What is Asset Recovery?

USING THE INTER-PLAY BETWEEN CIVIL AND CRIMINAL REMEDIES TO MAXIMIZE RECOVERY OPPORTUNITIES IN NIGERIABY‘KEMI PINHEIRO, SAN, FCIArb.DELIVERED ON THE 5TH OF NOVEMBER, 2013

“It is a notorious fact that one of the ills which have plagued and are still plaguing the Nigeria Nation is corruption in all faces (sic) of our National Life. It is an incontrovertible fact that the present economic morals and or quagmire in which the country find itself is largely attributable to the notorious virus, which is known as corruption. This Court is bound to take judicial notice of these facts and is so invited to do so……” Chief Afe Babalola, SAN, in A-G. Ondo State vs. A-G Fed. (2002) 9 N.W.L.R (Pt. 772) 222 in the preamble of his brief. -Ogwuegbu JSC in A.G. Ondo State vs. A.G Federation(2002) 9 NWLR pt. 772 pg. 222 at 337-339

What is Asset Recovery? “International asset recovery is any effort by governments to repatriate the proceeds of corruption hidden in foreign jurisdictions. Such assets may include monies in bank accounts, real estate, vehicles, arts and artifacts, and precious metals. As defined under the United Nations Convention against Corruption, asset recovery refers to recovering the proceeds of corruption, rather than broader terms such as asset confiscation or asset forfeiture which refer to recovering the proceeds or instrumentalities of crime in general ” -Wikipedia

“Asset Recovery is often used to emphasize the “multi-jurisdictional” or “cross boarder” aspect of a corruption investigation, international asset recovery includes numerous processes such as the tracing, freezing, confiscation, and repatriation of proceeds stored in foreign jurisdictions, thus “making it one of the most complex projects in the field of law” -Wikipedia

I hold the view that asset Recovery is the governmental process or task aimed at recovery of assets or the repatriation of proceeds of crime. Such assets may include monies in bank accounts, real estate, arts and artifacts and precious metals. • Under the United Nations Convention against Corruption, asset recovery refers to recovering of the proceeds of crime.

Article 51 of the United Nation’s Convention against Corruption 2004, provides that: “The return of Assets pursuant to this chapter is a fundamental principle of this convention, and states parties shall afford one another the widest measure of cooperation and assistance in this regard”

Article 52(1) provides: “Without prejudice to Article 14 of this Convention, each state party shall take such measures as may be necessary, in accordance with its domestic law, to require financial institutions within its jurisdiction to verify the identity of customer, to take reasonable steps to determine the identity of beneficial owners of funds deposited into high value accounts and to conduct enhanced scrutiny of accounts sought or maintained by or on behalf of individuals who are, or have been, entrusted with prominent public functions and their family members and close associates. Such enhanced scrutiny shall be reasonably designated to detect suspicious transactions for the purpose of reporting to competent authentic and should not be so construed as to discourage or prohibit financial institutions from doing business with any legitimate customer”.

The United Nation Convention Against Corruption was ratified by Nigeria on the 14th of December, 2004 in line with the provisions of the Treaties (Making Procedure) Act, Cap T20 LFN 2004.

Tracing of Assets Tracing of assets is the first requirement in any asset recovery case. A high degree of expertise, resources and cooperation between multiple intelligence and law enforcement agencies is essential for successful tracing. Assets must be followed not only to their final hiding place but causality must be established between the asset and the criminal activity. This poses a particular challenge when dealing with developing countries that are cash-based societies where monies often do not flow through the recorded financial system.

MODES OF TRACING-METHODOLOGY ADOPTED • Searches • Anton Pillar orders • Additionally, suspicious activity reports filed with national financial intelligence units can often uncover connections that can expose cases of grand corruption.

LEGAL FRAMEWORK TO AID TRACING • Section 1 of the Money Laundering Act 2011: “No person or body corporate shall, except in a transaction through a financial institution make or accept cash payment of a sum exceeding- a. N5,000,000 or its equivalent in the case of an individual; or b. N10,000,000 or its equivalent in the case of a body corporate.”

