Panama Papers – Last Chapter | Independent Newspapers Limited
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Panama Papers – Last Chapter

Posted: May 19, 2016 at 2:00 am   /   by   /   comments (0)

By Sam Kargbo

We have shown how the leakage of the content of the official files of Mossack Fonseca, a Panamanian law firm, exposed the identities of its otherwise secret clientele across the continents. The firm, which specializes in incorporating and managing offshore companies, is revealed –by the Panama Papers – to have worked with more than 14,000 banks, law firms, company incorporators and other middlemen to establish companies, foundations and trusts for its clients. We have also distinguished between offshore companies and offshore investments, besides defining offshore shell companies – facades that allow people to export capital from where they reside or from where they get that capital to countries that have low tax regimes and allow them to do business in secrecy. Here, we will appraise the legal issues in the offshore shell companies with Nigeria as our backdrop, and accordingly draw our conclusions using the Nigerian laws.

First, the legal issues in owning offshore shell companies. ***Citizens who are not public officers have more extensive discretional latitude in owning offshore shell companies than public officers.*** The constitution prohibits a public officer from putting himself in a position where his personal interest conflicts with his duties/responsibilities, and further prohibits him from operating foreign accounts or participating in the management of any private business, profession or trade except farming; and even prohibits Presidents, Vice-Presidents, Chief Justices, Governors and Deputy Governors of Nigeria from taking up service or employment in foreign companies or foreign enterprises even on retirement or when out of office. The tenor of the provisions of the constitution on conflict of interest strongly suggests that the constitution desires public officers to invest and do charity at home. Besides, public officers are obligated to declare their assets absolutely. Failure to declare business connections and linkages to offshore shell companies is criminal.

Any public officer who breaches any of these prohibitions is liable to (a) vacation of office or seat in any legislative house, as the case may be; (b) disqualification from membership of a legislative house and from the holding of any public office for a period not exceeding ten years; and (c) seizure and forfeiture to the state of any property acquired in the abuse or corruption of office.

Next is the source of the capital being traded by offshore shell companies. Municipal law and international law regimes agree that the proceeds from the following activities constitute crimes: bribery and corruption; piracy; slavery; falsification and counterfeiting; theft of national treasures; unlawful traffic in drugs; international traffic in obscene materials; human experimentation; mercenarism; human trafficking, prostitution and international sex trade; sexual exploitation and forced labour; warmongering and illegal weapons trade; terrorism; smuggling; illegal biological organs trade; racketeering and exploitation of third world countries; racketeering in petrol and diesel trade; organized crime and gangs; and fake medicine production and trade.

Thus, many countries promulgate and enforce anti-money-laundering laws and policies. Money laundering here implies the transfer of money flowing from illegal sources into legitimate channels to conceal its original source. In Nigeria, the extant anti-money-laundering laws include the Money Laundering (Prohibition) Act, 2011. That Act provides in Section 2 that:“(1) A transfer to or from a foreign country of funds or securities by a person or body corporate, including a Money Service Business of a sum exceeding US$10,000 or its equivalent shall be reported to the Central Bank of Nigeria, Securities and Exchange Commission or the Commission in writing within 7 days from the date of the transaction.(2) A report made under sub-section (1) of this section shall indicate the nature and amount of the transfer, the names and addresses of the sender and the receiver of the funds or securities.(3)Transportation of cash or negotiable instruments in excess of US$10,000 or its equivalent by individuals in or out of the country shall be declared to the Nigerian Customs Service.(4)The Nigerian Customs Service shall report any declaration made pursuant to sub-section (3) of this section to the Central Bank and the Commission.(5)Any person who falsely declares or fails to make a declaration to the Nigerian Customs Service pursuant to Section 12 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, commits an offence and shall be liable, on conviction, to forfeit the undeclared funds or negotiable instrument or to imprisonment of not less than 2 years or to both. (As amended by Money Laundering (Prohibition) (Amended) Act, 2012).

Section 11 prohibits the opening or maintaining of numbered or anonymous accounts by any person, Financial Institution or corporate body. Sections 15 to 19 emphasize the prohibition of Money Laundering in Nigeria and in particular makes it a criminal offence for any person or corporate body in or outside Nigeria, who directly or indirectly – (a) conceals or disguises the origin of;(b)converts or transfers; (c)removes from the jurisdiction; or (d) acquires, uses, retains or takes possession or control of any fund or property, knowingly or reasonably ought to have known that such fund or property is, or forms part of the proceeds of an unlawful act; commits an offence of money laundering under this Act. The unlawful acts referred to include participation in an organized criminal group, racketeering, terrorism, terrorist financing, trafficking in persons, smuggling of migrants, sexual exploitation, sexual exploitation of children, illicit trafficking in narcotic drugs and psychotropic substances, illicit arms trafficking, illicit trafficking in stolen goods, corruption, bribery, fraud, currency counterfeiting, counterfeiting and piracy of products, environmental crimes, murder, grievous bodily injury, kidnapping, hostage taking, robbery or theft, smuggling (including in relation to customs and excise duties and taxes), tax crimes (related to direct taxes and indirect taxes), extortion, forgery, piracy, insider trading and market manipulation or any other criminal act specified in this Act or any other law in Nigeria.