ECONOMIC CRIMES AND SECURITY CHALLENGES: PROSPECTS AND CHALLENGES FOR THE NIGERIAN SOCIETY

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ECONOMIC CRIMES AND SECURITY CHALLENGES: PROSPECTS AND CHALLENGES FOR THE NIGERIAN SOCIETY

TABLE OF CONTENTS

PAGE (S)

Title Page – – – – – – – – i

Declaration- – – – – – – – ii

Dedication – – – – – – – – iii

Acknowledgement – – – – – – iv

Table of Content – – – – – – v-viii

List of Tables- – – – – – – – ix

List of Abbreviations- – – – – – – x-xi

Abstract- – – – – – – – – xii

CHAPTER ONE: INTRODUCTION

1.1 Background- – – – – – – – 1-6

1.2 Statement of the Problem – – – – – 6-8

1.3 Research Questions – – – – – – 8

1.4 Objectives of the Study – – – – – – 9

1.5 Significance of the Study – – – – – 9-10

1.6 Scope of the Study – – – – – – 10

1.7 Limitation of the Study – – – – – – 11

CHAPTER TWO: LITERATURE REVIEW AND THEORETICAL

FRAMEWORK

2.1 Literature Review – – – – – – 12

2.2 The Nature of Crime – – – – – – 12-16

2.3 The Concept of Economic Crime- – – – – 17-21

2.4 The Concept of National Security – – – – .21-27

2.5 Relationship between Economic Crimes and National

Security- – – – – – – – – 27-30

2.6 Theoretical Framework – – – – – – 31-34

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction – – – – – – – – 35

3.2 Research Design – – – – – – – 35-36

3.3 Area of Study – – – – – – – 36

3.4 Population – – – – – – – – 36-37

3.5 Instruments of Data Collection – – – – 37

3.6 Validation of Instruments – – – – – 37-38

3.7 Methods of Data Collection and Analysis – – – 38

3.8 Weakness of the Methodology – – – – 38-39

3.9 Summary – – – – – – – – 39

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction – – – – – – – 40

4.2 FRAUD – – – – – – – – 40-47

4.3 ILLICIT DRUG TRAFFICKING- – – – – 47-52

4.4 IMPLICATION OF ECONOMIC CRIMES ON

NATIONAL SECURITY- – – – – – 52-56

4.5 NIGERIA’S EFFORT AT COMBATING ECONOMIC

CRIMES- – – – – – – – – 56-62

4.6 CHALLENGES OF ANTI-CORRUPTION AGENCIES

IN COMBATING ECONOMIC CRIMES- – – – – 62-67

4.7 STRATEGIES FOR COMBATING ECONOMIC

CRIMES – – – – – – – – 67-72

CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS

5.1 CONCLUSION – – – – – – – 73-74

5.2 RECOMMENDATION – – – – – – 74-75

Bibliography – – – – – – – 76-81

Appendix I – – – – – – – – 82

LIST OF TABLES

Serial	Contents	Pages
(a)	(b)	(c)
4.2.1.1	Fraud Cases in Banks. 1999 – 2009.	44
4.2.1.2	Police Data on Fraud Related Crimes. 2002 – 2008.	46
4.2.1.3	Suspects According to Age Distribution.	47
4.3.4	Drug Seized from 2000-2009.	50
4.3.5	Arrests and Gender Distribution in Drug Trade.	51
4.5.6	Drug Arrests and Prosecution. 1998 – 2009.	60

LIST OF ABBREVIATIONS

1. AFF – Advance Fee Fraud.

2. CBN – Central Bank of Nigeria.

3. CPI – Corruption Perception Index.

4. EFCC – Economic and Financial Crime Commission.

5. FATF – Financial Action Task Force.

6. FDI – Foreign Direct Investment.

7. FGN – Federal Government of Nigeria.

8. ICAC – Independent Commission Against Crime.

9. ICPC – Independent Corrupt Practices Commission.

10. ICT – Information and Communication Technology.

11. NAPTIP – National Agency for the Prohibition of

Trafficking In Persons.

