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March, 2003

Inheritance, Succession, Wills & Private Trust

It is with pleasure that l share with you some general legal information on the above. I will be happy to receive from you any question(s) or queries that you might have on the information contained herein. My mailing particulars are as stated on the last page of this paper.

Introduction

Inheritance in Nigeria is normally determined by the customary rules of where the deceased person originates from and not by where he resides or lives, or, where the property is situated. This of course presupposes that he or she did not make a Will, or, made a Will before getting married.

Nigerian systems on inheritance and succession are predominately patrilineal (i.e. inheritance through the father) than matrilineal (i.e. inheritance through the mother). Let us look at some of the rules of inheritance, relating to some ethnic groups, in Nigeria . After that, we will consider some of the principles governing the making of a Will and finally, some comments on private trust as it relates to inheritance and succession.

In Yoruba land , distribution of an estate of a deceased person, who dies without a valid Will, is per stripe; i.e. by the number of Wives that the deceased had and not by the number of children. Where there is a serious dispute, the family head is permitted, in some parts of Yoruba land, to have a final discretion by recommending the distribution of the estate, per capital; i.e. by the number of children and not by the number of wives.

In Benin Kingdom , the doctrine of primogeniture applies; i.e. the right to succession of the entire estate belongs exclusively to the eldest son of a deceased person who acts as a sort of Trustee for the other children. Note that under Benin custom, where there is a Will, the maker of the Will cannot devise the House where he lived and died to any person other than his eldest son.

The same rules of succession that apply to the Binis also apply to most parts of Igbo land including Onitsha , which by history, originated from the Benin Kingdom . There is also the interesting custom, which requires that the property of a deceased woman, which she acquired before her marriage, go back to her family on her demise.

In the general Calabar area , the eldest surviving male member of the deceased person succeeds as the head of the family and inherits the deceased estate.

In Hausa land , the Moslem rules of succession, under the Maliki code, have been largely absorbed into their indigenous system of property inheritance. Among the Fulani for example, the eldest son inherits his deceased father's cattle, the main asset in those days, out of which he makes presents of some of them to his younger brothers according to their needs.

The advent of the English into Nigeria changed and displaced, to a large extent, our local rules on inheritance. Of course, our Nigerian Courts have always made an effort to preserve and ensure that where possible, our fundamental local rules, which are equitable and not repugnate to natural justice and good conscience, are not totally displaced by the English rules of making a Will or establishing a private trust.

An example of the protection of some of our customs is the principle that a deceased person can only devise by his/her Will, his/her real property, which he/her has absolute title to and or, can freely dispose of under native law and custom. The Benin customary rule on where the deceased lived and died, being inherited by the eldest son of the deceased, is an example of this. Another example is the Iteskiri or Urhobo custom on a Wife's property. Another is the one that a Maker of a Will cannot devise family property to his beneficiaries. See also Section 1 of the Wills Law; Oke v. Oke [1974] 3 SC 1; Ogumefun v. Ogumefun [1931] 10 NLR 182.

Customary law on inheritance can also be displaced by necessary implication by the kind of marriage that the deceased contracted. One of the incidents of monogamous marriage under Common Law is the ouster of the rules of customary law on inheritance. See Section 49 (5) of the Administration of Estate Law, Cap 3, Laws of Lagos State ; Cole v. Cole [1898] 1 NLR 15.

Wills

The necessity, and not the desirability, of making a Will cannot be over emphasised especially, in the light of our very precarious environment and local customs.

Why Make a Will: -

Some of the advantages of making a Will include:

  1. A Will excludes both our traditional and English Common Law rules of inheritance;
  2. The Maker of the Will can by his/her Will distribute his/her assets in the manner desirable to him/her;
  3. The Maker of the Will can appoint the persons who would manage his/her estate on his/her demise;
  4. It excludes the additional cost of applying for Letters of Administration and paying inheritance tax(es), which are usually high and would constitute an inconvenience to one's beneficiaries, where no Will is made;
  5. It comes into effect immediately the Maker becomes deceased and before its approval by a Court of Law.

Note that a Will only takes effect after the demise of its maker.

Who Can & When to Make a Will

Under the Law, any adult above the age of 18 years old can make a Will. The only exemptions are persons in military service or seamen. Also, persons of unsound mind cannot make a Will.

