Back Where it Belongs: Part II

The funds were previously held in a bank account in Jersey in the name of Doraville Properties Corporation (“Doraville”), a BVI company. The Doraville assets originated in Nigeria during the period from 1993 to 1998 when General Sani Abacha was President. Abacha stole many hundreds of millions of dollars of public money during his military regime, described by then US Assistant Attorney-General Leslie Caldwell as “brazen acts of kleptocracy” and “flagrant abuse of power”.  The monies were laundered by his son and other close associates through the US banking system and other jurisdictions, including Switzerland and England, before being transferred to Jersey.

In 2012 Nigeria made a request to the United States for mutual assistance in recovering assets misappropriated from it under various schemes. These included funds being systematically embezzled from the Central Bank of Nigeria on the false pretence that the funds were necessary for national security, and a debt ‘buy-back’ fraud whereby the country was caused to repurchase its own debt for more than double the price it would have paid on the open market. The proceeds of these and other schemes were used to purchase US dollar denominated bonds, some of which ended up being paid into Doraville’s account at Deutsche Bank in Jersey, earning substantial sums of interest.

Further to the request of the Nigerian government, the US Department of Justice (“DoJ”) brought asset forfeiture proceedings. These are proceedings brought against the property and are referred to as “in rem”. The DoJ has jurisdiction in essence because of the misuse of the US dollar and US financial instruments in the money laundering process. In support of these proceedings, a property restraint order was granted by the Royal Court in February 2014 under the Civil Asset Recovery (International Co-operation) (Jersey) Law, 2007. This assistance was necessary because the property was held in Jersey and execution of the order was required offshore. The US proceedings culminated in a default judgment on 6 August 2014 against all assets held in the Doraville account, though there were a series of challenges thereafter which delayed matters.

Doraville attempted to have the restraining order discharged but in 2016 the Royal Court ruled that the restraint order was lawful. The Court of Appeal subsequently upheld that decision, dismissing Doraville’s appeal in a 2017 hearing. Doraville then tried to appeal the ruling to the Privy Council, but this ultimate challenge was rejected. An asset sharing agreement will now be negotiated between the Federal Republic of Nigeria, the United States and the Government of Jersey to return the funds to Nigeria.

This latest development comes less than six months since the External Relations Minister, Ian Gorst, signed an asset sharing agreement with the Government of Kenya following a case involving the proceeds of corruption of Samuel Gichuru, the former CEO of the Kenya Power and Lighting Company. This allowed £3 million in confiscated funds to be returned to the people of Kenya. The Gichuru case was a criminal prosecution of a Jersey company into whose bank account the proceeds of corruption had been paid.

Choosing the Right Paths

In every asset recovery action victims are faced with a choice of options. The civil and criminal routes both have advantages and disadvantages, as discussed in an earlier blog in February.

The civil action in rem in the Abacha/Doraville case was expedient in those particular circumstances, a crucial factor being the misuse of the US banking system and US financial instruments. As explained above, this meant the powers of the DoJ and the US civil forfeiture laws could be deployed, resulting in a substantial recovery.

A civil action can often be the best route to results in the recovery of assets in cross-border cases. An individual or institution bringing an action for civil fraud, either proprietary or personal, has some control of the action rather than relying on the state to be proactive when it may have many other pressing matters. Speed is also a factor – restraint and disclosure orders can be obtained much more quickly in civil matters. There is also the possibility of considering proceedings against facilitators for accessory liability, against whom there may be a better chance of recovery.

On the other hand, the power of the state can have great force. Which method of recovery to use, and whether to combine them, depends on the specific factual situation and the jurisdictions involved. The decision may often be nuanced and developing a coordinated strategy from the outset is essential. The value of sophisticated and practical advice at an early stage cannot be underestimated.

This case is an exemplar of international cooperation between jurisdictions bearing fruit. It shows what can be achieved offshore with proper consideration and commitment. It further falls to be considered in the context of the policy of the Jersey Royal Court, reflected in judgments such as Brazil v Durant in which it has shown itself to be robust and innovative in the remedying of fraud and providing injunctive relief.

Advocate Stephen Baker, Senior Partner of Baker & Partners, was retained by the Federal Republic of Nigeria to work on the asset recovery and was instrumental in the formulation of the strategy which resulted in this recovery.