Hiding the beneficial owner and the proceeds of corruption

Nigerian currency
Jackie Harvey
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This is one in a series of blogs authored by researchers supported by the Global Integrity Anti-Corruption Evidence (GI-ACE) programme. The overarching objective of the GI-ACE programme is to support world-class multidisciplinary research to inform the development of more effective policies and interventions that will help reduce corruption in developing countries and address its negative impact on people’s lives.

To achieve this objective, GI-ACE produces new and operationally relevant evidence on tackling corruption, with a focus on ensuring that the research outputs support more effective, evidence-based anti-corruption initiatives by the Department for International Development (DFID) and other practitioner partners in DFID-priority countries and beyond.

Supported research focuses on innovative and practice-oriented projects, covering three priority areas: (1)Addressing the international architecture that supports corrupt exchanges; (2) Promoting integrity systems in the public and private sectors; and (3) Tackling corruption at subnational and sectoral levels.

Learn more about Harvey’s GI-ACE research project…

In 2007, participants at the 6th National Seminar on Economic Crime in Abuja, Nigeria, were informed that some US$400 billion was estimated to have been stolen from public accounts in Nigeria over a 40-year period (Chatham House Report 2017). More recently, some US$32 billion ‘was lost to corruption’ during the six-year presidency of Goodluck Jonathan that ended in 2015. The scale of these losses are hard to grasp…and these are only the flows of funds that are known.

Nigeria has the unenviable position of continuing to occupy a position in the bottom quartile of countries perceived to be the most corrupt in the world. Perhaps more significantly, as measured by the more comprehensive Africa Integrity Indicators, the country has moved negatively from an overall score of 59 out of 100 in 2013 (somewhat weak) to 40 in 2019 (weak) in terms of its overall transparency and accountability. It is hardly surprising, therefore, that the country recently has been described by anti-corruption scholar Matthew Page as having ‘one of the world’s most complex corruption environments.’

The global regulatory response to reduce corruption and opportunity for laundering  the proceeds of corruption is set out in the FATF Recommendations 24, 25 and 38, dealing respectively with transparency and beneficial ownership of legal persons and arrangements.  The title of our research is Practical Interventions for Uncovering and Identifying ‘Beneficial Ownership’ as a Mechanism to Recover the Proceeds of Corruption – A Nigerian Case Study. As in the title adopted for this blog, we are trying to find out if a better understanding of the identification and tracking of the beneficial owner can help authorities in their attempts to recover the proceeds of corruption, thereby discouraging individuals’ willingness to accept bribes.

Our project investigates how the current international anti-corruption frameworks function within Nigeria and how they can be better targeted to reduce opportunities for the proceeds of corruption to be moved across the globe while the beneficial owner remains hidden. We start by looking at how the international legal and regulatory anti-corruption frameworks operate in Nigeria and how the various anti-corruption agencies interact with one another. We also examine how the financial system has already been used to move the proceeds of corruption out of the country, looking to see how far beneficial ownership can be tracked through the ownership chains. By way of example, a 20-year investigation into the Abacha family resulted in the recovery of US$1.3 billion of the estimated US$3-5 billion they were suspected of stealing, begging the question of what happened to the rest. In addition to considering a sample of the known cases, we aim to supply more information through a macro-level analysis of international financial flows into and out of the country. This will help to reveal what can be explained by the legitimate claims and liabilities of legal trade and arrangements and what flows are less clear.

Each part of the project will provide information from a different perspective that, when pulled together, creates a picture of how ownership has been hidden and how complex, or even simple, those disguises have been. We aim to provide an evidence base for the Nigerian authorities (accessible to other researchers and policy makers) that may assist their efforts to prevent the movement of, as well as to recover, the proceeds of corruption – funds that otherwise would be available to invest in national development programmes.

Our international team comprises experienced academics and practitioners who all work in the field of anti-money laundering, anti-corruption, and asset recovery and are able to draw from a range of disciplines and practice backgrounds. In addition to our colleagues based within Nigeria (Abdullahi Bello and Abdullahi Shehu), the multidisciplinary team from Northumbria University (Peter Sproat, Tony Ward, Sue Turner, Christopher Mitford, Sinan Gonul, and Alan Doig) is complemented by researchers and practitioners from both the Netherlands (Petrus C van Duyne and Jan van Koningsveld) and Northern Ireland (Sam Sittlington).

Jackie Harvey
Jacqueline Helen Harvey
Professor of Financial Management and Director of Business Research, Newcastle Business School

Coming from the school of critical scholars, Jacqueline Helen Harvey‘s evidence-based work challenges existing frameworks and approaches. Her overall contribution to the discipline is around two main themes: anti-money laundering policy / asset recovery and the criminal interface with internal organisational structure. Harvey is on the editorial board for the European Cross-Border Crime Colloquium that brings together researchers from across Europe. Harvey received her Ph.D. in Taxation Policy from the University of Bradford.

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