It is advisable that a person should make a Will as soon as he becomes an adult and has a regular income. This need becomes more important when an adult gets married. This is because once a person gets married, the customary rules under which he gets married may become applicable to his estate should he become deceased without making a new Will. Alternatively, should the English rules on inheritance be applied, the manner of distribution of the estate may not suit the desires of the deceased person.

Checklist

Key information that the Maker of a Will should state in the Will include:

  1. His/her full names including his alias if any, address, occupation, telephone numbers, etc;
  2. His/her proposed executors/trustees; these are usually very close associates;
  3. Instructions as to burial and associated expenses;
  4. Instructions as to the distribution of all his/her properties; full details of these properties must be given;
  5. Instructions as to what happens to properties acquired after the making of the Will;
  6. Any other instructions.

Note that a Will need not be in any special form or language. In addition, a Will would be declared invalid where it is not signed at the end, in the presence of at least two or more witnesses who MUST both be present at the same time and sign the Will simultaneously after the Maker has signed in their presence. The Witnesses need not read the contents of the Will.

An Invalid Will

A Will may become invalid where the Maker:

  1. Gets married and does not make a new Will;
  2. Makes a subsequent Will or Codicil; a Codicil is an addition or supplement to a Will;
  3. Expressly revokes his Will;
  4. Destroys or makes any kind of alteration;
  5. Expressly revives a previous Will.

Please note that Section 8 of the Wills Law discourages an attesting witness or the Wife of the Maker of the Will or any person claiming under him, from benefiting under the Will attested to by one of them. However, a beneficiary under secret trust, who witnesses the execution of a Will, will not forfeit his interest as his interest dehors, i.e. outside the Will and not from the Will.

Conclusion on Wills

Due to the rigours associated with proving a Will under our legal system and possible protracted litigations that might arise, I advice that in addition to making a Will, a person can during his/her life time state in a deed who he/she wants to inherit a particular property or properties of his/her. This can be done by a gift inter vivos; which means that the gift only comes into effect on the demise of the Maker of the Will.

It is also wise to deposit copies of the Will in reliable places like the office of a long time Solicitor, the regular Bank of the Maker of the Will, the High Court Registry of the place where the Maker of the Will regularly resides and have a majority of his assets; some security companies also accept custody of a Will for a nominal fee.

Another modern trend is for the owner of a property to purchase the property in the joint names of himself and his intended beneficiaries. This way, some of the title always remains with the beneficiary.

TRUST

A Trust can be said to mean, “ a right of property, real or personal, held by one party (‘the Trustee'), for the benefit of another party (‘the beneficiary')”.

In general, the Law (i.e. equity) is more concerned with the substance rather than the form of a trust. Once the three “certainties” are present, a valid Trust would be deemed to have been created.

Under the Common Law of Trust, which Nigeria also applies, it is essential that the following three “certainties” are in place for a trust to be held applicable. They are (1) certainty of words; (2) certainty of subject matter; (3) certainty of objects or purpose.

Advantages of a Trust

Private Trust in Nigeria is still a novelty. From our experience and investigations, the principal reasons why people establish a private trust for their personal estate are to protect their assets from bankruptcy (debtors) proceedings and to seek whatever tax advantages/shelter that they can get from such a Trust.

General Duties of Trustess: -

The task of the office of a Trustee is one lased with a lot of responsibilities. A Trustee is not liable for any loss occasioned by his or their act or omission provided that he or they acted in good faith.

Some of the duties of a Trustee include:

  1. A duty to ensure that the Trust, including its funds, is properly managed and the latter are not depleted.
  2. Duty not to delegate his authority and responsibilities under the Trust. Whilst he can engage the services of professionals like Lawyers or Accountants to undertake some professional responsibility, the ultimate responsibility lies with him as the principal to exercise proper supervision.
  3. Duty to be impartial to all the beneficiaries under the Trust.
  4. Duty not to deviate from the instructions/terms of the Trust.
  5. Duty to prepare regular accounts as he acts in a fiduciary capacity.

Note that a breach of any of the duties by a Trustee requires the Trustee to make good whatever loss may have accrued to the Trust as a result of that breach.

