The ever-shrinking world of asset tracing and recovery – is Africa outsourcing justice?

August 14, 2015

In March 2015 it was announced that Switzerland was to Authors/Presenters return $380 million of “Abacha loot” to Nigeria as part of a 16-year case against the family of the deceased military dictator.

In April 2015, the English High Court ruled that the Segun Osuntokun Republic of Djibouti and its lawyers should pay the Partner In Charge Djibouti businessman, Abdourahman Boreh, £800,000 in London [email protected] legal costs after it was found that the court had been misled when it granted an injunction freezing US$100 million of Mr Boreh’s assets in 2013. The freezing injunction, which was discharged, was to support a civil claim by the Republic of Djibouti seeking the recovery of alleged proceeds of corruption.

Also in April 2015, the Southwark Crown Court in London will restart hearings to determine which assets of James Ibori, the erstwhile governor of Nigeria’s Delta State, should be confiscated following his conviction by the court for money laundering in 2012.

In July 2012, the English High Court awarded Access Bank, a Nigerian bank, judgment in the sum of more £600 million against Dr. Erastus Akingbola (the former CEO of a bank acquired by Access) as damages for misappropriating the bank’s assets and operating an illegal share support scheme that led to the collapse of the bank.

Page 1 of 4 These are all recent cases in which foreign courts have adjudicated on claims stemming from acts of alleged corruption committed in African states. The questions, which they inevitably raise, include: why would a foreign state or corporation turn to a foreign court for assistance in tracing and recovering the proceeds of fraud or corruption and on what basis would a foreign court agree to render any assistance? Or, as I was asked in the aftermath of the judgment in the case against Dr Akingbola, in which my firm acted for Access Bank: are they instances of justice outsourced?

The reality is that justice in corruption and fraud claims is an increasingly international affair. The proceeds of corruption are frequently exported and it takes cooperation between the authorities in home countries and foreign courts to achieve results. In the Abacha case for instance, it was estimated in 2008 that about US$1.2 billion of funds embezzled by the late general had been recovered and returned to Nigeria through a combination of local forfeiture orders, foreign judgments and mutual assistance measures. Many more recoveries have been made since 2008.

In my experience, the English courts are only too willing to play their part in tracing and recovering the proceeds of corruption, provided that the complainant state or corporation is able to satisfy the rigorous conditions for the court to exercise jurisdiction. The simplest way to establish the court’s jurisdiction is by commencing proceedings against and serving court papers on the defendant while in the country: that was the means by which the jurisdiction of the English court was grounded in the claim against Dr Akingbola. Another way is to prove to the court that the proceeds of the fraud are either in or have passed through the country. Once the jurisdiction of the English court is engaged, a claimant then has the chance to deploy one of the most powerful weapons in the field of asset-tracing: the worldwide freezing order. These orders prohibit the defendant from dealing with his worldwide assets and, equally importantly, compel him to disclose their whereabouts.

In exercising jurisdiction in this way, the English court is not usurping the role of the courts in the defendant’s home state. Indeed, the English court will be scrupulous in ensuring that it does not trespass on any proceedings already commenced in the home state. Moreover, frequently the English proceedings will be brought to support court actions that have already

Page 2 of 4 or will be commenced in the home state, as was the case in Djibouti’s claim against Mr Boreh.

Whilst it is therefore simplistic to regard asset tracing and recovery cases brought in English courts as “justice outsourced”, there are elements in the administration of justice in some African countries that lend credence to the perception that justice in corruption cases can be more quickly obtained internationally than domestically. Two cases from Nigeria, already mentioned above, bear this out.

James Ibori was a notoriously corrupt governor of Delta State, one of the oil producing regions in Nigeria. Numerous unsuccessful attempts were made by the Nigerian authorities to prosecute him for his grand scale embezzlement of state resources. In one widely publicised trial, a Nigerian High Court acquitted Mr Ibori of 170 charges of corruption and money laundering brought against him by the Economic and Financial Crimes Commission. Mr Ibori was eventually extradited to the UK from Dubai and charged with money laundering offences under English law. He pleaded guilty to ten charges and was sentenced by Southwark Crown Court to 13 years in prison. Although the Nigerian Court of Appeal has overturned Mr Ibori’s earlier acquittal, the current position is still that a Nigerian court has not convicted him for his corrupt practices.

The case of Dr Akingbola is perhaps even more glaring. Civil and criminal proceedings in Nigeria were commenced against Dr Akingbola in Nigeria in 2009 at roughly the same time as Access Bank commenced proceedings against him in the English High Court. However, whilst the English court awarded the bank judgment against Dr Akingbola in July 2012 and dismissed his appeal in 2013, thereby allowing the bank to enforce the judgment, proceedings in Nigeria have been stalled. An action in the Lagos High Court has had to be restarted twice owing to the re-assignment of the judge hearing the case. An action in the Federal High Court ended in a controversial discharge of the criminal case against Dr Akingbola. Most surprisingly of all, a Nigerian court has refused to allow the judgment of the English Court to be enforced against Dr Akingbola’s assets in Nigeria.

Tracing and recovering the proceeds of fraud and corruption is undoubtedly an international affair: it needs to be, given the ever-shrinking global village we inhabit and the vast flows of capital across borders. African states and corporations should therefore continue to have

Page 3 of 4 recourse to foreign courts in their battles to recover such proceeds without fear that they are outsourcing justice. However, at the same time, much needs to be done to improve the administration of justice in many African countries, so that they are seen to play an effective role in the fight against corruption, fraud and grand scale embezzlement of state funds.

Article commissioned by African Banker magazine and published in the Q2 2015 edition.

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This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.

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