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?

Financial Nigeria Magazine - - Contents -

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

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