Statutory Requirements for a Private Trust

Section 7 of the Statute of Frauds 1677, which is a statute applicable in Nigeria , requires that all creations of a trust or other confidences in real property must be in writing and signed by the Maker; otherwise, the Trust will be held void. This requirement is essentially to prevent fraud.

There is also the requirement that the Trust Deed should be stamped otherwise, it may not be admissible in evidence.

Workings of a PrivateTrust

The Maker of a Will and or a Trust Deed can devise his interest to a Trustee, relying upon the Trustee's promise to hold the property, in trust, for the Maker's beneficiaries. This is usually referred to as a fully secret Trust.

It is crucial however that there should be some evidence that the Maker communicated his intentions to the Trustee at any time before his/her death and the Trustee either expressly or impliedly, acquiesced to carrying out the Maker's instructions/intentions.

The property to be held in trust must be ascertainable and definite. Any increase in the assets under the Trust must be communicated to the Trustee otherwise, the Trustee will hold the increase under a resulting trust for the estate of the Maker. In addition, where the Trust fails for any reason, the Trustee also holds the property on a resulting trust for the Maker's estate. A resulting trust is a trust arising by implication of law when it appears from the nature of the transaction that it was the intention of the parties to create a trust or where the trust created fails.

The instructions of the Maker to the Trustee can be contained in a sealed envelope with instructions not to open the envelope until after the death of the Maker of the Trust.

Taxation of Private Trust

In developed countries, save for countries that are referred to as tax haven(s), the problem of resolving the question of the taxation of a private trust is still far from final resolution.

A solution in some of these countries have been to tax the beneficiaries of the Trust on their income from the trust either directly, under the personal income tax, or indirectly for the actual income received from the trust. The Trustees on the other hand are taxed only on the remaining income of the trust so that there is no double taxation. When these extra incomes are distributed to the beneficiaries, the latter should be able to earn the income tax free.

A practical solution, subject to obtaining professional advice from a tax consultant, is to have the Trust Deed drafted in such a way that the Trustees bear the tax element of the income coming to the Trust.

Other General Comments

Let me further share with you some other important principles of the Law of Trust as they apply to inheritance and or succession.

A policy of assurance for example, effected by any man or woman, on his/her life and expressed to be for the benefit of another person or his/her children, creates a trust in favour of the beneficiaries and the moneys payable shall not, so long as the object of the Trust remains unperformed, form a part of the estate of the Insured/deceased or be a subject of his debts. See Section 11 of the Married Women's Property Act, 1882.

Another example of a Trust in our statute books is Section 7 (a) of the Lands Use Act, which permits the grant of a statutory right of occupancy to a Guardian or Trustee of an infant who will hold such grant on trust for the benefit of the infant.

Note that a Trustee can be held personally liable for any loss to the estate caused by his breach of duty as a Trustee.

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April, 2003

“Subject To Contract”

We have received some interesting Insurance questions from our friend and Colleague,
Mr. Uzo Aghaegbuna, Legal Adviser of Citizens International Bank. We also received some inquiry from a Client on what the legal effect of the term “Subject to Contract”, meant under Nigerian Law.

In summary, we would answer the Insurance questions first and then treat the one on “subject to contract”.

Insurance: Questions arising from Newsletter on Insurance

Question 1:
Does liability arise where only part premium payment was paid, whether or not the instalmental payment was agreed to between the Insurer and the Insured or between the Broker and the Insured?

Answer:
This is dependent on the terms of the contract policy. In practice, Insurance companies insist on the payment of the premium in advance. However, with the slow run in the Nigerian economy, and to sustain their clientele, Insurance companies accommodate instalmental or part payment of premiums. In the event of a loss, the practice is to make a pro-rata basis payment in order to meet the justice of the situation and maintain client loyalty.

A Broker does not have a contractual right to commit his principal, the Insurance Company, to terms of a policy different from that that the Insurance Company has imposed. Also, the practice of Insurance Brokers collecting Insurance premiums and not remitting to the Insurance companies could lead to numerous litigation and loss for the Insured because of the age long rule of ‘no premium, no cover'.

Question 2:
Can an Insured, whose car is comprehensively insured, insist, in the case of a loss, on a new car rather than repairs been effected on the old car, which the Insurer and the Loss Adjuster may insist on?