12. NDC – National Defence College.

13. NDLEA – National Drug Law Enforcement Agency.

14. NDIC – Nigerian Deposit and Insurance Cooperation.

15. NGO – Non Governmental Organisation.

16. NIPC – Nigeria Investment Promotion Commission.

17. NNPC – Nigerian National Petroleum Corporation.

18. NPA – Nigerian Ports Authority.

19. NPF – Nigeria Police Force.

20. PDP – People’s Democratic Party.

21. ONDCP – Office of National Drug Control Policy.

22. UBN – Union Bank of Nigeria.

23. UK – United Kingdom.

24. UN – United Nations.

25. UNDP – United Nations Development Programme.

26. USA/US – United State of America.

27. SPDC – Shell Petroleum Development Corporation.

ABSTRACT

This study was set out with 5 objectives: to establish the relationship between economic crimes and national security, to examine the effect of economic crimes on national security, to examine the steps taken by Nigeria to combat economic crimes, to examine the factors militating against the eradication of economic crimes in Nigeria and to suggest strategies of curbing economic crimes in Nigeria. The method used included the unstructured interviews and documentary methods. The study revealed there is a converse relationship between economic crimes and national security. A high rate of economic crimes in Nigeria would lead to a poor state of national security. To curb this menace, the FGN enacted some laws and established some anti-corruption agencies to fight economic crimes. This notwithstanding, economic crimes have continued to thrive in Nigeria. Consequently, some areas of challenge to the anti-corruption agencies were identified. Some of them are lack of political will to fight corruption, and loopholes in the judiciary system that enabled offenders to get very mild verdicts for their crimes. To this end, some strategies were proffered as a way of overcoming the identified challenges. These included the abrogation of the immunity clause in the Nigerian constitution and the award of very severe punishments to offenders so as to deter others. Additionally, it was suggested that special courts should be established. These courts are to deal strictly with economic crimes so as to enable quick disposals of cases of economic crimes.

CHAPTER ONE

1.0 INTRODUCTION

BACKGROUND

The phenomenon of crime has been in existence since time immemorial. From the time Adam disobeyed God in the Garden of Eden to the modern highly complex crime networks, the human society has never been devoid of criminal activities. Human nature is inflexible and hence crime, which is a product of human existence, has remained irrespective of space, time or age. Nevertheless differences do exist in the practices prevalent in various cultures and societies.

A holistic definition of crime has remained illusive to scholars. This implies that there is no simple definition for crime. It is an act or the commission of an act that is forbidden or the omission of a duty that is commanded by a public law and that makes the offender liable to punishment by that law (Pillai, 2001:13). Adam smith’s natural theory of law on one hand defines crime as, ‘the violation of individual rights and man made laws’ or simply, an illegal act (ibid:14). There are varying classifications and categories of crime.

The FBI classifies crimes into violent, property and economic crimes. Violent crimes include murder and homicide (voluntary manslaughter), forcible rape, aggravated assault, and robbery while property crimes include burglary, arson, larceny, and motor vehicle theft. Economic crimes on the other hand include the embezzlement of public funds, currency trafficking and money laundering. Other categories of economic crimes include tax evasion, AFF and all such illegal acts that may have a damaging effect on the economy of the host country (www.fbi.gov).

Since the end of the Cold War, many countries have witnessed great advancement in science and technology. This advancement in technology brought about a revolution in ICT. With the world now globalized, the ICT revolution in the Twentieth Century literally removed the barriers of time and space, thus increasing political and economic interactions among nations. This development ushered in abundant opportunities in the areas of tourism, culture and economic interaction among many countries. This resulted in the free and fast movement of people, information, goods and money across international borders. Thus with ICT, huge funds could be transferred across the globe electronically within a very short time.

