1.1 Background of the Study
To say that corruption is rampant in Nigeria is to over flog the obvious. Corruption in Nigeria, as it presently manifested can be appropriately termed endemic or systemic. Corruption is an effort to secure wealth or power through illegal means for private benefit. Corruption like cockroaches has coexisted with human society for a long time and remains as one of the problems in many of the world’s developing economies with devastating consequences. Corruption as a phenomenon, is a global problem, and exists in varying degrees in different countries (Agbu, 2003).
Corruption is found in democratic and dictatorial politics; feudal, capitalist and socialist economies. Christian, Muslim, Hindu and Buddhist cultures are equally bedeviled by corruption. Corrupt practices did not begin today; the history is as old as the world. Ancient civilizations have traces of widespread illegally and corruption. Thus, corruption has been ubiquitous in complex societies from ancient Egypt, Israel, Rome and Greece down to the present (Lipset & Lenz, 2000). This does not, however, mean that the magnitude of corruption is equal in every society some Countries are more corrupt than others! As George Orwell notes in his widely read book, Animal Farm: All animals are equal, but some animals are more equal than others.
In Nigeria, it is one of the many unresolved problems (Ayobolu, 2006) that have critically hobbled and skewed development. It remains a long-term major political and economic challenge for Nigeria (Sachs, 2007). It is a canker worm that has eaten deep in the fabric of the nation. It ranges from petty corruption to political/bureaucratic corruption or Systemic corruption (international Center for Economic Growth, 1999). World Bank studies put corruption at over $1 trillion per year accounting for up to 12% of the Gross Domestic Product of nations like Nigeria, Kenya and Venezuela (Nwabuzor, 2005).
A corruption is endemic as well as an enemy (Agbu, 2003). It is a canker worm that has eaten deep in the fabric of the country and has caused stunted growth in all sectors (Economic and Financial Crime Commission (EFCC), 2005). It has been the primary reason behind the country’s difficulties in developing fast (Independent Corrupt Practices Commission (ICPC), 2006). This is evident that Transparency International has consistent rating of Nigeria as one of the top three most corrupt countries in the world (Ribadu, 2003).
As part of effort at fighting corruption and strengthening the economy, Nigeria embarked on an aggressive pursuit of economic reform that through privatization, banking sector reform, anticorruption campaigns and establishment of clear and transparent fiscal standards since 1999.
The major aim of the economic reforms in Nigeria is to provide conducive environment for private investment (African Economic Outlook, 2006). The reform process has the following key pillars: improved macroeconomic management, reform of the financial sector, institutional reforms, privatization and deregulation, and improvement of the infrastructure for economic growth and development. The poor state of electricity, transport and communications is a major handicap for doing business in Nigeria.
Coming down to a heterogeneous country like Nigeria which consists of groups with distinct cultures and languages, and cohabiting together as a federation, a varied version of corruption like tribalism, nepotism, and favouritism are not uncommon. To further compound the problem of the elusiveness of corruption, the Anti- Corruption Law (2000), defines corruption as, “including bribery, fraud and other related offences”. However, what seems to unify all available definitions on corruptions is that it is a socio-political, economic and moral malaise. It is an evil wind that does no one any good. Until 2000, the offence of corruption was regulated by criminal and penal code. Sometimes in the 80s the military regime of General Mohammed Buhari made a decree to regulate indiscipline and corrupt practices in Nigeria. The programme was tagged War Against Indiscipline and Corruption (WAIC). When President Obasanjo assumed office in 1999, the first step he took in fighting corruption was the establishment of a commission called Independent Corrupt Practices and Other Related Offeces Commission (ICPC). One innovation of both the act of offering or receiving bribe. For instance, section 99i) and (b) of the Act states
“Anybody who gives confers or procure to give any property or benefits of any kind to, on or for a public officer or to, on or for any other person; or promises offers to give property of or benefits of any kind to or for a public officer on account of any act omission or commission, favor or disfavor to be done or shown by the public officer is guilty of an offence of official corruption and shall on conviction be liable to imprisonment for five or seven years (ICPC Act, 2000)”.