Section 2 (1) of the Money Laundering Act 2011 provides: “A transfer to or from a foreign country of funds or securities by a person or body corporate including a Money Service Business of a sum exceeding US$ 10,000 or its equivalent shall be reported to the Central Bank of Nigeria, Securities and Exchange Commission or the Commission in writing within 7 days from the date of the transaction”

Section 3(6) of the Money Laundering Act 2011 provides that: “Where a Financial Institution or Designated Non-Financial Institution suspects or has reasonable grounds to suspect that the amount involved in a transaction is the proceeds of a crime or an illegal act it shall require identification of the customer notwithstanding that the amount involved in the transaction is less than US$1,000 or its equivalent”

Section 6 of the Money Laundering Act 2011 provides: (1) Where a transaction- (a)Involves a frequency which is unjustifiable or unreasonable; (b)Is surrounded by conditions of unusual or unjustified complexity; (c)Appears to have no economic justification or lawful objective; or (d)In the opinion of the financial institution or designated non financial institution involves terrorist financing or is inconsistent with the known transaction pattern of the account or business relationship, that transaction shall be deemed to be suspicious and the financial institution involved in such transaction shall seek information from the customer as to the origin and designation of the fund, the aim of the transaction and the identity of the beneficiary.

(2) A financial institution or designated non-financial institution shall within 7 days after the transaction referred to in subsection (1) of this section- (a)Draw up a written report containing or relevant information on the matters mentioned in subsection(1) of this section together with the identity of the principal and, where applicable, of the beneficiary or beneficiaries; (b)Take appropriate action to prevent the laundering of the proceeds of a crime or an illegal act; and (c)Send a copy of the report and action taken to the commission.

(3) The provisions of subsection (1) and (2) of this section shall apply whether the transaction is complete or not. • (4) The commission shall acknowledge receipt of any disclosure, report or information received under this section and may demand additional information as it may deem necessary.

(5) a) the acknowledgement of the receipt shall be sent to the financial institution or designated no-financial institution within the time allowed for the transaction to be undertaken and it may be accompanied by a notice deferring the transaction for a period not exceeding 72 hours. • b) Notwithstanding the provisions of paragraph (a) of this subsection, the chairman of the commission, the governor of the central bank or their authorized representative shall place a stop order not exceeding 72 hours, on any account or transaction if it is discovered in the course of their duties that such transaction is suspected to be involved in any crime.

Section 10 of the Money Laundering Act 2011 provides:. (1) notwithstanding anything contrary in any other law or regulation, a financial institution or designated non-financial institution shall report to the commission in writing within 7 and 30 days respectively and single transaction lodgement or transfer of funds in excess of- (a)N5,000,000 or its equivalent, in the case of an individual; or (b)N10,000,000 or its equivalent, in the case of a body corporate.

(2) A person other than a financial institution may voluntarily give information on any transaction, lodgement or transfer of funds in excess of- (a)N1,000,000 or its equivalent, in the case of an individual; or (b)N5,000,000 or its equivalent, in the case of a body corporate. • (3) Any financial institution or designated non-financial institution that contravenes the provisions of this section is guilty of an offence and shall on conviction be liable to a fine not less than N250,000 and not more than N1,000,000 for each day the contravention continues.

Section 11 of the Money Laundering Act 2011 provides: (1) the opening or maintaining of numbered or anonymous accounts by any person, financial institution or corporate body is prohibited. (2) Any person, financial institution of corporate body that contravenes the provision of subsection(1) of this subsection, is guilty of an offence and is liable on conviction to- (a)In the case of an individual, a term of imprisonment of not less than 2 years but not more than 5 years; (b)In the case of a financial institution or corporate body, a fine of not less than N10,000,000 but not more than N50,000,000.

FREEZING OF THE ASSETS • Once financial investigations have identified assets as being possible proceeds of crime, freezing those assets becomes critical. • However, premature freezing prevents investigators from following the money trail. If alerted prematurely, beneficiaries of targeted assets most often take steps to transfer such assets with the view of making them unreachable.

The Chairman of the Commission, the Governor of the Central Bank or their authorized representatives may place a stop order on any account or transaction if discovered that such account or transaction is suspected to be involved in any crime-Section 6 (5) (b) of the Money Laundering Act. • The Federal High Court may at the request of the Commission or other persons or authority order that the funds, accounts or securities be blocked -Section 6 (7) and (8) of the Money Laundering Act.

