Avoidable Pitfalls in the Management of Public Funds : A Financial Crime Prosecutor’s - PowerPoint Presentation

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Avoidable Pitfalls in the Management of Public Funds : A Financial Crime Prosecutor’s Perspective .

Speaker: Chief Godwin Obla , SAN, FCIArb . (with Assistance from Damilare George Adeyemi Esq)Paper delivered to the Governing Council of the University of Nigeria, Nsukka, Nigeria at Abuja on the 31st of January 2014

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Contents

Definition of Seminar TopicIgnorance of the Law is no ExcuseAvoidable Pitfalls Tips.Graphic Enumeration of Relevant Laws vis-a-vis the Applicable Statutory ProvisionsCore Areas to be Scrupulously Followed and Attendant Consequences of ViolationsTypical Nigerian Attitude and the Consequential Price to be Paid.

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Attempted Definition of Seminar Topic

Pitfalls within the purview of this text connote the attendant dangers/consequences of violations of acts and activities statutorily regulated under the Nigerian laws.Avoidable Pitfalls in the Management of Public Funds from a financial Crime prosecutor’s perspective imply due compliance with the relevant provisions of the Applicable laws relating to the management of public funds to obviate the inherent dangers/consequences of violations of financial acts/activities sanctioned under the Nigerian laws. 3Slide4

Ignorance of the Law is no Excuse

To avoid Pitfalls observe the following tips with care:Know the relevant lawsKnow the relevant statutory provisions relating to financial crimesKnow the prescribed procedures for Management of Public Funds and FollowKnow the scope, extent and limit of your role , duty or responsibility.

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Graphic Enumeration of Relevant Laws

UNIVERSITY OF NIGERIA ACT CAP. U11 LFN ,2004.ECONOMIC AND FINANCIAL CRIMES COMMISSION (ESTABLISHMENT ) ACT 2004.MONEY LAUNDERING (PROHIBITION ) ACT 2011PUBLIC PROCUREMENT ACT ,2007CORRUPT PRACTICES AND OTHER RELATED OFFENCES COMMISSION ACT 2003.

CODE OF CONDUCT BUREAU AND TRIBUNAL ACT C.15 LFN 2004

FISCAL RESPONSIBILITY ACT 2007

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What is the Status of Members of the University Governing Council

:Simply put; the Status of members of the University Governing Council, except where otherwise stated by the law, is that of a Public Officer:Public Officer ,under paragraph 14 of the Second Schedule of the Code of Conduct Bureau and Tribunal Act , include Chairmen and members of the Boards of other government bodies and staff of statutory corporations and of companies in which the Federal or any State Government has controlling interest.

The members of the University Governing Council ,under

Part II of the fifth Schedule to the 1999 Constitution of the Federal Republic of Nigeria (as amended) are qualified as Public officers)

Pursuant to Part II of the fifth Schedule to the 1999 Constitution of the Federal Republic of Nigeria (as amended) Public

Officers include:

Chairman and members of the Boards or other governing bodies and staff of statutory incorporations and of companies in which the Federal or State Government has controlling interest.

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The Governing Council or Finance and General Purposes Committee of the Governing Council control the University Funds subject to the direction of the Governing Council of this University.( See Section 6 (1) & (2) of the University of Nigeria Act)

The Finance and General Purposes Committee/Governing Council are expected to comply with the provisions of any other statutes made by the University( in relation to public funds) subject to the University of Nigeria Act.(See Section 10 (1) of the University of Nigeria Act)7Slide8

Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActIntro: The Economic and Financial Crimes Commission (EFCC) was established by section 1 of the Economic and Financial Crimes Commission Act and is charged with enormous responsibilities which include; the investigation of all financial crimes to wit; advance fee fraud , money laundering , counterfeiting ,illegal charge transfers, futures market fraud, fraudulent encashment of negotiable instruments, computer credit card fraud, contract scam, etc (See Section 6 of the EFCC Act).Section 7 (1) of the Economic and Financial Crimes Commission Provides The Commission has power to (a) cause investigations to be conducted as to whether any person ,corporate body or organization has committed an offence under this Act; and (b) cause investigations to be conducted into the properties of any persons if it appears to the Commission that the person’s life style and the extent of his properties are not justified by his source of income.