There are two statutes regulating the offences in Nigeria ICPC Act 2003 and EFCC Act 2004. But EFCC seems to have taken the shine out of ICPC because since its inception, ICPC has never prosecuted successfully any corruption case but EFCC has successfully prosecuted a lot of highly place persons in Nigeria.
There are many unresolved problems in Nigeria, but the issue of the upsurge of corruption is particularly troubling. And the damages it has done to the polity are astronomical. The menace of corruption leads to slow movement of files in offices, police extortion on highways and slow traffics on the highways, port congestion, queues at passport offices and gas stations, ghost workers syndrome, election irregularities, among others. Even the mad people on the street recognize the havoc caused by corruption—the funds allocated for their welfare disappear into the thin air. Thus, it is believed by many in the society that corruption is the bane of Nigeria. Consequently, the issue keeps reoccurring in every academic and informal discussion in Nigeria. And the issue will hardly go away. Some writers say that corruption is endemic in all governments, and that is not peculiar to any continent, region and ethnic group. It cuts across faiths, religious denominations and political systems and affects both young and old, man and woman alike.
Since corruption is not new, and since it is a global phenomenon, it is not peculiar to Nigeria. However, corruption is pandemic in Nigeria (and in many other African and Asian nations); the leaders as well as the followers are corrupt. Consequently, it has defied all the necessary medicines. Corruption is a threat to democracy and economic development in many societies. It arises in the ways people pursue, use and exchange wealth and power, and in the strength or weakness of the state, political and social institutions that sustain and restrain those processes. Perhaps, because corruption has received an extensive attention in the communities and due to the fact that it has been over-flogged in the academic circles, corruption has received varied definitions. Corruption has broadly been defined as a perversion or a change from good to bad. Specifically, corruption or corrupt behavior involves the violation of established rules for personal gain and profit (Sen 1999). Corruption is efforts to secure wealth or power through illegal means private gain at public expense; or a misuse of public power for private benefit (Lipset & Lenz, 2000).
In addition, Corruption is a behaviour which deviates from the formal duties of a public role, because of private (gains)—regarding (personal, close family, private clique, pecuniary or status [gains]. It is a behaviour which violates rules against the exercise of certain types of [duties] for private (gains)—regarding influence (Nye, 1967). The definition includes such behavior as bribery (use of a reward to pervert the judgment of a person in a position of trust); nepotism (bestowal of patronage by reason of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public resources for private uses (Banfield, 1961). To the already crowded landscape (Osoba, 1996), adds that corruption is an anti-social behaviour conferring improper benefits contrary to legal and moral norms, and which undermine the authorities to improve the living conditions of the people. Even though some of these definitions of corruption have been around for the over decades, the recent development in Nigeria where discoveries of stole public funds into billions of US Dollars and Nigeria Nair, make these definitions adequate and appropriate. Corruption is probably the main means to accumulate quick wealth in Nigeria. Corruption occurs in many forms, and it has contributed immensely to the poverty and misery of a large segment of the Nigerian population.
In the real sense, political corruption is the use of legislated powers by government official for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage, graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and human tracking, it is not restricted to these activities. The activities that constitute illegal corruption differ depending on the country or jurisdiction. For instance, certain political funding practices that are legal in one place may be illegal in another. In some cases, government officials have broad or poorly defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide, bribery alone is estimated to involve 1 trillion US dollars annually. A state of unrestrained political corruption is known as a kleptocracy, literally meaning “rule by thieves”.
1.2 Statement of the Problem
A nation where financial and economic crimes are endemic cannot attain economic stability, growth and development.
According to Irving Kristol’s (2OO7), the problem is always far more important than devising a solution, for he who can define the problem has always exercised a large degree of intellectual sovereignty over the range of possible solutions that must be imagined Nigeria being a country where corruption is pandemic has been rated both domestically and internationally as a corrupt nation. Public officials take huge bribes and the cost of public goods and services are inflated, government often pays for nonexistent goods and services. Even when such corrupt practices are exposed, it has always been played to the gallery and sacrificed at the altar of backside bargaining. The corrupt practices that have characterized and painted the nation black include fraud, embezzlement, falsification of financial information, obtaining by false pretense, lack of transparency and accountability among others.