THE DOMESTIC LEGISLATION IN NIGERIA AFFECTING ASSETS RECOVERY • Corrupt Practices and Other Related Offences Act LFN 204; • Economic and Financial Crimes Commission Act 2004; • Advance Fee Fraud and Other Fraud Related Offences Act 2006; • Money Laundering Prohibition Act 2011; • Code of Conduct for Public Officers, 5th Schedule to the Constitution; • Criminal Procedure Act LFN 2004; • Administration of Criminal Justice Law of Lagos State 2001. • Federal High Court Act LFN 2004

CIVIL REMEDIES • Anticipatory remedies. • Post conviction remedies. • In Rem actions.

Anticipatory remedies • The 1999 Constitution Section 44(2) (b) and (k) “Nothing in subsection (1) of this section shall be construed as affecting any general law (b) for the imposition of penalties or forfeitures for the breach of any law, whether under civil process or after conviction for an offence (k) relating to the temporary taking of possession of property for the purpose of any examination, investigation or enquiry”

Corrupt practices and other related offences Act • Section 48 (1) of ICPC Act. “Where in respect of any property seized under this Act there is no prosecution or conviction for any offence under this Act, the Chairman of the Commission may, before the expiration of 12 months from the date of the seizure, apply to a judge of the High Court for an order of forfeiture of the property, if he is satisfied that such property had been obtained as a result of or in connection with an offence under sections 8-19 of this Act”

Economic and Financial Crimes Commission Act • Section 26 “(1) Any property subject to forfeiture under this Act may be seized by the Commission in the following circumstances- • The seizure is incidental to an arrest or search; or • in the case of property liable to forfeiture upon process issued by the Court following an application made by the Commission in accordance with the prescribed rules (2) Whenever property is seized under any of the provisions of this Act, the Commission my- (a)Place the property under seal; or (b)Remove the property to a place designated by the commission (3)Properties taken or detained under this section shall be deemed to be in the custody of the Commission, subject only to an order of a Court”

“It is apparent from Section 26 of the Economic and Financial Crimes Commission (Establishment) Act, the commission shall immediately trace and attach all the assets and properties of the person acquired, as a result of such illegal act, and shall thereafter cause to be obtained an interim attachment order by the Court.” -Pemu JCA in Appeal No: CA/L/987/2010; Felimon Enterprises Nigeria Limited vs. The Chairman Economic and Financial Crimes Commission (unreported) delivered on the 18th of January, 2013

Section 27 “(1) Where a person is arrested for committing an offence under this Act, such person shall make a full disclosure of all his assets and properties by completing the Declaration of Assets Form as specified in Form A of the schedule to this Act (2) The completed Declaration of Assets Form shall be investigated by the Commission”

Section 28 “Where a person is arrested for an offence under this Act, the Commission shall immediately trace and attach all the assets and properties of the person acquired as a result of such economic and financial crime and shall thereafter cause to be obtained an interim attachment order from the Court”

The commission upon attaching the assets shall apply to court for an interim forfeiture order – Section 27(4) of the EFCC Act. • The commission can obtain an interim attachment order from the court after tracing and attaching the assets and properties of a suspect consequent upon his arrest – Section 28 of the EFCC Act.

Precedent Prayers • An order restraining MR. AB by himself, or directly or indirectly or through any other persons (whether natural or non-natural), without limitation to the persons listed in schedule A, his family, servants, solicitors, associates, attorney or agents or any other persons howsoever called from removing, alienating, disposing off, dealing with or diminishing the value of assets, proceeds of economic and financial crimes owned directly or otherwise by the said Mr. AB located within the jurisdiction of this court in Nigeria or elsewhere in the world, including without limitation to known and traced assets listed in Schedule E.

An order restraining Mr. AB by himself or through his wife, children, relatives, solicitors, servants, associates, attorneys, trustees and privies from giving instructions or directions for the withdrawal from, transfer out of, alienating, disposing off and dealing with the monies kept in all his Bank accounts in Nigeria, and in particular the accounts listed in Schedule A to this application whether solely or jointly owned by him or whether directly or indirectly operated for his benefit within the jurisdiction of this court

CASE LAW

NWAIGWE VS. FRN (2009) 16 NWLR pt. 1166 pg. 169 “Under section 28 of the EFCC Act, the commission is empowered not only to arrest any person suspected to have committed an offence under the EFCC Act but also to trace and attach all assets and properties of the accused person or persons suspected to have been acquired as a result of such economic and financial crime and subsequently cause to be obtained an interim attachment order from the court. Section 28 therefore confers a ready made license to the EFCC to attach or seize any property suspected by it to have been acquired by committing any offence under the EFCC Act. This is the one single method provided for in the EFCC Act for immediate attachment or seizure of any property suspected to have been acquired through any means constituting an offence under the EFCC Act” –Mukhtar JCA (as she then was) at page 190

