NIGERIA’S STRUGGLE WITH CORRUPTION HEARING BEFORE THE SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL OPERATIONS OF THE COMMITTEE ON INTERNATIONAL RELATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION MAY 18, 2006 Serial No. 109–172 Printed for the use of the Committee on International Relations ( Available via the World Wide Web: http://www.house.gov/international—relations U.S. GOVERNMENT PRINTING OFFICE 27–648PDF WASHINGTON : 2006 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate Mar 21 2002 12:05 Jul 17, 2006 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 F:\WORK\AGI\051806\27648.000 HINTREL1 PsN: SHIRL COMMITTEE ON INTERNATIONAL RELATIONS HENRY J. HYDE, Illinois, Chairman JAMES A. LEACH, Iowa TOM LANTOS, California CHRISTOPHER H. SMITH, New Jersey, HOWARD L. BERMAN, California Vice Chairman GARY L. ACKERMAN, New York DAN BURTON, Indiana ENI F.H. FALEOMAVAEGA, American ELTON GALLEGLY, California Samoa ILEANA ROS-LEHTINEN, Florida DONALD M. PAYNE, New Jersey DANA ROHRABACHER, California SHERROD BROWN, Ohio EDWARD R. ROYCE, California BRAD SHERMAN, California PETER T. KING, New York ROBERT WEXLER, Florida STEVE CHABOT, Ohio ELIOT L. ENGEL, New York THOMAS G. TANCREDO, Colorado WILLIAM D. DELAHUNT, Massachusetts RON PAUL, Texas GREGORY W. MEEKS, New York DARRELL ISSA, California BARBARA LEE, California JEFF FLAKE, Arizona JOSEPH CROWLEY, New York JO ANN DAVIS, Virginia EARL BLUMENAUER, Oregon MARK GREEN, Wisconsin SHELLEY BERKLEY, Nevada JERRY WELLER, Illinois GRACE F. NAPOLITANO, California MIKE PENCE, Indiana ADAM B. SCHIFF, California THADDEUS G. MCCOTTER, Michigan DIANE E. WATSON, California KATHERINE HARRIS, Florida ADAM SMITH, Washington JOE WILSON, South Carolina BETTY MCCOLLUM, Minnesota JOHN BOOZMAN, Arkansas BEN CHANDLER, Kentucky J. GRESHAM BARRETT, South Carolina DENNIS A. CARDOZA, California CONNIE MACK, Florida RUSS CARNAHAN, Missouri JEFF FORTENBERRY, Nebraska MICHAEL MCCAUL, Texas TED POE, Texas THOMAS E. MOONEY, SR., Staff Director/General Counsel ROBERT R. KING, Democratic Staff Director SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL OPERATIONS CHRISTOPHER H. SMITH, New Jersey, Chairman THOMAS G. TANCREDO, Colorado DONALD M. PAYNE, New Jersey JEFF FLAKE, Arizona GREGORY W. MEEKS, New York MARK GREEN, Wisconsin BARBARA LEE, California JOHN BOOZMAN, Arkansas DIANE E. WATSON, California JEFF FORTENBERRY, Nebraska BETTY MCCOLLUM, Minnesota EDWARD R. ROYCE, California, EARL BLUMENAUER, Oregon Vice Chairman MARY M. NOONAN, Subcommittee Staff Director GREG SIMPKINS, Subcommittee Professional Staff Member NOELLE LUSANE, Democratic Professional Staff Member SHERI A. RICKERT, Subcommittee Professional Staff Member and Counsel LINDSEY M. PLUMLEY, Staff Associate (II) VerDate Mar 21 2002 12:05 Jul 17, 2006 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 F:\WORK\AGI\051806\27648.000 HINTREL1 PsN: SHIRL C O N T E N T S Page WITNESSES Ms. Linda Thomas-Greenfield, Deputy Assistant Secretary, Bureau of African Affairs, U.S. Department of State ...................................................................... 8 Mr. Nuhu Ribadu, Executive Chairman, Economic and Financial Crimes Commission, Federal Republic of Nigeria .......................................................... 24 Mr. David Goldwyn, President, Goldwyn International Strategies ..................... 39 George B.N. Ayittey, Ph.D., Distinguished Economist in Residence, American University ............................................................................................................. 46 LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING The Honorable Christopher H. Smith, a Representative in Congress from the State of New Jersey, and Chairman, Subcommittee on Africa, Global Human Rights and International Operations: Prepared statement ................ 3 Ms. Linda Thomas-Greenfield: Prepared statement ............................................. 10 Mr. Nuhu Ribadu: Prepared statement ................................................................. 28 Mr. David Goldwyn: Prepared statement .............................................................. 42 George B.N. Ayittey, Ph.D.: Prepared statement .................................................. 