These evils have in no small measure negated economic stability, growth and development in our country. Experience has shown that both the public and private sectors have continued to suffer inefficiency and ineptness and that growth indices and graph are having a downward slope. This has brought the pertinent question — are there adequate control measures and checks to stem this ugly tide (corruption)?
Poor and insincere policy conception, formulation and implementation on economic and financial crimes in Nigeria have been responsible for the low achievement recorded in curbing and stamping out economic and financial crimes in the country. Hence, the emergence of the “Economic and financial crimes commission to enhance financial accountability and transparency in Nigeria.”
1.3 Aims/Objectives of the Study
The major aim of this study is to assess the contributions of EFCC in promoting financial accountability and transparency in Nigeria. The objectives include:
1. To analyze week government in Nigeria
2. To examining corruption in public service
3. To examine the responsibilities and functions of EFCC.
4. To carry out a comprehensive analysis on the contributions of EFCC in detecting and controlling fraud in Nigeria.
5. To examine how effective EFCC contributions benefited Nigeria public and private sectors since her inception.
6. To examine the contributions of EFCC in enhancing financial accountability and transparency.
7. To effectively examine the achievements and successes of the commission.
1.4 Significant of the Study.
The research work will be useful and moreover be a source of information to the followings
• Government with this research work will be witty and aware of the extent the activities of EFCC has contributed in administration and controlling of fraud in Nigeria. It will also be of great significant in examining the area of weakness and how best to improve them for effective regulation of fraud.
• To the academic, the research work will help them formulate more theories and strategies that will enhance the effectiveness of EFCC in ensuring financial accountability and transparency. It will also contribute to the enrichment of literature on EFCC and serve as a body of reserved knowledge to be referred to by researchers.
• Public sector, by this we mean all government parastatals, institutions, ministries, corporations etc. FIUs work will expose them to the activities of EFCC.
• Private sector: By this we mean individuals and corporate bodies who have contributed their resources to provide goods and services to the public at a profit. They carry out their various activities which are expected to be done within the ambits of laws and legislations governing their operations. They include sole proprietorship, partnership, corporate organizations among others.
1.5 Research Methodology
This study uses a qualitative research design to gain insight into the Nigerian public service. It explores the depth, richness, and complexity inherent in the sector, by tracing the political history of the country, and the need of having an accountable public sector in the delivery of public goods and services to the citizens. Furthermore, by having an accountable public sector, the government is able to gain the trust of its citizens while performing at its optimum potential. In other to accomplish the purpose of this study as earlier stated, the analysis begins by examining the history of corruption in Nigeria, starting from the colonial period to post-colonial era including democratic and military regimes and up to the new democratic period. It further discusses how these periods have impacted the implied culture of corruption in the public sector.
Since the study explores some of the main causes of corruption in the public sector, it is necessary to look at these causes in order to determine appropriate policy recommendations.
Some of the causes examined include how inequality in the distribution of wealth influences the need for public officials to be corrupt. Nigeria, like many developing countries, is struggling with the social equity issue and public officials who want to be among the higher income class think that the only way to achieve such an ambition will be to embezzle government funds.
Another possible cause that influences public officials to embezzle funds is the poor reward system in the civil service sector, most employees do not feel they are being rewarded based on how much work they put into the service and the only way to reward themselves is to take away from the system that refuses to compensate them. Other factors that influence public officials, need to indulge in corruptible acts will be further examined in the study. The data collected in each of these areas will help in assessing the level of corruption and the urgent need for a change in the public service. In answering questions raised in the case study, it is necessary to use a variety of secondary data ranging from journal articles, newspapers and books. To improve on the reliability and validity of the study, multiple sources were used to minimize the risk of error.