These new opportunities brought along with them some challenges, such as the issue of economic crimes and the attendant insecurity. Economic crimes have since taken a new dimension of complexity with no respect for international boundaries. This has seriously threatened the world economy as well as the physical security and sociological well being of many countries.

All countries are vulnerable to the harmful effects of economic crimes. In the USA, daily foreign exchange transactions is estimated at US $1 trillion, out of which over US $20 billion is lost to economic and finance related crimes annually (Robinson, 2005:5).Similarly, the UK looses ₤25 billion yearly through scam (ibid:6). Commenting on the amount of money involved in this crime, Edward Jurith, acting director of the US ONDCP, stated that it stood roughly at US $1 trillion a year. This is largely realized from drug trafficking (Jurith, 2002:212). This implies that the volume of economic transactions across the world economies in a day is huge. It is therefore difficult to track dubious dealings in the midst of legitimate payments.

The effect of economic crimes is worse in African countries due to their weak economic structures, corruption, high rates of unemployment, mass poverty and poor wealth distribution. These are pre-requisites to the thriving of economic crimes. When the youths are unemployed and poverty threatens their very existence, they become prone to anything that guarantees their survival. Thus in most cases, Internet scam, AFF and drug trafficking become their most viable options. Similarly, when corruption has eaten into the fabric of a nation, economic crimes like embezzlement of public funds, money laundering, tax evasion and currency trafficking become the order of the day.

In Nigeria, the menace of economic crimes has been on the increase. A lucrative stock market, a well capitalized banking sector and a weak financial regulatory mechanism provide the suitable platform for economic crimes to flourish. Similarly, the lack of stringent policies on corruption has encouraged a lot of politicians and government officials to embezzle public funds without fear of ramifications. Several politicians and government officials have been indicted for embezzlement of public funds within the last decade (Ribadu, 2010:4).Additionally, illegal oil bunkering and pipeline vandalism are reported on regular basis leading to reduction in crude oil output. Furthermore, incidences of AFF and internet scam have persisted in the last decade. These illegal economic activities have impacted negatively on the Nigerian economy and her international image. One of the cumulative effects this has on Nigeria is the reduction in FDI and disruption of economic development. These have had a direct impact on Nigeria’s national security (ibid:5).

According to AS Mukhtar (2007:4), threats to Nigeria’s national security include border conflicts, bad governance, ethnic conflicts, militancy, underdevelopment and corruption such as economic and financial crimes. Thus, the rate of economic crime imposes real threats to the national security of the country.

The fight against economic crime in not new in Nigeria, yet this phenomenon has continued to spread its tentacles across every sector of the economy. Though economic crimes cannot be completely eradicated from the society, its frequency can be greatly reduced through organized planning and calculated measures. Accordingly, several anti-corruption agencies have been set up to combat economic and financial crimes in Nigeria. Some of these agencies are the EFCC, ICPC, NDLEA and NAPTIP among others. The activities of these agencies have raised hope that economic crimes can be curtailed in Nigeria.

The World Bank in 2006, ranked Nigeria among 26 countries that risked collapse as a result of bad governance, corruption and high rate of economic crimes (Alobo, 2006:62). Economic crimes erode the integrity of the financial institutions and discourage FDI. These are serious challenges to the Nigerian economy that could undermine her national security. It is against this background that this researcher is motivated to embark on the study of the effects of economic crimes on national security and the challenges they constitute to the anti-corruption agencies in Nigeria.

1.2 STATEMENT OF THE PROBLEM

Economic crimes have been in existence since colonial times. Initially limited in scope and accorded little importance, economic crimes started generating public concern in Nigeria from about 1984 when a decree specifying among others, the death penalty for drug traffickers was promulgated and backdated. Two citizens found guilty retroactively were subsequently executed thereby attracting public awareness among the populace about an otherwise little known crime.

