FINANCIAL CRIMES: Bankers Under EFCC Searchlight
There is no consensus among bankers or lawyers as to whether the Economic and Financial Crimes Commission (EFCC) can lawfully require bankers to declare their assets, but stakeholders believe it is a key step in the battle against the unholy romance between politicians and bankers who perpetrate financial crimes ,writes ROBERT EGBE.
They hatched the plan – a simple one – in her Abuja office: move the money, through whatever means, from the company’s Abuja headquarters to a secret bank account in Lagos.
But the sum was so huge, probably unlike anything either the bank director or the customer had physically transferred before, that they could not execute the plan alone. So, they involved two of the company’s former directors and, together, they moved the cash to the bank’s Lagos headquarters. From there, much of the money found its way to her secret accounts in two other banks and some to bank officials.
That was 2014.
By the time the Economic and Financial Crimes Commission (EFCC) blew the lid on the heist in 2017, $153,310,000 was missing from the Nigerian National Petroleum Corporation (NNPC) coffers.
It was said to have been looted by a former petroleum minister, Mrs Diezani Alison-Madueke, in connivance with her bank conspirators.
On January 6, 2017, the EFCC obtained a court order forfeiting the sum to the Federal Government.
Bawa’s riot act
The Diezani incident was not the first time bank officials would aide politicians to launder loot, but if the new EFCC Chairman AbdulRasheed Bawa has his way, it will be the last.
Last Tuesday, at the State House after briefing President Muhammadu Buhari, Bawa read the riot act to bankers: declare your assets by June 1 or face the music.
More attention will also be devoted to cybercrime “which has become a big problem to this country,” Bawa said.
He explained that the focus on bankers was part of the commission’s renewed poise to clampdown on financial crimes in all sectors of the economy.
Bawa said: “We understood that the tail end of every financial crime is for the criminal to have access to the funds that he or she has illegitimately gotten.
“We’re worried about the roles of financial institutions. We have discussed, but we hope that all (staff of) financial institutions, particularly the bankers, will declare their assets as provided for by the law, in accordance with the Bank Employees Declaration of Asset Act.
“The EFCC, come June 1, 2021, will be demanding this asset declaration forms, filled by the bankers so that the line that we have drawn from the first of June is complied with by all bankers.”
He expressed the hope that this would enhance financial sanity and make it easy to track illegally acquired funds.
The President, he added, had shown satisfaction with the agency’s proposal.
A statement signed by EFCC spokesperson, Wilson Uwujaren, also quoted Bawa as saying that the directive was in line with the Bank Employees, ETC. (Declaration of Assets) Act 1986, enacted to ensure adequate measures in sanitising the financial system.
Bawa said the commission had discussed it and expressed the hope that “all financial institutions, particularly the bankers, will declare their assets as provided for by the law, in accordance with the Bank, Employees Declaration of Asset Act.”
He added that the action would also help to block some of the loopholes currently being exploited by unscrupulous players in the sector to undermine the economy through money laundering and illicit financial flows.
Bawa said Sections 1 and 7 of the Bank Employees, ETC. (Declaration of Assets) Act 1986, make it mandatory for every employee of a bank to make full disclosure of assets upon employment, and annually in subsequent years.
“It shall be an offence for an employee of a bank to own assets in excess of his legitimate known and provable income,” Bawa said.
He added that the penalty for violation of the Act, as spelt out in Section 7(2) includes imprisonment for a term of 10 years.
“Any employee guilty of an offence under subsection (1) of this section shall on conviction be liable to imprisonment for10 years and shall, in addition, forfeit the excess assets or its equivalent in money to the Federal Government,” he added.
What the law says on asset declaration by bankers
Section 1 (1)&(2) states: “Every employee of a bank shall, within 14 days of the commencement of this Act, make full disclosure of all his assets.
“In the case of a new employee, he shall within 14 days of assuming duty with the bank make a full disclosure of all his assets at the time of his assuming duty; and for the purpose of this subsection, a transfer or secondment from one bank to another shall be treated as a new employment”.
The law under Section 7 (1) stipulates that “It shall be an offence for an employee of a bank to own assets in excess of his legitimate known and provable income”.
Section 7(2) states: “Any employee guilty of an offence under subsection (1) of this Section shall on conviction be liable to imprisonment for 10 years and shall, in addition, forfeit the excess assets or its equivalent in money to the Federal Government”.
In its citation, the Act also gives the President of Nigeria, sweeping powers to extend its application to other categories of persons.
Officials of the Nigerian Customs Service are also covered by the law. They are expected to make asset declaration, according to Section 12.
The section says: The provisions of this Act shall apply to the Comptroller General, Deputy Comptroller General, Assistant Comptroller General, Chief Collector, Principal Collector, Collector and other officer, staff or employee of the Nigerian Customs Service as they apply to a Chief Executive or an employee of a Bank”.
