Nigeria’s finance minister Ngozi Okonjo-Iweala, credited with fighting widespread corruption in the west African country, was a keynote speaker at the University College of the Cayman Islands’ conference on ethics and corruption in March. She told of some of the problems plaguing Nigeria and lesons Cayman could learn.
The Cayman Islands should diversify its economy to prepare for potential loss in business as it begins to comply with a raft of new transparency guidelines to avoid being a haven for criminal funds.
That was the verdict of Nigeria’s finance minister, who warned that the Caribbean in general, and the Cayman Islands in particular, are still viewed globally as a place where the corrupt could hide their ill-gotten gains.
Ngozi Okonjo-Iweala, a globally renowned economist who was managing director of the World Bank, acknowledged that Cayman was doing its best to comply with international standards.
But she said the “perception and maybe the fact is that you are not quite there yet.”
Some illicit funds still filtered through, she said, citing a recent case where $20 million of a $500 million fortune siphoned from the Nigerian public purse by former dictator General Sani Abacha had been traced to accounts in Cayman.
Describing her homeland’s own checkered history of corruption, she acknowledged that countries like Nigeria provided the demand for banking systems and structures to hide their stolen funds.
“The supply side comes from countries that are natural resource rich, such as many countries in sub Saharan Africa, including my own, where there have been outflows of corrupt proceeds looking for haven.
“The Caribbean including the Cayman Islands represent that demand side because they have put in place institutions ready to receive this money and secure it,” she told the Journal following a keynote address at the University College of the Cayman Islands’ anti-corruption conference.
Premier Alden McLaughlin appeared at the same event to deliver a familiar speech about the territory’s compliance with numerous international rules and regulations.
He argued, “The Cayman Islands has gained an unfair reputation as a place where all sorts of crooks stash their loot.
“The facts are that in terms of due diligence and anti-money laundering legislation, we are a world leader.”
Okonjo-Iweala warns that however diligent Cayman’s authorities may be in complying with international scrutiny, the climate has changed to such an extent that the island may need to refocus.
In her address at UCCI, she said, “The world is becoming more complex now with terrorism funding and the scrutiny on these kind of funds is now huge. Cayman needs to think of an alternative future, not just based on off shore finances.
“It is so difficult now to actually root out illicit flows because they come disguised in many fashions.
“You have the know your customer rules, you have disclosure of beneficial accounts which David Cameron is pushing now through the G8 – Cayman needs to obey all of those – even if you do you may still find some that escape. That is why Cayman should be diversifying and looking towards other services that it could offer in case it gets tougher and tougher to do this.”
She said Cayman risked losing some legitimate customers through obeying the rules, because of the extra layers of bureaucracy and scrutiny involved.
“You may lose some of that, but I think it is worth it. It is better to be open to disclose and not have other jurisdictions running after you and lose some of the business than be a little bit soft on those rules and regulations,” she told the Journal.
She said there is a moral imperative to do the right thing on issues like money laundering.
Putting Cayman’s issues into perspective, she highlighted some of the issues faced in Nigeria and how her government had tried to fight them.
She said the public sector had, for years, been paying salaries and pensions to “ghost workers” – employees who existed only on paper.
Nigeria now uses biometrics – identifiers such as fingerprints – to confirm its civil servant do, in fact, exist, before paying their wages. The move has saved the country up to $800 million, according to Okonjo-Iweala.
The stakes involved in fighting corruption in Nigeria are high, as the finance minster found out to her cost.
She said her 83-year-old mother had been kidnapped by thugs for five days because of her efforts to reform a fuel subsidy that was being systematically abused.
She said fighting corruption is not easy because corruption fights back. But should you give up? The answer is no.
“If you love your country, if you want to allow people to have a future, if you want them to know that honesty pays there has to be people who stand up and fight and this is what we have to do in our countries.
“You need the political will to fight corruption, we don’t need armchair critics we need people who are ready to roll up their sleeves and fight.”