Other economic crimes such as embezzlement, tax evasion, fraud, money laundering, illegal oil bunkering, arms and human trafficking and pipeline vandalism soon escalated. The World Bank estimates that as much as $200 billion has been lost to corruption and mismanagement in Nigeria since independence in 1960 (Zero Tolerance, 2008:17). In 2007, Ribadu, then EFCC chairman, said on the floor of the Senate that ‘31 out of 36 governors were indicted for acts of embezzlement of public funds’ (Newswatch, 2007:6). Despite sustained efforts to curtail these crimes, the phenomenon has continued to grow, threatening national security and sustainable development.

Increase in economic crimes have also taunted Nigeria’s image in international relations. This has led to the blacklisting of Nigeria by the USA for not doing enough to curb the involvement of Nigerians in economic crimes. In July 2002 for instance, Nigeria was decertified and Americans were advised ‘to be wary of transacting business with Nigerians’ (Sule, 2004:4) Similarly, the Transparency International in 2003, rated Nigeria as the second most corrupt country in the world after Bangladesh. However, by 2010, Nigeria’s position had dropped to the forty fourth most corrupt country in the world. But this in no way suggests that corruption rate had reduced in Nigeria but merely an indication that other countries had become more corrupt than Nigeria. Nigeria’s CPI still remained very low (www.transparentcyinternational.
com). Measures so far taken by the government to curb economic crimes have yielded little result.

1.3 RESEARCH QUESTIONS

In light of the foregoing, this research seeks to answer the following questions

a. What is the relationship between economic crimes and national security?

b. What are the effects of economic crimes on national security in Nigeria?

c. What measures has Nigeria taken to combat economic crimes?

d. What factors have militated against the eradication of economic crimes in Nigeria?

e. What strategies are best suited for the eradication of economic crimes in Nigeria?

1.4 OBJECTIVE OF STUDY

The objective of this study is to examine the effect of economic crimes on national security in Nigeria. Thereafter, strategies that could assist in eradicating the menace will be recommended. Specifically, the objectives of the study are to:

a. Establish the relationship between economic crimes and national security.

b. Examine the effect of economic crimes on national security.

c. Examine steps taken by Nigeria to combat economic crimes.

d. Examine factors militating against the eradication of economic crimes in Nigeria

e. Suggest strategies to curb economic crimes in Nigeria.

1.5 SIGNIFICANCE OF THE STUDY

. This study is significant because it seeks to provide the FGN, policy makers and anti-corruption agencies with a vivid understanding of

economic crimes. Furthermore, it will assist in informed policy formulation and the institution of more effective measures against economic crimes. It also seeks to enrich the existing body of knowledge, provoke further discussions and raise more public awareness on the menace of economic crimes to the society. It will provide scholars and researchers with new basic reference materials for further research work on the subject matter.

1.6 SCOPE OF STUDY

In view of the vastness of economic crimes, this study paid particular attention to fraud and drug trafficking as they affect national security, with emphasis on Nigeria’s experience from 1999 to 2010. Fraud and drug trafficking were particularly chosen for study because of their very damaging effect on the nation’s image and their impact on national security. Nigerians are often suspected and treated as criminals at international ports of entry into other countries just for being Nigerians. The country’s efforts to attract foreign investments and accelerate development can hardly be realised unless this problem is resolved.

The study covered the period from 1999 to 2010. This period was chosen because of government’s renewed efforts since 1999 to fight corruption at all levels and in all spheres of the country.

1.7 LIMITATION OF STUDY

The major limitation faced during this study was the poor methods of record keeping by most agencies and institutions. Similarly, confidentiality of information and documents also posed a limitation to this research. Consequently, despite several visits to such agencies, it was difficult to obtain vital up-to-date information. Another limitation to the study was the reluctance of some government officials to grant interviews. These limitations notwithstanding, the researcher used the secondary source to complement dearth faced with the primary source. The internet was also effectively utilized. Thus these limitations did not adversely affect the reliability and the validity of the study.

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