1.6 Literature Review
Different scholars from social sciences, such as; psychology, political science, Economics andreligious studies have attempted a working definition for corruption from their various disciplines. However, all of the working definitions are interwoven. The most relevant definition to this paper is the one given by World Bank, Akindele (1995) and Osoba (1998). The World Bank defines corruption as the abuse of public office for private gain.
Akindele (1995) defines it as any form of reciprocal behavior or transaction where both the power/office holder can respectively initiate the inducement of each other by some rewards to grant (illegal) preferential treatment or favour against the principles and interest of specific organization (or public) within the society. Overall, corruption covers such acts as: a) use of one’s office for pecuniary advantage, b) gratification, c) influence peddling, insincerity in advice with the aim of gaining advantage, d) less than a full day’s work for a full day’s pay, e) tardiness and slovenliness. Osoba (1998, p.378) defines corruption as an “anti-social behaviour conferring improper benefits contrary to legal and moral norms, and which undermine the authorities” to improve the living conditions of the people.
Dike (2011) notes that though some of these definitions of corruption have been around for over decades, the recent development in Nigeria where discoveries of stolen public funds run into billions of US Dollars and Nigeria Naira, make these definitions very adequate and appropriate. He further observes that corruption is probably the main means of accumulating quick wealth in Nigeria. Corruption occurs in many forms, and it has contributed immensely to the poverty and misery of a large segment of the Nigerian population. Corruption has become institutionalized in Nigeria.
Corruption is the colonization of fraudulence; the brazen celebration of impunity, which pollutes the ethical hygiene of a society (Ogbunwezeh, 2005). Corruption is a worldwide phenomenon, but prominent in countries of the third world, particularly in Africa. Johnston and Rose-Ackerman (1997) pointed out that the wide spread of corruption is a symptom of a poorly functioning state, and a poorly functioning state can undermine economic growth. Where corruption is situated in the structural nature of any society, countries with extensive natural resources may fail to develop in a way that benefits ordinary citizens (Edewor and Sokefun, 2002).
In Nigeria, corruption kick-starts a process of social decadence by enthroning the reign of rogues and unvarnished dishonesty. It allows ethical recklessness, and invites a normative chaos, that erodes every social value. In addition, corruption is ‘ behavior which deviates from the formal duties of a public role, because of private-regarding (close family, personal, private clique) pecuniary or status gains; or violates rules against the exercise of certain types private-regarding influence’ (Nye, 1967:417). This definition includes such behavior as bribery (use of a reward to pervert the judgment of a person in a position of trust); nepotism (bestowal of patronage by reason of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public resources for private uses) [Banfield, 1961]. To the already crowded landscape, Osoba (1996) adds that corruption is an anti-social behavior conferring improper benefits contrary to legal and moral norms, and which undermine the authorities to improve the living conditions of the people.
However, attempts to identify corruption with specific legal or moral offences are unlikely to succeed. Perhaps the most plausible candidate is bribery: bribery is regarded by some as the quintessential form of corruption (Noonan, 1984; Pritchard, 1998). What of nepotism? Surely it is also a paradigmatic form of corruption, and one that is conceptually distinct from bribery. The person who accepts a bribe is understood as being required to provide a benefit to the briber, otherwise it is not a bribe; but the person who is the beneficiary of an act of nepotism is not necessarily understood as being required to return the favour.
In fact, corruption is exemplified by a very wide and diverse array of phenomena of which political corruption is also one of its kinds. Political corruption is the abuse of entrusted power by political leaders for private gain, with the objective of increasing power or wealth (Imohe, 2005). Political corruption need not involve money changing hands; it may take the form of ‘trading in influence’ or granting favours that poison politics and threaten democracy. It occurs when the politicians and political decision-makers, who are entitled to formulate, establish and implement the laws in the name of the people, are themselves corrupt. It also takes place when policy formulation and legislation is tailored to benefit politicians and legislators.
