This British Tax Haven Will Return Hundreds of Millions of a Nigerian Dictator’s Money to His Country

Tax havens sometimes have to walk a fine line between encouraging companies and high-net-worth individuals and maintaining a strong public image. Recently, a British tax haven decided it would be in its best interests to return around $270 million of funds belonging to a Nigerian dictator, sending the money back to his country.

The Decision and Assets

The decision to return the money to Nigeria actually came last month in Jersey and was the result of five years in court. Sani Abacha, the former military dictator in Nigeria, had $268 million in funds in a Deutsche Bank account on Jersey. The court decided that this money would go into an asset recovery fund. From there, the funds will go back to Nigeria in the future.

The solicitor general indicated that this decision was a way to show that Jersey has a commitment and determination to deal with various types of international financial crime. This case began five years ago and was thanks to enforcements that began in the United States under the Obama administration. In fact, a United States Federal Court had found that this money came from Nigerian corruption during Abacha’s military regime.

The involvement of the United States was due to the money being laundered via the country’s banking system before it got transferred to Jersey. The Jersey bank account got a restraining order in 2014 based on a request by the US Authorities. From there, various appeals occurred. The issue seems to have finally reached a conclusion via the asset sharing agreement. This agreement is the result of negotiations between the Federal Republic of Nigeria, the Government of Jersey, and the United States of America.

Far From the Only Similar Action

The decision in Jersey was just one of several similar instances, which many believe are the result of the increasing scrutiny on Crown Dependencies and tax havens in general. It is no secret that influential MPs in the United Kingdom want to force tax havens like Jersey, the Isle of Man, and Guernsey to publish public registers. These registers would reveal the ownership of the around 80,000 companies currently registered in the three British dependencies.

Those in favor of the public registers point out the high use of these Crown Dependencies as tax havens. Examples include that Ilham Aliyev’s family (the Azerbaijan dictator) allegedly owns a $25 million house using a shell company in the Isle of Man. Another frequently cited example is the $28 million golf course that a jailed Azeri state banker’s wife holds via a Guernsey firm.

The Effects of Increased Scrutiny

Since the increased scrutiny began, all three relevant Crown Dependencies promised that they will create ownership registries. Despite this promise, those who want more transparency still express concerns that Jersey, the Isle of Man, and Guernsey are moving too slowly in these efforts.

Additionally, some banks have increased their levels of monitoring for accounts in known European tax havens, including Crown Dependencies. Lloyds Bank, for example, closed 8,000 accounts in Jersey as 2018 came to a close. The bank took this action as a result of the account owners repeatedly ignoring any questions regarding their identities. The Royal Bank of Scotland, Barclays, and HSBC are also all increasing questioning of clients on the relevant islands. Deutsche Bank also warned around 1,000 clients that their accounts may be closed.

The Future

Time will tell how long it takes for the Crown Dependencies to create and publish the public registers, or whether they complete them at all. It will also be interesting to see whether the change in Prime Minister in the U.K. impacts the actions the Crown Dependencies take.

Sources:

https://qz.com/1651742/british-tax-haven-jersey-is-returning-sani-abachas-270-million-to-nigeria/

https://www.gov.je/News/2019/Pages/AssetRecovery.aspx