“While the power to seize any property or asset suspected to be connected with the commission of an offence under the EFCC Act as provided by section 28 thereof falls in line with the decision in Attorney General of Ondo State vs. Attorney General Federation and is therefore constitutional, the provision of section 29 is something else. There is no doubt that seizure or attachment of property under section 28 is aimed at securing 36 (5) and 44 (1) of the Constitution. There is also no doubt that forfeiture of property be it temporary or permanent is punitive in nature” - Mukhtar JCA (as she then was) at page 200

“Section 29 of the EFCC Act clearly imposes punishment on the appellants by way of forfeiture of property on the basis of suspicion. In constitutes an infraction on the rights of the appellants under section 36 (5) of the Constitution and is in wild riot or conflict with that constitutional provision. I have no hesitation in finding the provision of section 29 of the EFCC Act as unconstitutional. I therefore invoke the provision of section 29 of the EFCC Act as null and void ” - Mukhtar JCA (as she then was) at page 201

Appeal No: CA/L/830/10; Francis Atuche vs. Chairman, Economic & Financial Crimes Commission (unreported) “The interim seizure allowed by section 25 and 26 of the EFCC Act is to prevent the dissipation or disposing of assets reasonably suspected to be proceeds of economic/financial crime before the determination of the criminal trial against an accused implicated in the crime. Although section 44 (2)(b) of the 1999 Constitution, as amended, referred to by the appellant states that the impossibility of forfeitures for breach of any law should be enforced after conviction for an offence, Section 44(2)(k) of the same constitution which comes after Section 44 (2) (c) thereof qualifies it that the temporary taking of possession of property for the purpose of examination, investigation or enquiry is proper and constitutional.” -Ikyegh JCA in Appeal No: CA/L/830/10; Francis Atuche vs. Chairman, Economic & Financial Crimes Commission (unreported) delivered on the 28th of June, 2013.

“The powers of the respondent to trace and seize the assets of a person arrested or accused of committing economic/financial crimes and apply for interim attachment of assets by court order are spelt out in Sections 12(b) and (d), 25, 26, 27 and 28 of the EFCC Act.” – Ikyegh JCA in Appeal No: CA/L/830/10; Francis Atuche vs. Chairman, Economic & Financial Crimes Commission (unreported) delivered on the 28th of June, 2013.

“I am therefore of the considered opinion that an exparte order of interim attachment of the assets of an accused is constitutional and does not foreclose the constitutional right to fair hearing of an accused…The kind of order the court issues under section 26 of the EFCC Act is an interim order of attachment, not an interim order of forfeiture. The former is a seizure order of attachment means seizure of a person’s property under legal authority for the purpose of securing judgment in a case…while the latter (forfeiture) means loss of the property as a penalty because of crime” • -Ikyegh JCA in Appeal No: CA/L/830/10; Francis Atuche vs. Chairman, Economic & Financial Crimes Commission (unreported) delivered on the 28th of June, 2013.

“Suppression of facts should hardly arise from the side of the respondents having regard to the express language of Section 27(1) of the EFCC Act mandating an accused upon his arrest to disclose all his assets to the EFCC by completing a Declaration of Assets Form Specified in Form A of the schedule to the Act on pain of ten years imprisonment under Section 27(3) thereof. What the EFCC is required to do under Section 27 of the Act is to investigate the declaration of assets linked to alleged economic/financial crimes and seize the affected assets leaving intact the assets acquired by honest means for interim attachment of the former only. The onus is thus on an accused to establish on the balance of probability that the assets submitted by the EFCC for interim order of attachment are not afflicted with economic/financial crimes and; upon such satisfactory account or explanation the innocent assets would be released to the accused. All that the respondents are bound to establish is the reasonable suspicion of linkage of the assets with the alleged commission of economic/financial crimes which the respondents were able to establish at a glance … I need to add that the tracing and attachment of assets by the respondents are based on either an arrest or search pursuant to section 25 (1)(a) of the EFCC Act… The said attachment of assets would therefore not appear to depend necessarily on the pendency of a charge or an amended charge.” -Ikyegh JCA in Appeal No: CA/L/830/10; Francis Atuche vs. Chairman, Economic & Financial Crimes Commission (unreported) delivered on the 28th of June, 2013.

