Forfeiture Order Under Section 17 of the Advance Fee Fraud Act

In the Supreme Court of Nigeria

Holden at Abuja

On Friday, the 7th day of June, 2024

Before Their Lordships

John Inyang Okoro

Adamu Jauro

Emmanuel Akomaye Agim

Obande Festus Ogbuinya

Habeeb Adewale Olumuyiwa Abiru

Justices, Supreme Court

SC/CV.1519/2019

Between

MELROSE GENERAL SERVICES LIMITED       APPELLANT

                                                  And

1.  ECONOMIC & FINANCIAL CRIMES COMMISSION

2.  WASP NETWORKS LIMITED

3.  THEBE WELLNESS SERVICES                    RESPONDENTS

(Lead Judgement delivered by Honourable Emmanuel Akomaye Agim, JSC)

Facts

Sometime in May 2016, the Nigeria Governors Forum (NGF) engaged a consortium of consultants made up of GSCL Consulting and Bizphus Consulting Services Limited to verify, reconcile and recover over-deductions on London and Paris Club debts made on the accounts of the 36 States of the Federation between 1995 and 2002. After the verification and reconciliation exercise, the Consortium submitted its report dated 31st August, 2016 to the NGF, in which they arrived at a total sum of $6,483,282,424.61 as the over-deducted sum due for refund to the 36 States. 

Meanwhile, the Appellant had also written a proposal dated 3rd August, 2016 to the NGF to provide consultancy services to the NGF. The NGF approved the proposal, and engaged the Appellant to verify and reconcile the data already generated in respect of the over-deductions on the States’ accounts on the London and Paris Club debts. Thereafter, the Appellant submitted its report, and the NGF paid the Appellant the sum of N3.2billion representing 0.77% of the amount recovered as the Appellant’s fees. 

Following a reported case of money laundering involving the monies received by the Appellant and some sums it paid to the 2nd and 3rd Respondent, the 1st Respondent approached the Federal High Court and obtained an interim order of forfeiture against the monies in the accounts of the Appellant, the 1st Respondent and the 3rd Respondent on the ground that the funds were reasonably suspected to be proceeds of unlawful activity under Section 17 of the Advance Fee Fraud Act 2006 (“AFFA”). The Appellant’s subsequent application to set aside the interim forfeiture order was denied, while the 1st Respondent’s subsequent application for an order of final forfeiture of the said monies was granted. 

Dissatisfied, the Appellant appealed to the Court of Appeal; however, the appeal was unsuccessful. Consequently, the Appellant filed a further appeal at the Supreme Court.

Issues for Determination

The Supreme Court considered the following issues distilled by the Appellant:-

1. Whether or not the lower court was right in affirming the forfeiture of the Appellant’s funds to the Federal Government of Nigeria, when the said funds were direct proceeds of a contract which was never alleged to be illegal or unlawful or criminal.

2. Whether or not the 1st Respondent discharged the burden and standard of proof required to establish that the Appellant’s funds ought to be forfeited to the Federal Government of Nigeria.

Arguments

On the 1st first issue, Counsel for the Appellant argued that for a property to qualify for forfeiture under Section 17 of the AFFA, it must be shown that it is proceeds from an unlawful activity. Counsel contended that the actual complaint of the 1st Respondent was that the Appellant did not perform the contract which it was paid for, and the performance or non-performance of a contract does not constitute unlawful activity upon which the provisions of Section 17 of the AFFA will be applicable. Counsel argued that since the funds in issue proceeded from a contract which is not itself unlawful or prohibited by any of the penal laws; it cannot be subject of forfeiture proceedings. 

In response, Counsel for the 1st Respondent argued that by Section 6(b) of the Economic and Financial Crimes Commission (Establishment) Act, the 1st Respondent is empowered to investigate all financial crimes including contract scams, and that Section 1 of AFFA defined properties obtained by false pretences to include even those obtained to induce through the medium of a contract. Counsel argued that the Appellant’s affidavit before the trial court showed that the Appellant was paid consultancy fee from public funds for doing absolutely nothing, and the facts presented at the trial court showed that the consultancy contract relied upon by the Appellant was part of a conspiracy to steal or misappropriate public funds, and this was the unlawful activity for which the order of forfeiture was made.

On the 2nd issue, Counsel for the Appellant argued that the two lower courts were in error to shift the burden of proof to the Appellant, to prove that the funds were not proceeds of unlawful activities. Counsel argued that the lower courts were in error to have decided the case solely on the reasonable suspicion of the 1st Respondent that the funds were proceeds of unlawful activity, and reasonable suspicion cannot take place of evidence needed to prove a case to reasonable satisfaction of the Court.

Counsel for the 1st Respondent argued conversely that by the provisions of Section 17 of the AFFA, it is the 1st Respondent who has the initial burden during the interim forfeiture stage, to present sufficient facts in the ex-parte application to show that the funds are reasonably suspected to be proceeds of unlawful activity, after which the trial court will grant the interim order of forfeiture.  Counsel argued further that, at the final forfeiture stage, the evidential burden shifts to the person who claims an interest in the property, to justify his claim that the funds or property sought to be forfeited are not proceeds of an unlawful activity. Counsel submitted that the lower court, did not misplace the burden of proof in the case. 