Political corruption in Nigeria encompasses the use of official power and government resources for sordid and disreputable private gains. Political corruption is not a recent phenomenon that pervades the Nigerian State: since the creation of modern public administration in the country, there have been cases of official misuse of resources for personal enrichment (Osoba, 1996). A nation that allows itself the extravagant luxury of entertaining corruption unwittingly commissions the debauchery of its social structures. Corruption empowers, patronizes, and encourages the forces of social retrogression, handing them an unmerited leeway to wreak havoc on the society. It becomes inducted into the social mainstream, when the whole society timidly smiles at impunity; tolerates unmerited stations; glorifies the success or triumph of dishonesty; permits the diffusion of double standards; celebrates indiscipline; and encourages the ostentatious arrogance of unearned privileged (Ogbunwezeh, 2005).
To this end, every society that desires progress must do ceaseless battle with the constant attempt of negative forces to bring the social structure under its Inglorious dominance. This is because corruption as a disintegrative social factor often prevents social, political and economic development of a nation, just as poverty works against enduring democracy.
Aluko (2002) notes that Corruption now appears to have become a permanent feature of the Nigerian polity. It had become completely institutionalized, entered into the realm of culture and the value-system; it is now a norm and no longer an aberration. The young ones are born into it, grow up in it, live with it, and possibly die in it. The aged are not left out as they are re-socialized and begin to conform to it. This observation by Aluko is quite true of the situation in Nigeria where corruption has become endemic. The effect is noticed everywhere. The family is not left out. When parent sends their wards on errand the children will expect some gratification from the parent and some unsuspecting parent gratifying their wards with gifts. When the children grow up, corruption becomes part of their daily life.
It is very easy to talk about corruption, but like many other complex phenomena, it is difficult to define corruption in concise and concrete terms. Not surprising, there is often a consensus as to what exactly constitutes this concept. There is always a danger as well that several people may engage in a discussion about corruption while each is talking about a different thing completely. But in recent years there is a body of theoretical and empirical research on corruption (such as: Elliot 1997; Rose-Ackerman 1999; Gill 1998; Girling 1997; Human Development Cooperation (HDC) 1999; Kaufmann & Sachs 1998; Mauro 1995; Guhan & Paul, 1997; Shleifer & Vishnay, 1993; Stapenhurst & Kpundeh, 1999; Vittal, 1999; World Bank 1997 and the most recently, Farida & Ahmadi-Esfahani, 2007).
To avoid the confusion of definition of corruption, this paper gives an operational definition of corruption as conceptualized by some studies. Corruption is like cancer, retarding economic development. According to Eigen (2001) corruption is seen as a “daunting obstacle to sustainable development”, a constraint on education, health care and poverty alleviation, and a great impediment to the Millennium Development Goal of reducing by half the number of people living in extreme poverty by 2015.
The World Bank defines corruption as the abuse of public office for private gains. Public office is abused through rent seeking activities for private gain when an official accepts, solicits, or extorts a bribe. Public office is also abused when private agents actively offer bribes to circumvent public policies and processes for competitive advantage and profit. Public office can also be abused for personal benefit even if no bribery occurs, through patronage and nepotism, the theft of state assets or the diversion of state resources (World Bank, 1997). A public official is corrupt if he accepts money for doing something that he is under duty to do or that he is under duty not to do. Corruption is a betrayal of trust resulting directly or indirectly from the subordination of public goals to those of the individual. Thus a person who engages in nepotism has committed an act of corruption by putting his family interests over those of the larger society (Gire, 1999).
In Asian Development Bank perspectives of corruption as cited by Agbu (2001), corruption is defined as the behaviour of public and private officers who improperly and unlawfully enrich themselves and/or those closely related to them, or induce others to do so, by misusing the position in which they are placed. Systemic corruption also referred to as entrenched corruption, occurs where bribery (money in cash or in kind) is taken or given in a corrupt relationship. These include kickbacks, pay-off, sweeteners, greasing palms, etc) on a large or small scale. It is regularly experienced when a license or a service is sought from government officials. It differs from petty corruption in that it is not as individualized. Systemic corruption is apparent whenever the administration itself transposes the expected purposes of the organizations; forcing participants to follow what otherwise would be termed unacceptable ways and punishing those who resist and try to live up to the formal norms (International Center for Economic Growth, 1999).