50 (III) VerDate Mar 21 2002 12:05 Jul 17, 2006 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 F:\WORK\AGI\051806\27648.000 HINTREL1 PsN: SHIRL VerDate Mar 21 2002 12:05 Jul 17, 2006 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 F:\WORK\AGI\051806\27648.000 HINTREL1 PsN: SHIRL NIGERIA’S STRUGGLE WITH CORRUPTION THURSDAY, MAY 18, 2006 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL OPERATIONS, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, DC. The Subcommittee met, pursuant to notice, at 2:05 p.m. in room 2172, Rayburn House Office Building, Hon. Christopher H. Smith (Chairman of the Subcommittee) presiding. Mr. SMITH OF NEW JERSEY. The Subcommittee will come to order and good afternoon everybody. When Nigeria became an inde- pendent nation on October 1st, 1960, that development was seen as a major leap forward for Africa. Its most populous nation would now govern itself and use its tremendous natural and human re- sources for the benefit of its more than 100 million citizens, and the rest of Africa would enjoy at least residual benefits. Unfortu- nately, Nigeria’s blessings have not proved to be as widespread as was hoped. This great nation has gained a reputation for corruption that is difficult to overcome. It is not the only nation consistently ranked high on Transparency International’s Corruption Perceptions Index; however the reach of Nigeria’s fraud peddlers exceeds that of most other nations. Many of us who use the Internet have re- ceived solicitations to claim foreign funds abandoned in some for- eign bank account. These schemes, known as 419 scams after the provision in the Nigerian law outlawing them, are among the issues often cited by those who know little else about Nigeria. There are numerous accounts of retirees and even churches losing many thousands of dollars when Internet users respond to these fraudulent requests. Those who try to obtain someone else’s money are as criminal as those who initiate the scam. Moreover, the Nigerian Government has made a serious effort to address this problem. At the heart of corruption in Nigeria, how- ever, are those who wield government authority. According to a re- port done by Nigeria’s Economic and Financial Crimes Commission last year, the country’s excessive government stole or misused about $400 billion during the last four decades of the 20th century. That amount is about equal to all of the aid given to Africa by Western donors during the same period of time. Nigeria’s people are those who overwhelmingly suffer as a result. According to the World Bank, with Nigeria’s large reserve of human and natural resources, it has the potential to build a pros- perous economy, reduce poverty significantly, and provide the (1) VerDate Mar 21 2002 12:05 Jul 17, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\AGI\051806\27648.000 HINTREL1 PsN: SHIRL 2 health, education and infrastructure services its population de- serves and needs. However, despite the country’s relative oil wealth, poverty remains widespread. About 37 percent of the popu- lation lives in extreme poverty. Testimony in prior congressional hearings has cited corruption as Nigeria’s biggest single problem. It has not only sapped public trust in government, but it has cost the government and the people of Nigeria billions due to corrupt management of public companies, unrealized public projects and deteriorated infrastructure caused by looted maintenance budgets. One of the earliest government scams was the cement scandal of the early 1960s in which a grand public housing plan was an- nounced where vast quantities of cement were purchased from for- eign contractors, but far more cement was ordered than was need- ed. Overloaded Nigerian ports saw ships loaded with cement backed up for miles out to sea. Corrupt officials made profits, how- ever, from selling cement import licenses. But the promised hous- ing was never constructed on the scale that had been envisioned. Another 1960s scandal involved an aluminum smelter that was supposed to be part of the industrialization of Nigeria. Unfortu- nately, corrupt manipulators drove the cost of the smelter up to $2.4 billion, which was 60 to 100 percent higher than comparable plants elsewhere in the developed world. Once completed, the smelter never operated above a fraction of its capacity. More recently, in 2003, a commission of inquiry was appointed to investigate the collapse of Nigerian Airways. That commission found that former top airline officials, Federal cabinet members and high-ranking civil servants were to blame for the nation’s air- lines collapse through waste and misappropriation of funds. One of the hallmarks of Nigerian corruption is that top officials most responsible for the looting of public enterprises are almost never punished for their crimes or forced to return the funds that they have stolen. Even President Obasanjo, who is seen as a cam- paigner for transparency, has failed to bring to justice the many corrupt officials who have yet to answer for their crimes. Corruption in Nigeria squanders the vast resources available to