‘Bankers already declaring assets’
Bawa’s directive generated a debate on social media, particularly on Twitter, on the rightness or otherwise of the call.
Offline, some stakeholders also expressed reservations about the directive.
The President, Association of Senior Staff for Banks, Insurance and other Financial Institutions (ASSBIFI), Comrade Oyinkansola Olasanoye, told The Nation that the anti-graft agency was merely playing to the gallery.
He said: “As bank workers, we do not have any issue with the EFCC investigating the banks but asking bank workers to declare their assets is just trying to enforce an order already in existence.
“Every year, bank workers declare their assets by filling a form which is sent to the CBN for scrutiny. We have been doing that for almost five years now.
“So, for the EFCC Chairman to now wake up and ask the same of us is only an admission the EFCC is not doing its work.
“EFCC has the right to investigate the top management and board of directors of banks but ordinary workers who are diligently carrying out their responsibilities as professionals should be exempted.
On the possibility of challenging the order in court, the ASSBIFI boss said the union was watching events as they unfold and would decide on the next line of action if need be.
However, Olasanoye’s suggestion that the EFCC should focus on the top management and board of directors of banks does not seem to go against the grain following research by two Ekiti State University students.
The report, authored by Olaoye Clement Olatunji and Dada Raphael Adekola, was published in 2014 in the European Journal of Business and Management.
Adapted by the authors from the Nigeria Deposit Insurance Corporation (NDIC) Annual Reports (2005 – 2012), the research showed a rise in the number of lower-level bank workers engaging in fraud and forgery.
Most banks use ‘contract staff’
The Act requires all bank employees to declare their assets, but according to last April’s National Bureau of Statistics (NBS) banking sector report, 46,263 out of 104,364 staff or 44.3 per cent of most bank staff are, ‘contract staff’, not employees of the banks where they work.
It thus appears, from the letters of Section 1 of the Bank Employees, ETC. (Declaration of Assets) Act 1986, that contract staff have a loophole to legally not declare their assets.
The report showed that contract staff across banks rose by six per cent from 43,955 in June 2018 to 46,263 in June 2019.
This means in the last one year, contract staff rose by 2,308 across all banks.
According to the NBS, bank workers are categorised into the executive staff, senior staff, junior and contract staff. There was an upsurge in the bank staff strength in five years up till 2019 and it was rising by double digits.
In three years, banks staff rose from 77,096 in 2017 to 104,364 in 2019.
Meanwhile, the breakdown showed that contract staff employment surged more than any other staff category.
For instance, in Q1 2017, banks had a total of 77,096 staff, of which junior staff was the highest with 36,202 staff (47%), senior staff (20,483 or 27%), contract staff (20,237 or 26%) and the executive staff with 174 or less than 1%.
Meanwhile, three years later, contract staff in banks rose significantly.
As of June 2019, contract staff recorded the highest number with 46,263 staff or 44.3 per cent of the total staff across banks.
Others include junior staff (39,980 or 38.3%), Senior Staff (17,943 or 17.19%) and Executive Staff (178 or 0.17%).
‘Waste of time’
This, perhaps, explains why a former President/Chairman of the Council of the Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu, said the agency was merely grandstanding.
Unegbu, a lawyer, arbitrator and stockbroker, acknowledged that most banks these days are peopled mostly by outsourced workers who work on an ad hoc basis.
The one-time chairman/chief executive at Broad Bank and Citizens Bank (both defunct) said asking such a category of bank staff with little or no stake in the business to declare their assets was a clear waste of time and resources.
The EFCC, Unegbu maintained, must step up its investigative processes and put searchlights on banks suspected to be involved in any kind of sleaze.
‘Why EFCC has no jurisdiction’
Convener of the Transparent Bar Initiative Douglas Ogbankwa argued that Bawa was seeking to exercise powers that the EFCC did not have.
Ogbankwa, immediate past publicity secretary of the NBA, Benin Branch, said the EFCC “illegally” gave bankers till June 1, 2021 to declare their assets.
He said: “The Act provides in Section 1 (1), that an existing bank employee, shall within 14 days of the Act coming into force, which was in 1986, make a full declaration of all his assets. Section 1(2) of the Act indicated above, imposes the same obligation on a new staff of a bank after the act haa come into force.
“Section 3 (1) of the Act stipulates that bank employees shall submit their assets declaration forms to the chief executive of their banks within the said 14 days of making the Declaration.
“Section 3 (2) of the Act provides that the Chief Executive of the bank shall within seven days after the expiration of the days, submit the assets declaration to the Appropriate Authority.
“Section 2 (1) of the Law makes it mandatory for the Declaration of Assets to be done as prescribed in the Declaration of Assets Form, Form A attached to the Act and it shall be executed before a Registrar of a Superior Court of Record.”