In an elaborate analysis, Alatas (1990) divided corruption into seven distinct types: autogenic, defensive, extortive, investive, nepotistic, supportive, and transitive. Autogenic corruption is self-generating and typically involves only the perpetrator. A good example would be what happens in cases of insider trading. A person learns of some vital information that may influence stocks in a company and either quickly buys or gets rid of large amounts of stocks before the consequences arising from this information come to pass. Defensive corruption involves situations where a person needing a critical service is compelled to bribe in order to prevent unpleasant consequences being inflicted on his interests. For instance, a person who wants to travel abroad within a certain time frame needs a passport in order to undertake the journey but is made to pay bribes or forfeit the trip. This personal corruption is in self-defense. Extortive corruption is the behavior of a person demanding personal compensation in exchange for services. Invective corruption entails the offer of goods or services without a direct link to any particular favor at the present, but in anticipation of future situations when the favor may be required. Nepotistic corruption refers to the preferential treatment of, or unjustified appointment of friends or relations to public office, in violation of the accepted guidelines. The supportive type usually does not involve money or immediate gains, but involves actions taken to protect or strengthen the existing corruption. For example, a corrupt regime or official may try to prevent the election or appointment of an honest person or government for fear that the individual or the regime might be probed by the successor(s). Finally, transitive corruption refers to situations where the two parties are mutual and willing participants in the corrupt practice to the advantage of both parties. For example, a corrupt businessperson may willingly bribe a corrupt government official in order to win a tender for a certain contract.
1.7 Theoretical Framework
The theory that best explain corruption in Nigeria is the theory of Prebendalism as postulated by Richard (1996) which described the nature of Patron-Client relationship in Nigeria. According to theory “state offices are regarded as prebends that can be appropriated by office holder who use them to generate material benefit for themselves and their constituent and kin groups”. In Nigeria, prebendal politics is the order of the day being displayed by political office holders. Thus, corruption is regularly be perpetrated at will and the society at the receiving end. Inevitably, the prebendal nature of Nigeria system in time of its patron-client or identity politics further allows corruption to thrive, undermine and thereby, stagnate the development of Nigerian society. Thus theory contends that corruption in Nigeria is purely an elite and political office holder. It argues that people who engage in crime in such society is not to amass wealth but only a force reaction to the corrupt practices of the ruling class and as a means of barely keeping alive in the face of the ostentatious display of ill-gotten wealth of the ruling class. For example, Karl Marx, leader of materialist approach argue that rather than people’s consciousness determining their well-being, it is the way society organized the production, distribution and exchange of goods and services that determine their material condition.
The aforementioned theory is very significant because it has actually provided adequate explanation for the corruption habit of Nigeria office holders.
1.8 Scope and Limitation of the Study.
The scope of this study tries to take a holistic view of the activities of EFCC in Nigeria and how these can help improve financial accountability and transparency. It embraces their operations both in the public and private sectors with the aim of improving financial efficiency.
This research work would suffer many setbacks due to a lot of reasons. One of such is the inaccessibility of information from the office of EFCC. Presently, they are security conscious and unwilling to disclose information and plans available some write ups and journals which would have been helpful for this research work. Ideally, the work should have involved more states but due to some inherent constraint such as time and money but effort would be made to at least touch a great number of states to have a balance view of this research.
1.10 Definition of Terms.
• EFCC: This is an acronym for Economic and Financial crimes commission. It is a commission created by an act of the National Assembly in 2002 and was amended in 2004. It is charged with the responsibility of investigating and enforcement of all laws against economic and financial crimes.
• FRAUD: The crime of deceiving somebody in order to collect money or goods illegally. It also means a person who pretends to have qualities and abilities, skills etc that he or she does not really have to deceive others.
• It is an acronym for Nigeria Financial intelligent unit. It is an autonomous central national agency, domiciled within EFCC with responsibility of receiving and analyzing financial information.
• INVESTIGATION: This means a special kind of examination of accounts or records carried on by an investigator with the predefined purpose according to the necessity of the situation (Chike Nwoha 2003:33).