By Rose Audu
A civil society group under the auspices of Civil Society Legislative Advocacy Center (CISLAC) Wednesday engaged stakeholders from various sectors to deliberate on issues of Illicit Financial Flows in Nigeria, with focus on corruption in global trade disputes through the instrument of investor-state arbitrations.
Speaking on the case of the Process & Industrial Developments Limited, otherwise known as P and ID versus the Federal Republic of Nigeria, the Executive Director of CISLAC, Auwal Ibrahim Musa Rafsanjani said the organization will not take a stand on the case, but rather urge all to learn from it and prevent future occurrence.
According to Auwal, the aim of the engagement meeting is to “have a deliberate dialogue with key stakeholders from the anti-corruption institutions, civil society organisations and the media to share and exchange knowledge and practices around Illicit Financial Flows.”
Auwal who expressed sadness over the situation of Nigeria regarding Illicit Financial Flows (IFFs) and Money Laundering (ML) also noted that it is extremely a challenging one.
According to him, Nigeria loses about $15bn to $18bn annually to Illicit Financial outflows, largely generated by tax evasion but fueled also by grand corruption, organised crime activities and many other licit and illicit practices. Although Nigeria might be an extreme case, this model is replicated throughout Africa.
Recent high UN panel calculated that for every 1 USD gained through foreign direct investment and oversees development aid, Africa loses 2 USD because of illicit financial outflows.
Auwal said “the corruption and gaps in the investor-state arbitration proves to be another area where Nigeria loses precious resources while most Nigerians live in abject poverty.”
According to the CISLAC boss, many Nigerians have little or no knowledge on this topic while some disputes may influence Nigeria’s finances for years to come.
According to him, a single case of the Process & Industrial Developments Limited and the Federal Republic of Nigeria may lead to gigantic loss.
The Process & Industrial Developments Limited v Federal Republic of Nigeria arbitration case concerns a 2010 contract relating to the construction and operation of a gas processing facility “Process and Industrial Developments Ltd (P&ID), a company incorporated in the British Virgin Islands, and the Nigerian Ministry of Petroleum Resources.
Less than three years after the contract was signed, P&ID initiated arbitration, alleging that Nigeria had not performed its obligations under the contract and seeking damages for lost profits.
Despite a number of corruption-related red flags in the contract, Nigeria did not raise the issue of corruption in its defence in the arbitration.
The tribunal concluded that Nigeria had repudiated the contract. It awarded P&ID US$6.6 billion in damages plus 7 per cent interest per annum, even though neither party had taken significant steps to perform their obligations under the contract.
While the P&ID case is proceeding through enforcement of the international arbitration in UK courts Nigeria has already suffered enormous economic and reputational damage at a time when ordinary Nigerians suffer from economic recession, and widespread insecurity.
To prevent future occurrence of illicit financial flows and corruption in Nigeria CISLAC recommended full adherence to the procurement act urging the Federal government to inaugurate the procurement council as stipulated in the Procurement Act 2007.