Answer:
Most Insurance policies usually give the Insurer the sole right of exercising the options of whether to repair the car or to pay cash to the Insured, or to assist in the purchase of another car.

In practice, we believe that these are matters that can always be negotiated especially where the Insured is a valued client of the Insurer.

Last word on Insurance

Rate cutting remains an unethical and wrong corporate behaviour. We hope that the current controversy on rate cutting, between some big Insurance companies and the Nigerian Insurance Association on this subject will be resolved soon in the best interest of the Insurance industry.

Agreements “Subject to Contract”

The use of the proviso, ‘Subject to Contract', in preliminary contract papers, continues to be on the increase. Sometimes, this term has been used in correspondence after the parties have agreed on the terms of the contract and payment/consideration is made.

In the case of International Textiles Industries v. Dr. Aderemi & 4 Ors [1999] 6 SC (Part 1) Page 1, the Appellant received a letter of offer from the 1 st to 4 th Respondents marked “Subject to Contract”. By various correspondence, (the Respondent's own correspondence, all marked “subject to contract”), the parties agreed on the terms of the contract and payment was made to the 1 st to the 4 th Respondents in furtherance of these terms and agreement.

The 1 st to the 4 th Respondents breached the contract by selling the property to the 5 th Respondent on the grounds that their negotiation papers were marked “subject to contract” and that the consent of the Governor of Lagos State was not obtained to the Lease in breach of the provisions of the Lands Use Act.

The Supreme Court held that the phrase, ‘subject to contract' seemed irrelevant and perhaps meaningless in Nigeria, unlike in the United Kingdom, unless it can be shown that the vendor or purchaser or both evinced as their intention a special formal contract to embody terms and conditions which go beyond the mere offer and acceptance implication.

We are of the opinion that it would have been an act of fraud if the Supreme Court had held otherwise because exhibit F in this case, confirmed the terms of the contract, exhibit G was the receipt of payment for 5 (five) years rent and the Appellant was already in possession of the property after expending a lot of money on carrying out improvements on the property.

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May, 2003

Minutes of Statutory Company Meetings

A dispute can arise between the directors and shareholders or both of a company over the records and the authenticity of the Minutes of meetings of the company.

Recording of Minutes in a bound book or in loose sheets comes with its legal implications.

The Companies Law

According to the learned Author, Deji Sasegbon, in his book, Nigerian Companies & Allied Matters Law & Practice, the statutory Minutes of meeting(s) of a company are an authoritative record of the proceedings at such meetings.

Though the Minutes of the meeting of a company are an authoritative record of proceedings at such meeting, they constitute only prima facie (i.e. credible) evidence of what transpired at the meeting as other evidence can be provided to contradict or in some cases, throw more light on proceedings at such a meeting.

Section 241(1) of the Companies & Allied Matters Act, 1990 (“CAMA”) provides that it is mandatory for a company to record, in a book, kept for that purpose, all the proceedings at its general meetings (whether annual or extra-ordinary), the meetings of its directors and general managers.

Section 241(2) of CAMA goes further to provide that any minute purportedly signed by the Chairman of the meeting at which the deliberations were held or by the Chairman of the succeeding meeting, shall be credible evidence of the deliberations and the decisions reached at such a meeting.

The failure to keep proper Minute book(s) as required under the Law is an offence, which attracts a fine of N500 on conviction for each non-compliance.

Minutes in Bound Book or Loose Sheets

Prior to the enactment of CAMA and with recent judicial authorities, the judicial view was that Minute entries made in loose sheets of paper, whether kept in a file or fastened together in a bound book subsequently, were not admissible/permitted evidence of the Minutes of the deliberations and

decisions taken at such a meeting. See Onwuka v. Taymani & Ors [1965] NCLR page 203; Heart of Oaks Ass. v. James Lower & Sons Ltd[1936] Ch.D page 26.

Section 633(1) & (2) of CAMA and the Supreme Court decisions of Int. Agric. Ind. Ltd. v. Chika Brothers Ltd [1990] 1 SC page 1 @ 6 changed the above legal position. Section 633(1) of CAMA permits the keeping of Minutes in either bound books or loose sheets.

However, where the Minutes are not kept in a bound book but by some other means like loose sheets, adequate precaution must be taken to guard the Minutes from falsification and for facilitation of its discovery by interested persons in the company.