According to him, the EFCC was not the appropriate authority referred to in the Act.
Ogbankwa said: “The apposite question to ask is, who is the ‘appropriate authority’ referred to in Section 3 (2) of the Act? Is it the EFCC?
“To start with the EFCC was not in existence in 1986 when the Act was enacted. The interpretation section of the Act in Section 13, defines the appropriate authority to be the Secretary to the Federal Government or any person designated by him through an Instrument published in a Federal Government Gazette.
“I am not aware of any instrument published in a Federal Government Gazette issued by the Secretary to the Federal Government designating the Economic and Financial Crimes Commission as an appropriate authority to enforce/ implement the provisions owf the law hereinbefore analysed.
“They are therefore not the appropriate authority but meddlesome interlopers.”
Ogbankwa’s views were similar to that expressed by an Abuja-based lawyer, Ken Eluma Asogwa in a post on his Twitter handle.
Asogwa, Principal Partner of Forte Solicitors, said: “Asking private operators like bankers to declare assets is not within the purview of the EFCC to pursue. EFCC is yet to tell Nigerians where it drew the powers to so declare!”
In an earlier interview with an online news medium, he argued that Bawa had no constitutional mandate to demand asset of bankers who run private businesses.
Asogwa contended, among others, that the 1986 law Bawa cited requires bankers to declare their assets annually to the chief executive of their respective financial institutions, but that the law had since been abandoned following the introduction of The Code of Conduct Bureau and Tribunal Act, which mandated only scheduled public office holders to declare asset upon assumption of office.
Falana: Those opposing Bawa’s directive are wrong
Senior Advocate of Nigeria (SAN) Mr Femi Falana disagreed with those challenging the legality of the EFCC chairman’s directive.
According to him, the Bank Employees (Declaration of Assets) Act “is an existing law,” despite being enacted 35 years ago.
Clarifying the roles of the EFCC concerning the Act, Falana said the anti-graft agency “is charged with the responsibility of enforcing the provisions of all laws relating to economic and financial crimes.”
Under the law, the human rights lawyer said every governor of the Central Bank of Nigeria (CBN), bank executives, directors and board members are also required to declare their assets because they are dealing with public funds.
Specifically, he pointed out that the Banks and other Financial Institutions Act (BOFIA) “is one of such laws. Since the Bank Employees Declaration of Assets Act pertains to economic and financial crimes, the EFCC is empowered to enforce the law.”
Falana further contended that by Section 7 (1) (b) of the EFCC Act, the agency “is empowered to cause investigations to be conducted into the properties of any person if it appears to the commission that the person’s lifestyle and extent of the properties are not justified by his source of income.”
He disclosed that the EFCC had been enforcing this particular provision to compel every suspect to fill forms containing a list of their assets.
Falana noted that in August 2016, the CBN directed employees in all commercial banks in the country “to declare their assets. The directive was complied with. Bank employees who fail to comply with the law may have themselves to blame.”
He disclosed that some bankers were being prosecuted for allegedly contravening the provisions of the Act, noting that it was not the first time that the law has been applied.
The activist-lawyer reasoned that Bawa is only reminding bank executives and employees of their responsibilities under the law.
Directive can help Nigeria save $18 billion, says TI
Similarly, the Civil Society Legislative Advocacy Centre (CISLAC)/ Transparency International – Nigeria threw its weight behind the directive.
In a statement by its country representative, Mr Auwal Rafsanjani, TI argued that if the Act is effectively enforced, Nigeria could save between $15 billion and $18 billion in illicit financial flows (IFFs) annually.
Rafsanjani reasoned that the measures stipulated in the Act would help prevent money laundering and IFFs through which terrorism is largely funded, effectively tax bank executives, and expose illegal financial transactions.
He said: “The banking sector has been largely implicated in money laundering and has been instrumental in the initial entry or placement phase that involves the initial movement of an amount of money earned from criminal activity into some legitimate financial network or institution.
“Despite the powers of and the checks that have been put in place by the CBN and other relevant institutions regulating the sector, it appears that the system is being manipulated as Nigeria loses between $15 and 18 billion annually to IFFs.
“While this has well-established roles in hindering economic development, illicit financial flows are crucial to a variety of illegal activities that undermine global and national security, from organised crime to financing terrorism.
“We use this medium to call out other institutions like national security agencies who have a duty to counter these flows and are related to this context, to throw their full support behind this move by the EFCC, by using available instruments, one of which is the Bank Employees, etc. (Declaration of Assets) Act 1986.
“With the ongoing security crisis in the nation, there couldn’t be a better time for the introduction of this initiative. As regards tax evasion, in 2017, only 214 people in populous Nigeria paid taxes above N20 million.”