For those who say Nigeria is a country where wonders shall never end, the unfolding drama over the stolen assets of Governor Atiku Bagudu and the Abacha family clearly advertises a democracy that is not working, and reinforces Nigeria’s international image as a country with highly dysfunctional institutions where bizarre things can happen. The drama has its roots in the August 4, 2014 default judgment and order of forfeiture ruling by Justice John D. Bates of the District Court in Washington DC, which allowed the US government to seize over $550 million worth of cash and assets owned by Atiku Bagudu and Mohammed Abacha.
The funds include $313 million in two bank accounts in Bailiwick of Jersey and $145 million in two bank accounts in France. In addition, four investment portfolios and three bank accounts in Britain with at least $100 million were also seized. Because the Nigerian government did not as much as raise a finger in protest; a group of US-based Nigerian attorneys claiming to be acting in the national interest mounted a legal challenge to prevent the US from seizing the recovered assets. Their effort failed after the Nigerian government disavowed and denounced them as “fraudsters.” Read and draw your own conclusion from a saga that one commentator described as “Nigeria’s Panama Papers.”
The Facts
Court filings obtained by Huhuonline reveal that on November 18, 2013, the US government filed a complaint for forfeiture in rem against five corporations, seven bank accounts, and four investment portfolios, owned by Mohammed Sani Abacha and Atiku Bagudu. A lawsuit in rem is an action against an item of property, not against a person. Attorneys from the Criminal Division of the Asset Forfeiture and Money Laundering Section of the US Department of Justice alleged that Bagudu and Abacha defrauded and extorted hundreds of millions of dollars from Nigeria and then laundered the proceeds through eight US banks in violation of American laws, hence the assets were subject to forfeiture.
On December 6, 2013, Justice Bates issued arrest warrants in rem for all bank accounts and assets held in the name of Bagudu and Abacha, including interests and benefits traceable to the following properties: Doraville Properties Corporation, (Bailiwick of Jersey); Rayville International SA (France), Standard Alliance Financial Services Ltd (France); HSBC Fund Administration Ltd (Jersey); Mecosta Securities (UK), Midland Life International Ltd (British Virgin Island, UK); Blue Holding (1 & 2) Pte Ltd, traceable to Ridley Trust, at James O Hambro Investment Management Ltd (UK); among other assets.
On April 16, 2014, the warrants were enforced after the US government gave direct notice of the civil forfeiture action to Bagudu, Abacha and their agents in the British Virgin Islands; advising them that any counter-claims needed to be filed within 35 days of the date of receipt of the notice; not later than May 25, 2014. Pursuant to the 1989 treaty on Mutual Legal Assistance in Criminal Matters between the USA and Nigeria, the US sought assistance from the Nigerian government in serving notice of the action to Bagudu and Abacha. According to court filings, the Nigerian government through then AGF and Minister of Justice, Mohammed Adoke provided affidavits to the effect that copies of the notice, complaint, and arrest warrants were delivered to Mohammad Abacha on March 19, 2014; and to Bagudu on March 24, 2014; who at the time was PDP Senator for Kebbi Central.
Motions and Counter-Motions
Both Bagudu and Mohammed Abacha did not file any counter-claim against the forfeiture action. But according to court papers obtained by Huhuonline, 10 members of Bagudu’s family, through lawyers at James Hambro & Partners LLP in the UK, filed motions to dismiss and counter-claims of interest, asserting they are beneficiaries in the investment portfolios. They included: Ibrahim Bagudu (Bagudu’s brother), Aisha Atiku Bagudu (one of Bagudu’s wives), and Ibrahim Atiku Bagudu (Bagudu’s first son). The other five were minor children of Bagudu and Aisha Bagudu. Zainab Shinkafi Bagudu and her child later withdrew their claims.
In support of their motion to dismiss, the Bagudu lawyers advanced four main arguments: firstly, the US court lacked jurisdiction over the case. Secondly, the applicable statute of limitations had elapsed and the timing therefore violated the Bagudus’ due process rights. Thirdly, the doctrines of international comity and act of state necessitated dismissal. Finally, they argued that the complaint failed to prove why the investment portfolios should be subject to forfeiture. None of these arguments were successful.
On the issue of improper jurisdiction, the Bagudus argued that there was virtually no contact between the claimed properties and the US, but the US countered that using the US banking system to launder the proceeds of criminal activity, provided sufficient contact between the claimed properties and the United States for a civil forfeiture action in rem. The Bagudus also claimed they “have less than the required minimum contacts with the United States,” since only one of the children was a US citizen. But the argument was rejected. Personal jurisdiction is not a valid consideration in an in rem civil forfeiture action because forfeiture actions against property located outside the USA would always be dismissed whenever a foreign national without minimum contacts raises personal jurisdiction as an issue.