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActThe EFCC is Charged with the responsibility of enforcing the following provisions:the Money Laundering Act 2004;No.7. 1995 No.13the Advance Fee Fraud and Other Fraud Financial Related Offences Act 1995;the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act , as amended;

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC Act(d) the Banks and Other Financial Institution s Act 1991,as amended ; (e) Miscellaneous Offences Act ;(f) any other law or regulation relating to Economic and Financial Crimes, including Criminal and Penal code.(See section 7(2) of the EFCC Act)PITFALLS /CONSEQUENCES OF VIOLATIONS IDENTIFIED VIS-A-VIS THE EFCC ACT.

Any member of this Governing Council who gives false information or makes any misrepresentation in material particular commits an offence and such offender is liable to a term of imprisonment not less than 3 years and not more than 5 years. (See section 16 (1) & (2) of the EFCC Act)

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActAny member of this Governing Council who ; whether by concealment , removal from jurisdiction ,transfers to nominees or otherwise retains the control of the proceeds of an Economic or financial crime on behalf of another person knowing that the proceeds are as a result of criminal conduct by the principal; or knowing that any property in whole or in part directly or indirectly representing another person’s proceeds of an economic or financial crime , acquires or uses that property or has possession of it , commits an offence and is liable on conviction to imprisonment for a term not less than 3 years or to a fine equivalent to 100 per cent of the value of the proceeds of the economic or financial crime or to both such imprisonment and fine . (See

section 17(a) & (b) of the EFCC Act)

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActCONSEQUENCE OF VIOLATION:Public officer who engages;in the acquisition , possession or use of property knowing at the time of its acquisition , possession or use that such property was derived from any offence under this Act.

in the management , organisation or financing of any offence under this Act;

in the conversion or transfer of property knowing that such property is derived from any offence under the EFCC Act ; or

in the concealment or disguise of the true nature , source , location, disposition , movement, rights with respects to or ownership of property knowing that such property is derived from any offence under this Act, commits an offence under this Act; and is liable on conviction to the penalties provided in Section 18(2) of the EFCC Act .

is liable for a term of imprisonment not less than 2 years and not more than 3 years(See Section 18(2) of the EFCC Act):

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActAny person convicted of an offence under the EFCC Act shall forfeit to the Federal government of Nigeria: all the assets and properties which may or are the subject of an interim order of the court after an attachment by the commission as specified in section 26 of this Act;Any asset or property confiscated , or derived from any proceeds the person obtained directly or indirectly as a result of such offence not already disclosed in the assets declaration form specified in Form A of the schedule to this Act or not falling under paragraph ‘a’ above.

Any of the person’s property or instrumentalities used in any manner to commit or to facilitate the commission of all offence not already disclosed in the declaration of assets form or not falling under paragraph A of this subsection (See section 20(1) of the EFCC Act).

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActASSETS DECLARATION UPON ARREST :CONSEQUENCE OF VIOLATION A person arrested for the commission of an offence under this Act, such person shall make a full disclosure of all his assets and properties by completing the declaration of assets form as specified in form A of the schedule to the EFCC Act and shall be investigated by the EFCC and if he –Knowingly fails to make full disclosure of his assets and liabilities; or

Knowingly make a declaration that is false; or

Fails ,neglect or refuses to make a declaration or furnishes any information required, in the declaration of assets form ,

Commits an offence under this Act and is liable on conviction to imprisonment for a term not exceeding 5 years. (See section 27 (1)(2) & (3) of the EFCC Act)

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Core Areas to be Scrupulously followed vis-a-

vis the EFCC ActA person who-wilfully obstructs the EFCC or any authorised officer of the EFCC in the exercise of any of the powers conferred on the commission by this Act; orfails to comply with any lawful enquiry or requirement made by any authorised officer in accordance with the position of the EFCC Act, commits an offence under this Act and is liable on conviction to imprisonment for a term not exceeding 5 years or to a fine not below the sum of 500,000 or to both such imprisonment and fine. (See Section 38(2) of the EFCC Act).

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Core Areas to be Scrupulously followed vis-a-

vis Money Laundering Act(2011)(As Amended)PITFALLS IDENTIFIED VIS-A-VIS THE ML ACT (2011).Every person or body corporate shall not, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding:N5,000,000 or its equivalent, in the case of an individual ;or

N10,000,000 or its equivalent in the case of a body corporate. (See Section 1 of the EFCC Act.)

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Core Areas to be Scrupulously followed vis-a-

vis Money Laundering Act(2011)(As Amended)Public Officers should observe risks management system in place respecting financial transactions involving their institutions. {See Section 3(8) of MLA (2011)}. CONSEQUENCE OF VIOLATION:Person who-converts or transfers resources or properties derived directly from :Illicit traffic in narcotics drug or psychotropic substances; or {See Section 15(1) of MLA (2011)}.

