UK Banks Propping Up Nigerian Corruption

October 15, 2010 Taxation in NigeriaTaxation in UK

42-15535702Major UK banks are being accused of actively aiding corruption and spreading poverty in Nigeria by holding accounts and accepting transactions from corrupt politicians.

A new report by the UK anti-corruption group Global Witness has condemned Barclays, HSBC Bank, the Royal Bank of Scotland, NatWest and UBS for holding accounts and processing transactions of two Nigerian politicians. Allegedly, between 1999 and 2005 the banks accepted millions of pounds in transactions and deposits into accounts held by the Nigerian politicians Diepreye Alamieyeseigha, former governor of Bayelsa State, and Joshua Dariye, former governor of Plateau State, without adequate screenings for signs of corruption or illicit cash flows.

In 2005 Diepreye Alamieyeseigha was accused of corruption after he was discovered with millions of pounds in cash at his London residence. In 2007 he pleaded guilty to embezzlement and money laundering, and served a brief jail sentence in Nigeria. In 2004 investigations revealed that Joshua Dariye owned several properties in London, despite his official annual income only being approximately GBP 40 000. He has returned to Nigeria, and so far escaped any significant punishment.

The report did not claim that the actions taken by the banks were explicitly illegal. However, their actions aided the wide-spread corruption in Nigeria, and their anti-money laundering screenings were evidently inadequate. Robert Palmer, campaigner at Global Witness, explained, saying, “…large scale corruption is simply not possible without a bank willing to process payments from dodgy sources, or hold accounts for corrupt politicians.” The report went on to point out that the Royal Bank of Scotland, which was used by Diepreye Alamieyeseigha to bring GBP 2.7 million into the UK, is now majority owned by UK taxpayers. Robert Palmer commented on this, saying: “It adds insult to injury that not only are ordinary taxpayers propping up failing banks, but that one of these banks has facilitated corruption in Nigeria, a country where more than half the population are still without access to clean water. This undermines British development aid, which fills the gaps created by poor governance and failing state services.”

Under current regulations, UK banks are required to screen all clients for a money-laundering risk. Large transactions to accounts held by risky individuals are also required to be inspected for signs of illicit activities. According to Robert Palmer, UK banks need to significantly improve their performance in such checks, and regulating bodies need to ensure that the banks are following all appropriate legislations.

Photo by Sauteed Brain Cells

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