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05 August 2013
One of the tools available to the principal Nigerian law enforcement agency charged with the investigation and prosecution of financial crimes - the Economic and Financial Crimes Commission (EFCC) - is the power to seize the property of a suspect who has been arrested on suspicion of having committed an offence listed in the EFCC Establishment Act. In addition to being empowered to seize assets, the EFCC can seek an ex parte interim forfeiture order from the court whenever assets of an arrested person have been seized. This is a valuable tool, as it enables property held by a suspect to be preserved and kept available for the purposes of recovery and restitution. It also deprives suspects of a source of financing their defence and could encourage them to negotiate a plea deal with the EFCC.
These powers were granted to the EFCC in 2002, when the agency was first established. They were first exercised in 2003, when assets owned by some fraudsters, who were eventually convicted and imprisoned, were ordered to be forfeited to the federal government during their trials. The constitutionality of the interim attachment order was challenged in the High Court, which ruled that the grant and exercise of the powers violated no provisions of the Constitution. An appeal to the Court of Appeal was dismissed in 2005.
Following these initial interim forfeiture orders, the EFCC adopted the practice of appointing agents to manage real estate and other assets on its behalf for the duration of the orders. The intention was to maintain the value of real estate and to ensure that, insofar as possible, the assets remained available to the suspect in the event that no final forfeiture order was made. The EFCC took the view that, as the owner of such assets (albeit on an interim basis), the federal government – acting through the EFCC – was empowered to exercise all rights of ownership over the assets, including the right to appoint agents to manage the assets and to do things such as collect rents accruing in respect of real estate.
However, in a June 2012 decision the Federal High Court held that although the EFCC has the power to seize assets and to seek interim forfeiture orders, it is not entitled to appoint an agent to manage forfeited assets without an express order of the court. The appointment of an agent was thus nullified by the court. The judge who delivered this decision applied Section 26 of the act, which deals with the seizure of property, ruling that under this provision, the EFCC is empowered only to place the property seized under seal or, in the case of moveable property, to remove it to some place of the EFCC's choosing. She went on to hold that if the EFCC wishes to deal with the property other than by placing it under seal or removing it to some designated place, it can do so only upon obtaining a court order This decision was followed in May 2013 by another Federal High Court ruling which nullified the EFCC's appointment of an agent and went further to appoint a Federal High Court official as the receiver/manager of the assets that were the subject of an interim forfeiture order, even though no application for such an appointment had been addressed to the court.
These two decisions purported to apply Section 26 of the EFCC Establishment Act. However, interim forfeiture orders are governed by a different section of the act - Section 29 - which imposes no limitation on the power of the federal government to deal with assets that are the subject of an interim forfeiture order. Since a forfeiture order has the effect of transferring title to the federal government, the EFCC's argument that the federal government has the power to appoint an agent in exercise of this title would appear to be a strong argument. Both decisions have been appealed by the EFCC and the Court of Appeal's decision is eagerly awaited - especially since the appeals will be heard by two different divisions, Lagos and Abuja. The reporting of judgments in Nigeria continues to be so poor that it is not uncommon for different divisions of the Court of Appeal (a federal court) to deliver different decisions in respect of similar issues.
In the interim, it would seem that the EFCC is now obliged, when seeking interim forfeiture orders, to include an application for liberty to appoint agents to manage the forfeited assets during the investigation and any subsequent trial.
For further information on this topic please contact Babajide Oladipo Ogundipe at Sofunde Osakwe Ogundipe & Belgore by telephone (+234 1 462 2502), fax (+234 1 462 2501) or email (firstname.lastname@example.org).
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