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Core Areas to be Scrupulously followed vis-a-

vis Money Laundering Act(2011)(As Amended)(ii) Participation in an organised criminal group and racketeering , terrorism, terrorist financing, trafficking in human being and migrant ,smuggling, tax evasion , sexual exploitation, illicit arms trafficking in stolen and other groups, bribery and corruption, counterfeiting currency , counterfeiting and piracy of products, environment crimes, murder, grievous bodily injury, kidnapping, illegal restraints and hostage takings, robbery or

thefts,

smuggling,

extortion

,

forgery

, piracy , insider trading and market manipulation and any other criminal act specified in this Act, or any other legislation in Nigeria relating to money laundering illegal bunkering , illegal mining with the aim of either concealing or disguising the illicit origin of the resources or property or aiding any person involved to evade the illegal consequences of his action;

{See Section 15(1) of MLA (2011)}.

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Core Areas to be Scrupulously followed vis-a-

vis Money Laundering Act (2011)(As Amended)(b) collaborate in concealing of disguising the genuine nature, origin, location, disposition, movement or ownership of the resources property or right thereto derived directly or indirectly from the Act specified in paragraph a of this subsection commits an offence under this section and is liable on conviction to imprisonment for a term not less than 5 years but not more than 10 years. {See Section 15(1) of MLA (2011)}.

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Core Areas to be Scrupulously followed vis-a-

vis Money Laundering Act(2011)(As Amended)CONSEQUENCE OF VIOLATIONA person who commits an offence under section 15 (1) of MLA 2011 shall be subject to the penalties specified in that subsection notwithstanding that the various acts constituting the offence were committed in different country or places. {See Section 15(2) of MLA (2011)}.20Slide21

Core Areas to be Scrupulously followed vis-a-

vis Money Laundering Act(2011)(As Amended)A person who –conspires with, aids, abets, or counsels any other person to commits an offence; attempts to commit or is an accessory to an act or offence; orIncites, procures or induces any other person by any means whatsoever to commit an offence under this Act, commits an offence and is liable on conviction to the same punishment as is prescribed for that offence under this Act.

{See Section 18 of MLA (2011)}.

FRN V. SABIT IKUFORIJI & ANOTHER

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Core Areas to be Scrupulously followed vis-a-

vis the Public Procurement Act (2007).PITFALLS IDENTIFIED VIS-A-VIS THE PUBLIC PROCUREMENT ACT The Council as public officer must comply with the procedures for procurement under the Public Procurement Act subject to prior review thresholds as may from time to time be set by either the Bureau particularly under section 7 (1) (a)-(b) or by the relevant statutes; {See Section 15 (1) (a) of PP Act(2007)} Procurement should be :

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Core Areas to be Scrupulously followed vis-a-

vis the Public Procurement Act (2007). based only on procurement plans supported by prior budgetary appropriations and no procurement proceedings shall be formalised until the procuring entity has ensured that funds are available to meet the obligations and subject to the threshold in the regulations made by the Bureau has obtained the “Certificate of ‘No Objection” from the Bureau. (may not be applicable in the light of the University autonomy granted by the Federal Government of Nigeria to Nigerian Universities) by open competitive bidding

in a manner which is transparent , timely, equitable for ensuring accountability and conformity with this Act and regulations deriving

therefrom

.

{ See Section 16 (1) of PP Act(2007)}

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act(2007)With the aim of achieving value for money and fitness for purpose.In a manner which promotes competition, economy and efficiencyIn accordance with the proceedings and timeline laid down in PP Act(2007)

and as may be specified by the Bureau from time to time.

{ See Section 16 (1) of PP Act(2007)}.

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act(2007)where the Bureau has set prior review thresholds in the procurement regulations , no funds shall be disbursed from the threshold of Federation Account or any Bank Account of any procuring entity for any procurement falling above the thresholds unless the cheque , payment or other forms of request for payment is accompanied by “Certificate of ‘No Objection” to an award of contract duly issued by the Bureau.25Slide26

Core Areas to be Scrupulously followed vis

-a-vis Public Procurement Act(2007)Code of Conduct of Public Officers involved in Public Procurement:All public officers involved in public procurement and disposal of Assets shall maintain the highest standard of ethics in their relationship with persons real or corporate who seeks government commerce whether as a bidder, supplier, contractor ,or service provider by developing transparent , honest and professional relationships with such persons. {See Section 57(8) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act(2007) Every public officer involved directly or indirectly in matters of public procurement and disposal of assets shall :divest itself of any interest or relationships which are actually or potentially inimical or detrimental to the best interest of Government and the underlining principles of PP Act(2007)Act ; and