In the case of Nsirim v. Onuma Construction [2001] 3 SC page 168 @ 173 the Nigerian Supreme Court interestingly held that the decisions of a company need not necessarily appear in a Minute book; the trial Court should uphold, when called upon to determine the question, a resolution of a company if the Court is satisfied that a meeting was convened and such a resolution was passed.

The Practice

The modern behaviour of keeping the Minutes of a company is to, in addition to having them in a bound book, circulate the Minutes widely amongst the members of the company where the company is a private company. Where the company is a public company, the Legal Counsel makes it a duty to publish as many of the resolutions of the company, as possible.

The above behaviour reduces disputes and challenges, as the members of the company would have received constructive notice of the Minutes and would be estopped from possibly challenging their authenticity at a latter date where that is not done at a prior opportunity.

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NCC, Telecommunications & Tariffs Regulations  

Consumers of telecommunications services in Nigeria , especially voice service, ("the subscribers") welcomed the introduction of Global System for Mobile Communications ("GSM") in the year 2001. This was because of the dearth in the provision of this and other telecommunication services in Nigeria .

Unfortunately, there persists a conflict on the tariffs charged, between the subscribers and the GSM service providers (“GSM Operators”). The GSM operators have, as a defence, contended that the high cost of paying for their licenses, i.e. $250Million, the lack of minimum infrastructure facilities in Nigeria and the alternative option of constructing the basis infrastructure, etc have made present tariff rates of an average of N 50 per minute, during peak time, impossible to reduce. The official exchange rate in Nigeria at the time of this article was N …. to One (1) US Dollars.

To the subscribers, there is the contention that it is wrong for a new business to transfer all its start-up costs to its consumers. There is the further contention that the current tariff charged is not competitive relative to those charged in other countries, whether with developed GSM technologies/market or not. The refusal of NCC and the Nigerian government to intervene in the tariffs charged has not augured well for all the stakeholders especially as the functional operators are presently running an Oligopoly.

The Nigerian government and NCC have refused to intervene in the tariff administration on the principal ground that the Nigerian economy is a free market economy devoid of government intervention and regulation.

Communication is a basic need of life and communication companies have always been classified as institutions that provide socio-economic services. It is therefore essential that the services provided must at all times reflect the state of the well being of that community or its people. No government or political institution, have strictly left the determination of tariff charged solely on market forces and the operators. All countries have always established regulatory bodies to regulate, define and set tariffs, policies and or prices of telecommunications services and operation.

Abandoning the politics of what tariff should be charged, let us consider the enabling Law establishing NCC which is the Nigerian Communications Commission Act, 1992 as amended in 1998 ("the NCC Act") vis-à-vis the power of NCC to regulate the telecommunications industry, tariffs and NCC funding.

NCC Act:

Section 2(1) of the NCC Act provides that some of the objectives of NCC includes: “to ensure that licensees or authorised carriers and other providers of telecommunication services and infrastructure meet their commercial obligation and such other obligations specified under this Decree in a manner which promotes co-operation and fairness ”.

Section 2(d) of the NCC Act also provides, as part of the objectives, “to protect licensees and the public from unfair conduct of other providers of telecommunication services, with regard to the quality of service and the payment of tariffs ”.

Section 2(j) in addition provides that NCC shall ensure “the protection of licensees from misuse of market power by other carriers”.

Section 26 of the NCC Act provides that “the Commission may with the approval of the Minister make regulations generally for the purpose of giving effect to the provisions of this Decree and may in particular without prejudice to the generality of the foregoing provisions make regulations to the following matters, that is:

(d) tariff charged by operators ;”.

Note that all the underlinings above are mine.

Under the old “NCC guidelines for considering applications for a Licence”, it is provided that “ …. The need to protect a fair return on the investment of existing licensees should not be an obstacle in the granting of new licensees in any enterprise or location”.

The NCC “form of application for Licence” requires in paragraph 4.2(f) and (g) the furnishment of a business plan, which should detail the proposed amortisation period of the investment and the proposed tariffs.

Nigerian National Policy on Telecommunications

The Nigerian National Policy on telecommunications (“the Policy”) became operational in May 2000. The principal objective of the policy is to “… provide Nigeria the basic framework and primary building blocks for the much desired telecommunications revolution”.

