The new head of the Word Trade Organization has delivered a damning critique of Britain’s supposed fight against international corruption, accusing the UK of harbouring a “cottage industry” of financial enablers who cater to corrupt public officials overseas.
Ngozi Okonjo-Iweala, who was appointed WTO director-general in March and has twice served a Nigeria’s finance minister, said the Pandora Papers showed how UK bankers, lawyers and estate agents help corrupt officials and wealthy individuals in her home country — and in other graft-blighted nations — invest in expensive London real estate through anonymous offshore shell companies.
Delivering the 2021 anti-corruption lecture for Transparency International UK, Okonjo-Iweala earlier this week said: “When public monies are stolen, they are often sent abroad to countries not generally thought of as corrupt, where a cottage industry exists of bankers, lawyers, accountants and others, who launder and sequester the ill-gotten funds.”
She added: “The Pandora Papers — like the Panama Papers before them — shed light on this shadow economy of tax avoidance, luxury homes and shell companies.”
Okonjo-Iweala has for decades been a pioneering campaigner on anti-corruption and transparency issues, both in Nigeria and internationally. For her efforts, she has received death threats and, in 2012, her mother was briefly kidnapped.
In October, Finance Uncovered and Premium Times published the results of its investigation into wealthy Nigerians who anonymously owned UK property. The investigation was based on thousands of leaked shell company documents from the Pandora Papers, Panama Papers and other data sources.
It identified 233 houses and apartments in the UK — worth £350m at current property prices — which had been secretly bought by 137 wealthy Nigerians using 166 anonymous offshore shell companies.
Among those found to have invested in UK property were a senior manager at the Nigerian Ports Authority, one of the longest serving members of Nigeria’s House of Representatives, a former finance commissioner for Lagos State and a major government contractor in the power generation industry.
It is not illegal to secretly buy UK property through anonymous offshore shell companies and documents reviewed by Finance Uncovered found no evidence that funds used to buy UK property amounted to proceeds of corruption or other criminality. In fact, many UK enabler firms routinely advised their Nigerian clients to invest in UK property through offshore companies in order to legally avoid tax.
Also among the real estate identified by Pandora Papers journalists were five UK properties linked to Nigeria’s former aviation minister Stella Oduah — a onetime cabinet colleague of Okonjo-Iweala who is now the subject of corruption charges in Nigeria, which she has denied.
So too were several London properties that, according to U.S. court filings, were bought by oil tycoons allegedly as bribes for the benefit of Diezani Alison-Madueke, then Nigeria’s minister for petroleum resources and yet another former cabinet colleague of Okonjo-Iweala.
Alison-Madueke was arrested in London by UK law enforcement officers in 2015 but has denied wrong-doing. No charges have been brought but investigations into her affairs remain ongoing.
As well as naming several otherwise hidden property investors, Finance Uncovered and Premium Times published further details concerning Nigerians investing in UK real estate in the form of an interactive map.
One in six of the 233 UK properties identified by Finance Uncovered and Premium times were owned by anonymous offshore companies that were once the subject of law enforcement interest — including search warrants, freezing orders, money laundering investigations and suspicious activity reports.
Since 2016, the UK government has been promising to introduce a public register of who owns offshore companies that have bought residential property in Britain. However, ministers have failed to bring the necessary legislation before parliament.
Instead, Prime Minister Boris Johnson has fast-tracked other measures, such as the introduction of eight freeports, which many experts say could increase the flow of dark money to the United Kingdom.
Okonjo-Iweala said she was surprised that findings from the Pandora Papers had not yet generated more impact, suggesting the pandemic crisis may have drawn political attention away. However, she added: “Refusing corruption will be an important part of building back better our economies and societies, so it is an issue we cannot afford to neglect.”
In particular, she called on the UK and other countries that have become well-known destinations for corrupt and laundered funds to provide more efficient means for repatriating stolen assets.
She added: “I think real estate is really the key. There is a huge amount in the UK, in France, in Switzerland, all these countries. And not very much is being done about it, still today.”
In a further challenge to developed countries, she suggested one way to restrict corrupt money flows would be to outlaw anonymous shell companies. “You should challenge lawyers to stop all this helping tax evasion and shell companies. Why don’t we outlaw shell companies? If you want to put money or assets somewhere, put them under your name. Why do you create a shell company and hide all these things?”
Praising the work of Transparency International, Okonjo-Iweala also suggested NGO groups could do even more to help pressure developed countries into anti-corruption measures. Specifically, she suggested TI’s widely-cited Corruption Perceptions Index — which ranks countries in order of the perceived propensity for corruption — should be complemented by a second index that ranked the countries that received proceeds of corruption.
“As long as we have countries that are willing to receive these illicit monies, then it [corruption] will keep happening,” Okonjo-Iweala said. “So that’s why I have been pressing TI that, please, let’s start an index. We need an index of countries that receive corrupt funds. Let’s rank them, and see who is at the top, who is second, who is third. That will help us get a hold of all this because I’m sure no one will want to be listed like that.”
A long-standing campaigner on anti-corruption, Okonjo-Iweala used her time in a previous post at the World Bank, to help set up the Stolen Assets Recovery initiative (StAR), a measure designed to help developing countries retrieve funds stolen by kleptocratic regimes. That initiative followed on from her tireless pursuit through the courts of money looted from Nigeria by Sani Abacha, the country’s military dictator from 1993 to 1998.
Okonjo-Iweala, 67, was appointed as director-general of the WTO in March, becoming the first woman and first African to lead the organisation. Earlier, she had two spells as Nigerian finance minister, though most of her career was spent at the World Bank. She has also held board positions at Standard Chartered Bank and at Twitter.
The Pandora Papers is a leak of almost 12 million documents, largely made up of administrative paperwork from the archives of 14 law firms and agencies that specialise in offshore company formations.
The leak was obtained by the International Consortium of Investigative Journalists and seen by more than 600 journalists, including reporters at Finance Uncovered and Premium Times, as part of an investigation that took many months and spanned 117 countries.