Not engaging or participate in any commercial transaction involving the Federal Government its Ministries, extra ministerial departments, corporations where his capacity as public officer is likely to confer any unfair advantage –pecuniary or otherwise on him or any person directly related to him. {

See Section 57(8) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis

-a-vis Public Procurement Act (2007)any person who engages in public procurement and disposal of assets who has assumed , or is about to assume, a financial or other business outside business relationship that might involved a conflict of interest, must immediately declare to the authorities any actual or potential interest. {See Section 57(10) of PP Act (2007)} such a declaration shall bring to the notice of the relevant authority that a conflict of interest already exist. {

See Section 57(11) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act (2007)Conflicts of interests exist where a person :Possesses an interest outside his official duties that materially encroaches on the time or attention which should otherwise be devoted to affairs of government.Possesses a direct or indirect interest in or relationship with a bidder ,supplier, contractor, or service provider that is inherently unethical or that may be implied or constructed to be , or make possible personal gain due to the person’s ability to influence dealings;

Entertains relationships which are unethical , rendering his attitude partial toward the outsider for personal reasons or otherwise inhibit the impartiality of the persons business judgment ; {

See Section 57(12) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act (2007)Places by acts or commissions the procuring entity he represents or the Government in an equivocal , embarrassing , or ethically questionable position;entertains relationships compromising the reputation or integrity of the procuring entity he represents or the Government.receives benefits by taking personal advantage of an opportunity that properly belongs to the procuring entity he represents or the government.

creates a source of personal revenue or advantage by using public property which comes into his hands either in course of his work or otherwise ; and

Disclose confidential information being either the property of his procuring entity , the Government or to a supplier , contractor, or service to unauthorized persons. {

See Section 57(12) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act (2007)Offences to which a person/public officer may be liable under this Act include:entering or attempting to enter into a collusive agreement whether enforceable or not , with a supplier, contractor or consultant where the prices quoted in the respective tenders , proposals or quotations are or would be higher than would have been the case had there not been collusion between the persons concerned ;conducting or attempting to conduct procurement fraud by means of fraudulent and corrupt Act, unlawful influence , undue interests, favour, agreement , bribery or corruption;

directly , indirectly, or attempting to influence in any manner the procurement process to obtain an unfair advantage in the award of a procurement contract;

splitting of tenders to enable the evasion of monetary threshold set; {

See Section 58(4) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis-a-

vis Public Procurement Act (2007)(e) Bid rigging ;(f) Altering any procurement document with the intent to influence the outcome of a tender proceeding ;(g) Altering or using fake documents or encouraging their use and wilful refusal to allow the Bureau or its officers to have access to any procurement records. {See Section 58(4) of PP Act (2007)}CONSEQUENCE OF VIOLATION

Any person who while carrying out his duties as an officer of the Bureau , or any procuring entity who contravenes any provision of this Act commits an offence and is liable on conviction to a cumulative punishment of :

a term of imprisonment of not less than 5 calendar years without any option of fine ; and

b) summary dismissal from government service.

{

See Section 58(5) of PP Act (2007)}

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)PITFALLS IDENTIFIED VIS-A-VIS The CPC Act (2003)Offence of Accepting Gratification.Penalty: 7 years imprisonment. See Section 12 of the CPC Act (2003).Corrupt offers to Public Officers.

Penalty: 7 years imprisonment.

See Section 13 of the CPC Act (2003).

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)Corrupt demands by persons.Penalty: 7 years imprisonment. See Section 14 of the CPC Act (2003).Fraudulent Acquisition of Property.Penalty: 7 years imprisonment.

See Section 15 of the CPC Act (2003).

Fraudulent Receipt of Property.

Penalty: Guilty of felony.

See Section 16 of the CPC Act (2003).

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)Penalty for offences committed through postal system.Penalty: 7 years imprisonment. See Section 17 of the CPC Act (2003).Deliberate frustration of investigation by the Commission.Penalty: Guilty of felony & liable to 7 years imprisonment.

See Section 18 of the CPC Act (2003).

Making false statement or returns.

Penalty: 7 years imprisonment.

See Section 19 of the CPC Act (2003).

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)Offence of giving or Accepting Gratification through Agent. Penalty: 5 years imprisonment or a fine not less than N200,000. See Section 20 of the CPC Act(2003).Bribery of Public officer.

Penalty: 5 years imprisonment

with hard labour. See Section 21 of the CPC Act (2003).