Court’s Judgement and Rationale

In determining the first issue, the Apex Court held that by the clear words of Section 17(1) of the Advance Fee Fraud Act, an order of interim or final forfeiture of property cannot be made by a Court under that Act, unless the Applicant has shown that the property is reasonably suspected to be proceeds of some unlawful activity under the Act, the Money Laundering Act 2004, the Economic and Financial Crimes Act 2004 or any other law enforceable under the EFCC Act; thus, by expressly listing those legislations, it excludes those not listed. In essence, the Applicant must adduce evidence or circumstances that justify or provide reasonable basis for suspecting that the property is the proceed of an activity that is made unlawful by the provisions of any of the legislations listed in Section 17(1), and not a mere suspicion which is baseless or whimsical or less than reasonable. The Court held that it is clear that Section 17 of the AFFA limits the unlawful activity to which it applies, to those under the legislations listed therein. 

In determining the correctness or otherwise of the Court of Appeal’s affirmation of the trial court’s application of Section 17 of the AFFA in the circumstances of the case, the Apex Court proceeded to examine Exhibit MGS2 which is the letter written by NGF engaging the Appellant as a consultant; Exhibit MGS3 – the written contract between the Appellant and NGF which was signed for NGF by the NGF Chairman – the then Governor of Zamfara State and the NGF Director General, and for the Appellant by the Appellant’s CEO, and Exhibit MGS4 – the Appellant’s report of its completed verification and reconciliation of the data contained in existing reports already made by other consultants, which formed the basis of the consultancy fees paid to the Appellant by the NGF. 

The Court held that the authenticity of the said documents was not challenged or denied by the NGF, and the NGF did not deny engaging the Appellant to verify and reconcile the data already generated in respect of the over-deductions on the London and Paris Club debts; neither did the trial court make any finding of fact contrariwise. The NGF did not also deny receiving Exhibit MSG4, or express any dissatisfaction with the work done by the Appellant. 

The Apex Court held that, assuming the Appellant breached its contract with the NGF, Section 17 of the AFFA cannot be used as a tool to secure the performance of the contract, or to recover monies paid under the contract, or settle other disputes, as it is not a debt recovery or contract enforcement mechanism. The Court further held that it is only the NGF itself or its auditors that can decide the propriety or reasonableness of NGF entering into a contract with the Appellant to verify and reconcile the data in the GCSL/Bisplus report submitted to the NGF, and if the NGF decided to contract another consultant to have a second look at the data submitted to it by another consultant, such administrative discretion cannot be questioned or be a reasonable basis for suspecting that the money paid to the second consultant is the proceeds of unlawful activity under the Advance Fee Fraud Act or the EFCC Act or any other law enforceable under the EFCC Act.

The Supreme Court found that the 1st Respondent did not show that facts relied upon for the order for forfeiture of the Appellant’s money were unlawful under any of the legislations listed in Section 17(1) of the AFFA, hence, there was no basis for the grant of the order of forfeiture made against the funds in the Appellant’s account. 

On the 2nd issue, the Apex Court held that by the provisions of Section 17(1) of the AFFA, the primary burden is on the Applicant to show the activity that produced the property is in breach of any statutes listed in the provision, and it is illegal to grant the interim order or forfeiture without compliance with the requirements of the provision,  and only for the purpose of compelling the owner of the property to show that the owner of the property to come to court to show that it is not the proceed of an unlawful activity or to explain its source, when the Applicant itself has not shown that the activity that yielded the property is in breach of any of the statutes listed in the Section 17(1). The Court held that the duty of a property owner to show that the property is not the proceed of an illegal activity arises only after an interim order of forfeiture of the property is made in strict compliance with the provisions of Section 17(1), and in the circumstance of the instant case, the 1st Respondent failed to discharge the burden of proof required of it for the grant of the interim order of forfeiture of the subject funds, or a final forfeiture order. 

 Dissenting Opinion of Honourable Habeeb Adewale Olumuyiwa Abiru, JSC and Honourable Obande Festus Ogbuinya, JSC

The Learned Justices disagreed with the lead judgement, and instead found that in proceedings for civil forfeiture under Section 17 AFFA, there is no need for an Applicant to specify or prove any exact crime, so long as it is satisfied that the property in question constitutes directly or indirectly the proceeds of unlawful activity, as it is a unique remedy which targets the stolen property and not the perpetrator. The Learned Justices opined that there were several inconsistencies in the evidence of the Appellant, which implied that the consultancy contract was never executed by the Appellant to warrant the payment of the N3.5billion by the NGF, and led to a reasonable suspicion that the money was earned illegitimately and was thus, proceeds of an unlawful activity within the provisions of Section 17 of the AFFA. 

Appeal Allowed on a Ratio of 3:2, Order of Interim Forfeiture and Order of Final Forfeiture Set Aside.

Representation 

Kehinde Ogunwumiju, SAN, Chikasaolu Ojukwu, SAN with others for the Appellant.

E. E. Iheanacho with R. U. Adagba for the 1st Respondent.

S. Ovia with F. D. Muhammed for the 2nd Respondent.

Oluwaseun Alabi with others for the 3rd Respondent.

Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Reports (NMLR)(An affiliate of Babalakin & Co)