When legitimate service is paid for with illegitimate fund
Does the term 'reasonably ought to have known' in our money laundering law infer a duty on recipients of funds to proactively inquire the source of client's funds?
Two recent lawsuits filed by the Economic and Financial Crimes Commission (EFCC) have raised crucial questions about the interpretation of our money laundering and financial crime laws, as well as the prosecution of offenders. The first lawsuit pertains to a criminal charge, while the second is a suit for the forfeiture of money suspected to be proceeds of financial crime.
In the first case, Major General Emmanuel Atewe (Rtd), former Commander of the Joint Task Force (JTF) for the Niger Delta, and four others are facing criminal charges for the alleged theft of N19.7 billion from the accounts of the Nigerian Maritime Administration and Safety Agency (NIMASA). On the 17th of February, 2017 – during the ongoing criminal trial – one of the witnesses testified that N35 million out of the said stolen funds was transferred to Living Faith Church, also known as Winners Chapel, by the former JTF Commander. This understandably sparked a debate on whether the church should return the funds to the agency since the illegitimate source had been revealed. Some queried the church for accepting such a huge sum of money without questioning the legitimacy of the source. Meanwhile, there has been no reported move by the EFCC to retrieve the funds from the church.
However, in the second case, the EFCC did take steps to retrieve funds paid to Senior Advocate of Nigeria, Chief Mike Ozekhome by Governor of Ekiti State, Ayodele Fayose. The sum of N75 million was allegedly paid to the lawyer from a total sum of over N1.2 billion Governor Fayose is accused of receiving from the office of the former National Security Adviser, Sambo Dasuki. The money was reportedly sent to the Governor through the former Minister of State for Defence, Musiliu Obanikoro.
Following the tip-off, the Commission then approached the Federal High Court in Lagos and obtained an ex parte order freezing Governor Fayose's accounts pending the conclusion of investigation and possible prosecution. (The legality of freezing funds in the accounts of a person who cannot be prosecuted due to his subsisting constitutional immunity is an issue for another day.)
Governor Fayose, through his lawyer, Chief Ozekhome, filed a suit at the Federal High Court in Ado-Ekiti challenging the action by the federal anti-graft agency. On the 13th of December, 2016, judgment was delivered in his favour, unfreezing his accounts. Unsurprisingly, EFCC appealed the judgment. But Governor Fayose, in his usual theatrics trumpeted his victory when he stormed the bank to withdraw N5 million in cash. But what the newspapers did not report at the time was that he also transferred the sum of N75 million to the account of Mike Ozekhome's Chambers as part payment for professional fees regarding several cases the senior lawyer was handling for him.
The EFCC then approached the Federal High Court in Lagos and obtained an order of interim forfeiture in respect of the N75 million sent to Ozekhome's law firm by Fayose. Ozekhome immediately filed an application to set aside the order, arguing that he was paid his legitimate fees; therefore, the funds could not be described as proceeds of an unlawful act. Opposing the application to set aside the order of interim forfeiture, the EFFC argued that having handled the suit, the senior lawyer ought to have reasonably known that the money he was been paid was from the proceeds of an unlawful act. And while agreeing that he is entitled to be paid his fees, the agency maintained that he cannot be paid from money that was stolen. As at the time of writing this article, the court was yet to rule on the application to discharge the order of interim forfeiture.
These two scenarios seem to stress the need for citizens to be more alert and ask questions about the sources of funds entering their bank accounts. But there is also a need to closely examine this development to ensure the prosecuting agencies are not giving absurd and ludicrous interpretations to our laws.