Appeal No: CA/L/987/2010; Felimon Enterprises Nigeria Limited vs. The Chairman Economic and Financial Crimes Commission (unreported) delivered on the 18th of January, 2013 “The provisions of the Economic and Financial Crimes Commission (Establishment) Act does not provide for the discharge and or setting aside of interim attachment of properties of culprits. If the Law had envisaged this, it should have stipulated it in its provisions.” Indeed in Section 30 of the Act, it says “Where an arrested person is convicted of an offence under this Act, the commission or any authorized officer shall apply to the Court for the order of confiscation and forfeiture of the convicted persons’ assets and properties acquired or obtained as a result of the crime already subject to an interim order under this Act”. In my view, the refusal of the learned trial Judge, to set aside, and or discharge the order, is borne out of the fact that the provisions of the Act do not provide for it, and that refusal was in order to protect the RES.” -Pemu JCA

“The interim order of attachment allowed by Section 28 and 29 of the Act, is to prevent the dissipation or alienation of the properties before the determination of the Criminal trial. At page 25 of the judgment (page315 of the Record of Appeal), the learned trial judge did observe that the application for the order, and the grant of it, was protected by Section 44(2) of the 1999 Constitution.” -Pemu JCA in Appeal No: CA/L/987/2010; Felimon Enterprises Nigeria Limited vs. The Chairman Economic and Financial Crimes Commission (unreported) delivered on the 18th of January, 2013

In Akingbola vs. Chairman EFCC (2012) 9 NWLR pt. 1306 pg. 475 at 507 the court granted an order attached all assets being proceeds of economic crimes held directly by or for the benefit or on behalf of the Appellant pending the conclusion of his trial.

Code of Conduct for Public Officers/Code of Conduct Bureau and Tribunal Act. • The 5th Schedule to the Constitution creates the Code of Conduct for Public Officers. • Section 20 of the Code of Conduct Bureau and Tribunal Act establishes the Code of Conduct Tribunal. • Section 15(3) of the Code of Conduct Bureau and Tribunal Act provides that: “Any property or assets acquired by a public officer after any declaration required under subsection (1) of this section and which is not fairly attributable to income, gifts or loan approved by this Act , shall be deemed to have been acquired in breach of this act unless the contrary is proved”

Section 23 (2) “The punishment which the tribunal may impose shall include any of the following- (a) (b) (c) Seizure and forfeiture to the State of any property acquired in abuse or corruption of office” Has the Code of Conduct Tribunal been effective in this regard?

Advance Fee Fraud and other Related Offences Act Section 17 (1) “Where any property has come into the possession of any officer of the Commission as unclaimed property or any property is found by any officer of the Commission to be in the possession of any other person, body corporate or financial institution or any property in the possession of any person, body corporate or financial institution is reasonably suspected to be proceeds of some unlawful activity under this Act, the Money Laundering (Prohibition) Act of 2004, the Economic and Financial Crimes Commission (Establishment) Act 2004, the High Court shall upon application made by the Commission, its officers, or any other person authorized by it and upon being reasonably satisfied that such property is an unclaimed property or proceeds of unlawful activity under the Acts stated in this subsection make an order that the property or the proceeds from the sale of such property be forfeited to the Federal Government of Nigeria”

Money Laundering Prohibition Act Section 6(7) and (8) • (7) Where it is not possible to ascertain the origin of the funds within the period of stoppage of the transaction, the Federal High Court may, at the request of the commission or other persons or authority duly authorized in that behalf, order that the funds, accounts or securities referred to in the report be blocked. • (8) An order made by the federal high court under this subsection (7) of this section shall be enforced forthwith.

13. (1) The Commission, Agency, Central Bank of Nigeria or other regulatory authorities pursuant to an order of the federal high court obtained upon ex-parte application supported by a sworn declaration made by chairman of the commission or an authorized officer of the central bank of Nigeria or other regulatory authorities justifying the request, may in order to identify and locate proceeds, properties, objects or other things related to the Commission of an offence under this Act, the

Economic and Financial Crimes Commission (Establishment) Act, or any other law- (a)Place any bank account or any other account comparable to a bank account under surveillance; (b)Obtain access to any suspected computer system; (c)Obtain communication of any authentic instrument or private contract, together with all bank, financial and commercial records, when he account, telephone line or computer system is used by any person suspected of taking part in a transaction involving the proceeds, of a financial or other crime.

What is Asset Recovery?