On page 14 of the policy, NCC is required to “define standards for economic regulations of dominant operators including tariffs regulation as outlined in this policy”.

The policy also requires the Ministry of Communications to establish a National Frequency Management Council. The Council shall be responsible for planning, co-ordination and bulk allocation of the radio frequency spectrum in the country.

NCC is further enjoined by the Policy to, “… establishing and enforcing regulations that ensure fair and equitable competitive practices among all telecommunications operators”.

On interconnectivity charges, the Policy requires that “where adequate cost infrastructure is not readily available, the Commission may examine comparable interconnection pricing policies and price levels from international experience to establish fair benchmark for operator interconnection charges in Nigeria ”.

On tariff regulation, the policy recognises that in the short term, there will be dominant mobile operators in the market with the power to control pricing. The Policy therefore requires NCC to “ establish tariff regulation requirements for such dominant operators which will ensure that service prices are cost oriented, that the consumers and competitors interest are protected and that the industry develops in the most efficient manner possible”.

The Policy further provides that “in determining a tariff regulation regime, the Commission shall be guided by the following principles:

  • Telecommunications service tariffs shall in all cases be cost-oriented, reflecting the actual cost required by operators to provide the services in question;
  • Tariff setting rules must be transparent to both operators and their customers, with stable, predictable, and understandable standards for current prices and for changes to those prices over time;
  • Telecommunication service tariffs shall generate sufficient revenues for the operators to compensate for their investments, while also seeking to be as affordable as possible to the broad range of potential service customers;
  • In general, cross-subsidies between services or service categories shall be prohibited. In certain cases, limited cross-subsidies may be permitted, only in connection with an explicit public purpose such as the promotion of universal access, and where such subsidies can be effectively targeted to accomplish that purpose at minimum costs.”

On the former monopolies in the industry, i.e. Nigerian Telecommunications Limited (“Nitel”) and the Mobile Telecommunications Limited (“M-Tel”), the Policy provides that “NCC shall undertake a tariff review and re-balancing process, in co-ordination with the privatisation and restructuring of these companies”.

Experiences From Other Emerging Jurisdictions:

From the International Law Office website, www.internationallawoffice.com , we came across the following regulatory experience of other jurisdictions. In Ecuador for example, there is presently no definition of who a dormant operator is. Consequently, the Regulator is reviewing the market environment in Ecuador so that it can respond quickly to situations and conflicts. In Brazil , the Regulator approved new requirements on the use of chip cards for public telephones. In Finland , the Ministry of Transport and Communication intervened in the pricing of mobile phone calls, which originate and terminate within a single network as it claims that the low price distorts competition in the market place.

On April 28 th , 2003 in the United Kingdom , the regulatory body, the Office of Telecommunications (“OFTEL”) “. published its review of the wholesale broadband access market as well as a statement of its views on what constitutes ‘narrowband' and, by process of elimination, its working definition of ‘broadband' services”. In Spain , the Telecommunication Market Commission decided to investigate Telefonica, Vodafone and Amena for alleged breaches of a Commission Resolution “… on number portability where a change occurs in the mobile network”.

Suggested Improvements:

It is conceded that the present functional and dominant GSM Operators and NCC have contributed immensely to the development of telecommunication services within a very short time. However, NCC MUST raise to the challenge of reasonably regulating the telecommunications industry as the alternative option would be the humiliating experience of other Nigerian regulatory agencies/bodies who have had to rely on the operators within their industry, that they are in Law required to regulate, for their basic tools of administration.

To effectively carry out the above, NCC should resort to Section 31 of the NCC Act, which provides for the establishment of a Fund for the Commission. Subsection 2 of this Section also provides that:

“ There shall be paid and credited to the Fund established pursuant to Subsection (1) of this Section: -

  1. Such moneys as may, from time to time, be lent or granted to the Commission by the government of the Federation or of a State;
  2. All moneys raised for the purpose of the Commission by way of gifts, loans, grant-in-aid;
  3. All subscriptions, fees and charges payable to the Commission; and
  4. All other assets that may, from time to time, accrue to the Commission.

There is further a provision in the licences granted to the Operators, which requires them to pay to NCC a percentage of their annual profits.