The statute of limitations for bringing a civil forfeiture action is five years after the time when the alleged offense was discovered or two years after the time when the involvement of the property in the alleged offense was discovered, or whichever is later. The Bagudus contended that the US was aware of the allegations that form the basis of the complaint as early as May 2003, yet “inexcusably decided to wait nearly ten years to file these forfeiture proceedings.“ The Bagudus claimed the delay violates the protections afforded them by the Fifth Amendment’s due process clause as it “severely prejudices and puts them in the absurd position of having to defend against allegations of events that occurred almost 20 years ago.” The court refused saying the Bagudus failed to show evidence the delay prejudiced their ability to defend themselves; and that allegation of general dimming of memories and loss of evidence was insufficient to show prejudice or tactical advantage. The court also decided that foreign nationals without minimum contacts with the USA lack due process or other constitutional rights.
Thirdly, the Bagudus argued that principles of comity and act of state support dismissal because, a 2003 settlement agreement between Bagudu and Nigeria constituted a formal decision and act by Nigeria to fully and finally resolve the disputes regarding Bagudu’s alleged participation in misappropriating funds from Nigeria. International comity is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation. The US government responded that “neither principles of international comity, nor the act of state doctrine, warranted dismissal of a civil forfeiture action which involves violations of US criminal laws.” Besides, dismissing a case because of international comity concerns is inappropriate when doing so “‘would be contrary to the policies or prejudicial to the interests of the United States.”
Finally, the Bagudus argued that the US government’s complaint failed to show that the debt buy-back scheme was fraudulent and thus failed to show that proceeds from the scheme were stolen, converted, or taken by fraud; and the complaint also failed to prove that, in the security votes and debt-buy-back schemes, Atiku Bagudu, then a private citizen, knew the funds he received from Mohammed Abacha were stolen, converted, or taken by fraud at the time he moved them into foreign commerce. “The complaint provided no basis to conclude the debt buy-back scheme was fraudulent and thus provided no basis for forfeiture of any debt buy-back-derived property as proceeds of crime,” the Bagudus averred in court documents, accusing the US of casting general allegations of lawlessness in Nigeria as the basis of the forfeiture action.
In response, the US government asserted that specific allegations about the fraudulent nature of the debt buy-back scheme showed the victim of the fraud (Nigeria); the perpetrators of the fraud (Bagudu, Abacha, Abacha’s sons and the Minister of Finance); the goal of the fraud (to defraud Nigeria by orchestrating its purchase of debt at a vastly inflated price); the means of effectuating the fraud (the agreement between Bagudu, Ani, and Abacha, Mecosta’s purchase of the debt with money loaned by Nigeria, the sale of the debt from Mecosta to Nigeria, and the various transactions afterward moving the proceeds of the sale overseas and depositing them into accounts controlled by Bagudu and Mohammed Abacha); who masterminded the fraud.
Lawyers for the Bagudu family also argued that the US failed to prove the debt-buy-back scheme was a specific “offense against a foreign nation” involving misconduct “by or for the benefit of a public official.” The US countered that the fraudulent scheme was conducted with the assistance of then Finance Minister, Anthony Ani and personally approved by General Abacha. After all their objections failed, the Bagudus invoked traceability; and argued that the forfeiture action should be dismissed because the US failed to prove sufficient facts connecting the four investment portfolios to the alleged criminal activity.
But the US argued that Bagudu and Mohammed Abacha knew the funds from the security votes and debt buy-back schemes were stolen when they moved the funds into foreign commerce. These same funds were subsequently laundered through the purchase of Nigerian Par Bonds. It stands to reason that if Bagudu and Mohammed Abacha were aware that the funds were derived from illegal activity when they moved them into foreign commerce, then they also knew that those same funds were derived from illegal activity when they subsequently laundered them through the purchase of Nigerian Par Bonds.
After over eight months of legal histrionics, on March 19, 2015, Justice John Bates denied the Bagudus’ motions to dismiss the civil forfeiture action against the four investment portfolios. The Bagudus did not challenge forfeiture of the other twelve defendant properties, with respect to which the US government filed an application for a default judgment and order of forfeiture to be entered against the assets. But a US-based Nigerian lawyer, Godson Nnaka said not so fast; these assets belong to Nigeria, and I am a Nigerian. That story is next.
