki’s father was Sultan of Sokoto and was made chairman of BCCI (Nigeria) by Babangida, something Ellis describes pithily as being ‘roughly equivalent to appointing Bernie Madoff as the Pope’ (p. 139). BCCI collapsed in 1991 in a welter of corruption and money laundering.
What Ellis’s book amply demonstrates is the extent of corruption in Nigeria, the networks of wealth accumulation and patronage that dominate politics, business and the oil industry, but also the inextricable link with international financial networks used to launder or invest corrupt money and the plundering activities of multinational companies that avoid tax, under-report export volumes and inflate contracts.
Nigeria is part of a fantastically corrupt international network. But is Nigeria innately corrupt or has corruption developed and burgeoned there for specific reasons related to its complex past, the effects of colonialism and the effects of decolonisation within a global financial and trading environment that encouraged corruption? I’m with Ellis when he concludes that ‘Nigerian organised crime is not created by culture, but it does arise from a particular history’ (p. 230).
Professor Keith Somerville is a senior research fellow at the Institute for Commonwealth Studies (ICWS) at the University of London’s School of Advanced Study. He teaches at the Centre for Journalism, University of Kent and edits the Africa – News and Analysis. His latest book, Africa’s Long Road Since Independence. The Many Histories of a Continent, was published in December 2015.
* Stephen Ellis, This Present Darkness. A History of Nigerian Organised Crime, London: Hurst and Co. 2016.
This article first appeared on Commonwealth Opinion and has been reproduced with the author’s kind permission.