NCC must also be run as a professional private enterprise so as not to fall into the error of depending only on government subvention which is always inadequate and irregular in disbursement as to have such a dependence will be fatal to its statutory duties, responsibilities and obligations.

It is globally conceded that mobile tariffs are always more expensive than land call tariffs. It is therefore not yet time for NCC to feel that it's principal objective have been met, as the number of landlines in Nigeria are very nominal per density of the population. Finally, other areas that call for attention from the GSM Operators and the Regulator, NCC include per minute billings, calls that are not properly terminated or received but are billed against the Subscriber's account, etc. The excuse by the GSM Operators that the software for remedying these problems are very expensive is not on very strong footing as it was recently reported that their parent companies in South Africa have been restrained by a Court order from converting and charging per second calls as per minute calls.

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August, 2003

Economic & Financial Crimes

Nigeria is through legislation and some enforcement, trying to stem and follow the current global behaviour of combating economic and financial crimes, which are more sophisticated and difficult to detect, than other forms of crimes.

One of such legislation is the Economic and Financial Crimes Commission (Establishment) Act, 2002. This legislation created the Economic & Financial Crimes Commission (“the Economic Crimes Commission”).

One of the principal functions of the Economic Crimes Commission is “the investigation of all financial crimes including advance fee fraud, money laundering, counterfeiting, illegal charge transfer, futures market fraud, fraudulent encashment of negotiable instruments, computer credit fraud, contract scam, etc.” See Section 5 (1) (b).

Another function of the Economic Crimes Commission is the adoption of measures to identify, trace, freeze, confiscate or seize proceeds derived from terrorist activities. In consonance with present international behaviour, a conviction under this leg attracts life imprisonment and confiscation of the concerned properties to the Federal Government of Nigeria.

The legislation establishing the Economic Crimes Commission requires the latter to establish and maintain “… a system of monitoring international economic and financial crimes in order to identify suspicious transactions and persons involved”. This it does in cooperation with other similar agencies in other countries of the world.

Finally, for harmony and proper coordination, the Economic Crimes Commission is charged with the responsibility of enforcing the provisions of the following existing Laws in Nigeria :

  1. The Money Laundering Act, 1995;
  2. The Advance Fee Fraud and other fraud related offences Act, 1995;
  3. The Failed Banks (Recovery of Debts) and financial malpractices in Banks Act, 1994, as amended;
  4. The Banks & other Financial Institutions Act 1991, as amended;
  5. The Miscellaneous Offences Act, Cap 410, LFN, 1990;
  6. Any other Law or regulation relating to economic and financial crimes.

Various offences relating to financial crimes/malpractices attract their corresponding penalties on conviction and these are stated in Part IV of the Economic & Financial Crimes Act (“the Act”). They include:

  1. Failure of an Officer of a Bank or other financial Institution to secure compliance with the provisions of the Act attracts on conviction, imprisonment for a term not exceeding 5 years or to a fine of N50,000, or to both such imprisonment and fine. See Section 13.
  2. “Any person who commits or attempts to commits a terrorist act or participate in or facilitates a terrorist act, commits an offence, and is liable on conviction to life imprisonment. See Section 14.

As a further deterrent, any individual convicted of an offence under this Act forfeits all his/her assets relating to the offence, to the Federal Government of Nigeria. This also applies to illegally acquired assets in a foreign country subject to any treaty or arrangement between Nigeria and such other foreign country.

The Act gives the Economic Crimes Commission wide powers to apply to a Federal High Court for an order freezing the accounts, in any Bank or other financial institution, of any arrested person, without notice to such a person.

In conclusion, this Act has not attracted much enthusiastic commendation either locally or from the international community. This is because the deficiency in tackling economic and financial crimes in developing economies is more a matter of lack of political will and discipline in its enforcement than in the legislations.

As a result of the above, Nigeria is among 17 countries blacklisted for financial crimes by the United Nations and the International Monetary Fund (“IMF”) Financial Action Task Forces. These organisations with others have warned direct foreign investors to be cautious of transacting business in Nigeria .

In response to the above, the Nigerian government has, in addition to increased enforcement of the existing Laws on financial crimes, sent an Amended Bill on Financial Crimes to its National Assembly. Only time will tell whether this will bring the required all round “comfort” to the investing public.

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