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Major British banks allowed two high-profile Nigerian politicians facing corruption charges to deposit millions of pounds of illicit money overseas largely without questions, according to a new report released Monday.
The report by transparency group Global Witness blamed laxity at the banks for allowing former state governors Diepreye Alamieyeseigha and Joshua Dariye to deposit huge sums of money. The report called on Barclays PLC, HSBC Holdings PLC, NatWest, Royal Bank of Scotland Group PLC and UBS to exercise stricter controls and closely monitor how much money foreign political leaders deposit into their accounts.
"Our financial system is morally complicit in Nigerian corruption," the Global Witness report read. "The government must send a clear signal to the financial sector: corrupt money is not welcome. And the banks themselves must demonstrate much more clearly the steps they are taking to stop dirty money entering the financial system."
HSBC said it had "rigorous and robust" measures in place to stop such abuses, but a spokesman in London declined to talk about individual customers citing the bank's confidentiality policies. On Thursday, U.S. regulators ordered HSBC's U.S. subsidiary to improve its internal controls to be in compliance with money laundering laws.
The other banks did not immediately respond to requests for comment Monday.
Both Alamieyeseigha and Dariye's cases offer famous examples of the culture of graft that pervades life in Nigeria, where oil money funds nearly all government operations. Government contracts often offer the nation's political elite a quick means to enrich themselves as more than 80% of people in Africa's most populous nation earn less than $2 a day.
In one case, the report shows an employee at UBS "politely" asked Alamieyeseigha about the millions of dollars coming into his account. The report said the then-governor of oil-rich Bayelsa state told the employee he expected more money to come into the account for a property sale, while he previously told the government he owned only a few hundred thousand dollars worth of land.
The employee accepted Alamieyeseigha's answer, then tried to get him to set up an offshore trust fund - highlighting the pressure bank employees face in trying to close high-dollar deals that involve politicians with questionable assets, the report said.
"This shows how important it is for banks to try and independently verify the information that they receive from their clients, especially when dealing with senior (politically exposed persons) in highly corrupt environments such as Nigeria," the report said.
Alamieyeseigha later would flee Britain for Nigeria disguised as a woman, though lawmakers impeached him and stripped him of his immunity from prosecution. His downfall gave rise to a little-known deputy governor Goodluck Jonathan, a man who now serves as Nigeria's president.
Dariye, a former Plateau state governor, brought $4.5m into the UK through Barclays and NatWest, a bank now owned by Royal Bank of Scotland, which itself was partially nationalized after the credit crisis. Dariye used a housing manager to launder the money, though the banks never questioned why someone with that position deposited millions, the report said.
The report by transparency group Global Witness blamed laxity at the banks for allowing former state governors Diepreye Alamieyeseigha and Joshua Dariye to deposit huge sums of money. The report called on Barclays PLC, HSBC Holdings PLC, NatWest, Royal Bank of Scotland Group PLC and UBS to exercise stricter controls and closely monitor how much money foreign political leaders deposit into their accounts.
"Our financial system is morally complicit in Nigerian corruption," the Global Witness report read. "The government must send a clear signal to the financial sector: corrupt money is not welcome. And the banks themselves must demonstrate much more clearly the steps they are taking to stop dirty money entering the financial system."
HSBC said it had "rigorous and robust" measures in place to stop such abuses, but a spokesman in London declined to talk about individual customers citing the bank's confidentiality policies. On Thursday, U.S. regulators ordered HSBC's U.S. subsidiary to improve its internal controls to be in compliance with money laundering laws.
The other banks did not immediately respond to requests for comment Monday.
Both Alamieyeseigha and Dariye's cases offer famous examples of the culture of graft that pervades life in Nigeria, where oil money funds nearly all government operations. Government contracts often offer the nation's political elite a quick means to enrich themselves as more than 80% of people in Africa's most populous nation earn less than $2 a day.
In one case, the report shows an employee at UBS "politely" asked Alamieyeseigha about the millions of dollars coming into his account. The report said the then-governor of oil-rich Bayelsa state told the employee he expected more money to come into the account for a property sale, while he previously told the government he owned only a few hundred thousand dollars worth of land.
The employee accepted Alamieyeseigha's answer, then tried to get him to set up an offshore trust fund - highlighting the pressure bank employees face in trying to close high-dollar deals that involve politicians with questionable assets, the report said.
"This shows how important it is for banks to try and independently verify the information that they receive from their clients, especially when dealing with senior (politically exposed persons) in highly corrupt environments such as Nigeria," the report said.
Alamieyeseigha later would flee Britain for Nigeria disguised as a woman, though lawmakers impeached him and stripped him of his immunity from prosecution. His downfall gave rise to a little-known deputy governor Goodluck Jonathan, a man who now serves as Nigeria's president.
Dariye, a former Plateau state governor, brought $4.5m into the UK through Barclays and NatWest, a bank now owned by Royal Bank of Scotland, which itself was partially nationalized after the credit crisis. Dariye used a housing manager to launder the money, though the banks never questioned why someone with that position deposited millions, the report said.