Using office or position for gratification .

Penalty: 5 years imprisonment without option of fine.

See Section 22 of the CPC Act (2003).

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)Forfeiture of gratification and other penalties. : Forfeiture subject of gratification or pay a fine not less than five times the sum or value of such gratification or ten thousand. See Section 23 of the CPC Act (2003)Bribery in relation to auction.Penalty: A fine of the current price of the property the subject of auction and 3 years imprisonment.

See Section 24 of the CPC Act (2003).

Bribery for giving assistance ,etc..., in regards to contract.

Penalty: 7 years imprisonment and a fine not less that 1 million naira.

See Section 25 of the CPC Act (2003).

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)Duty to report bribery transactions.Penalty: A fine not more than one hundred thousand naira or not more than 2 years imprisonment, or both . See Section 26 of the CPC Act (2003).Dealing with, using, holding, receiving or concealing gratification.

Penalty: Not more than 5 years imprisonment.

See Section 27 of the CPC Act (2003).

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Core Areas to be Scrupulously followed vis-a-

vis The CPC Act (2003)Making false or misleading statement to the commission . Penalty: Not more than 7 years imprisonment. See Section 28 of the CPC Act (2003).Attempts ,conspiracies, abetments, punishable as offence.Penalty: Liable for punishment provided for such offences

See Section 29 of the CPC Act (2003)

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Core Areas vis

-a-vis the Code of Conduct Bureau and Tribunal Act C 15 LFN 2004.Conflict of interest with duty : Section 5 of the CCBT Act prohibits a public officer from putting himself in a position where his personal interest conflicts with his duties and responsibilities.Restriction on Specified Officers: Without prejudice to section 5 of the CCBT Act , a public officer shall not:

receive or be paid the emoluments of any public office at the same time as he receives or is paid the emoluments of any other public office; {See Section 6 of the CCBT Act}.

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Core Areas vis-a-

vis the Code of Conduct Bureau and Tribunal Act C 15 LFN 2004.Prohibitions of foreign accounts; public officers cannot operate or maintain a foreign account. See Section 7 of the CCBT Act.41Slide42

Core Areas vis

-a-vis the Code of Conduct Bureau and Tribunal Act C 15 LFN 2004.Gifts or benefits in Kind: A public officer shall not ask for or accept any property or benefits of any kind for himself or any other person on account of anything done or omitted to be done by him in the discharge of his duties. (See section 10(1) of CCBTA)Receipt of gift or benefit in kind by public officer from entity having contract with the Government is presumed to have contravened the provision of section 10(1) of CCBTA (See section 10(2) of CCBTA).But gifts/benefits received by a public officer from relatives or personal friends particularly during public or ceremonial occasions are exempted. (See section 10(3) of CCBTA)

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Core Areas vis-a-

vis the Code of Conduct Bureau and Tribunal Act C 15 LFN 2004.Bribery of Public Officers: property/gift/benefits offer to induce a public officer in order to secure a favour((See section 12 of CCBTA).Abuse of Powers : Public officer’s unlawful intentional acts prejudicial to people’s rights or contrary to any government policy. (See section 13 of CCBTA)Membership of any society incompatible with the functions or dignity of office of the members of the University governing Council (See section 14 of CCBTA)

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Core Areas vis-a-

vis the Code of Conduct Bureau and Tribunal Act C 15 LFN 2004.CONSEQUENCE OF VIOLATIONS:The following punishments may be imposed on any public officer in contravention of any provisions of CCBTA : Vacation of officeDisqualification from holding office (whether elective or not) for a period not exceeding ten years; and

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Core Areas vis-a-

vis the Code of Conduct Bureau and Tribunal Act C 15 LFN 2004.Seizure and forfeiture to the state of any property acquired in abuse or corruption of offence. (See section 23(1) & (2) of CCBTA) It is of prime importance to note that the above punishments are without prejudice to the additional punishments prescribed by any other written law in force in Nigeria for the same offence. (See section 23(3) of CCBTA) Fiscal Responsibility Act: No punishments provisions.

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Typical Nigerian Attitude and the Consequential Price to be Paid.

Relevant Case Of Federal Republic Of Nigeria V. Sabit Ikuforiji & Another.Conclusion: The only assured way guaranteed under the Nigerian laws to avoid the pitfalls inherent and incidental to the management of public funds is nothing (else)other than the due compliance with all the relevant provisions under the Nigerian laws(the university statutes inclusive) respecting the management of public funds as copiously adumbrated earlier. For the umpteenth time; ignorance of the law is no excuse. Thanks.

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