I think it is important to first of all stress that, under our money laundering laws, it is a criminal offence – a felony to be precise – to acquire, use, retain or take possession of funds, which a person knows – or reasonably ought to have known – are proceeds of an unlawful act. There is a substantial number of criminal charges against individuals currently undergoing trials based on these laws. For instance, Femi Fani-Kayode is facing a criminal charge in the Federal High Court in Lagos over money he spent as Director of Media and Publicity of the Jonathan-Sambo Presidential Campaign Organization. Former National Publicity Secretary of the
People's Democratic Party (PDP), Olisa Metuh, is also subject of a criminal trial over the source of money he spent during the 2015 campaign. Notable legal practitioner, Mohammed Belgore SAN, and former Minister of National Planning, Prof. Abubakar Suleiman, are also facing trial for allegedly accepting N450 million from funds misappropriated by former Minister of Petroleum Resources, Allison Deziani Madueke.
To what extent can the law be stretched to indict individuals for monies they receive? What is clear is that Winners Chapel and Ozekhome both received funds from individuals acting in their private capacity, albeit they are public officers. A close look at even the prosecutions regarding the PDP presidential campaign funds reveals the same pattern of going after private individuals for money siphoned or 'contributed' from public coffers to the campaign. Neither Femi Fani-Kayode nor Olisa Metuh were public officers at the time the alleged stolen funds they are being accused of retaining were diverted from the public treasury.
The question that arises, therefore, is whether the likelihood of being prosecuted for receiving or retaining money one ought to have reasonably known was pilfered, should impose a responsibility on persons getting paid for legitimate services to ensure he is not being paid from stolen or ill-gotten wealth. A subsidiary issue would be whether a person should be made to forfeit money he lawfully gained by practicing his legal trade because the client paid with stolen fund. One would expect that it is the person who stole money that should be made to repay same.
Is it, therefore, our laws that are problematic or is it the interpretation given by EFCC, who seems to have a goal to beat the Federal Inland Revenue Service (FIRS) to become the highest revenue-generating agency in the current administration?
It would seem a ridiculous interpretation of the money laundering law to say that one must confirm the legitimacy of funds one receives as payment for goods and services. I doubt the intention of the law is to impose a burden on businesses and their proprietors to confirm that the money being paid to them for legitimate transactions was not stolen from the public purse, simply because the client is a public official or has questionable wealth.
It is a different scenario if the individuals or entities are being paid by Federal Government agencies. It is only wise for any corporate entity receiving payment directly from such agencies to be more careful and ensure that procurement policies and procedures, as stipulated under the Public Procurement Act, are adhered to.
However, where the transaction is with a private citizen who just happens to be a public officer, as in Ozekhome's case, should we be encumbered with an extra duty to confirm that the money is legitimately earned by the public officer? And if it is later found out that the money used to pay for the legitimate goods or services was indeed pilfered from government coffers or from any other unlawful activity, on whom rests the liability to return the money – the criminal or the honest man carrying out his trade? And does the term 'reasonably ought to have known' in our money laundering law infer a duty on recipients of funds to proactively inquire the source of client's funds?
The Ozekhome scenario is hardly straightforward. It, however, has the potential to create a precedent that can easily be abused. Like in many other instances in this country, we have the penchant of ignoring potentially dangerous trends until they become entrenched or begin to affect many more people. This is a good time to take this issue very seriously. We must not create new monsters while killing our age-old monster of corruption. Certainly, we must kill corruption before it kills us. But in the anticorruption process, we must not birth other attitudes also capable of killing posterity.
We must fight corruption within the rule of law while upholding the integrity of our judicial system. We must fight corruption without giving bizarre interpretations to our laws. Doing otherwise can only portend danger for a country that is yet to have truly strong and independent institutions. We need to see if the EFCC would pursue the forfeiture of the N35 million by Winners Chapel. Absent this, Nigerians who have thought the freezing of Governor Fayose's account and the prosecution of Ozekhome as political witch-hunt will feel vindicated. A Financial Nigeria columnist, Funmilayo Odude is a Lagos-based legal practitioner, and a public affairs analyst.
Should a person be made to forfeit money he lawfully gained by practicing his legal trade because the client paid with stolen fund?
Acting Chairman of Economic and Financial Crimes Commission, Ibrahim Magu
Governor of Ekiti State, Ayodele Fayose
Senior Advocate of Nigeria, Mike Ozekhome