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A new report by Global Witness, an international watchdog has accused banks in the United Kingdom of encouraging corruption in Nigeria and some other countries. The report listed the banks as Barclays, NatWest, UBS and HSBC. It said this had raised questions about their commitment to tackling financial crime.

The watchdog said the banks have been helping politicians to keep funds stolen from their countries. This was in spite of their indictment in the laundering of funds stolen from Nigeria by the country’s late military leader, Gen. Sani Abacha, in the 1990s.

Calling for an end to the acceptance of ‘dirty money’ by UK banks, Global Witness also outlined how two former governors and their suspected accomplices moved money from Nigeria to these banks.

“Without access to the international financial system, it would be much harder for corrupt politicians from the developing world to loot their national treasuries or accept bribes. By taking money from such customers, British banks are fuelling corruption, entrenching poverty and undermining international development assistance.

“Global Witness has found that Barclays, HSBC, RBS, NatWest and UBS held accounts for two former Nigerian state governors, Diepreye Alamieyeseigha of Bayelsa State and Joshua Dariye of Plateau State. These men funnelled dirty money into the UK, spending their ill-gotten gains on sustaining a luxury lifestyle, in stark contrast to the poverty of ordinary Nigerians.

“The Nigerian government took the governors to court in London to recover their illicit assets. The cases were successful and British judges ordered their UK assets to be returned.” The report said the banks were supposed to have tightened up their procedures since the Abacha saga, adding that its investigation revealed that they had not done enough.

It urged the UK regulator, the Financial Services Authority (FSA) to “do much more to prevent banks from facilitating corruption. As yet no British bank has been publically fined, or even named, by the regulator for taking corrupt funds, whether willingly or through negligence.”

It said this was in ‘stark contrast’ to the United States where banks had been fined hundreds of millions of dollars for handling dirty money. “The FSA is due to be abolished next year. Whichever organisation takes over regulating the banking sector must take corruption seriously.

“Banks that accept corrupt funds should be named, and if it is found that they acted negligently, heavily fined. Banks also needed to be provided with more information about how to spot corrupt money,” the report said.

Global Witness noted that the UK had centred its aid to poor countries on budget cuts while its banks were sustaining practices that were inimical to development assistance.

Democratic and economic progress in Nigeria is hindered by poor governance, entrenched corruption, internal conflict, ineffective service delivery, and pervasive poverty, says a report of the United States government.

The report titled: Background Notes: Nigeria released on 13 May by the US government also lists Nigeria's publicly owned transportation infrastructure as a major constraint to economic development. “Docking fees for freighters are among the highest in the world. Of the 80,500 kilometers (50,000 miles) of roads, more than 15,000 kilometers (10,000 miles) are officially paved, but many remain in poor shape.”

Background Notes are periodic profiles of countries by the US government which are published by the Department of State. Such profiling focuses on political condition, economy and foreign relations, among other issues.

The report says Nigeria's proven oil reserves are estimated to be 36 billion barrels, while natural gas reserves are well over 100 trillion cubic feet, but poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta continue to plague the nation's oil sector.

“Nigeria inspects all imports on arrival, rather than at ports of origin; as a result, about 95% of containers are physically examined. This procedure, along with Nigeria's uneven application of import and labeling regulations and poor infrastructure, complicates the movement of goods through Nigeria's notoriously congested ports and increases the cost of doing business.”

It also notes that the government's implementation of 100 % destination inspection of all goods entering Nigeria has resulted in long delays in clearing goods for importers and “created new sources of corruption, since the ports lack adequate facilities to carry out the inspection.”

It says although government has promoted foreign investment and encouraged reforms in these and other areas, the nation’s “investment climate remains daunting to all but the most determined.” The report says cheap consumer imports and excessively high domestic production costs as a result of erratic electricity and fuel supply has pushed down industrial capacity utilisation to less than 30 %, while many Nigerian factories would have closed except for relatively low labor costs, which its put at between 10 and 15 %.

It says domestic manufacturers, especially pharmaceuticals and textiles, had lost their ability to compete in traditional regional markets but added that there are signs that some manufacturers have started addressing their competitiveness, noting that the country's high propensity to import means roughly 80% of government expenditures is recycled into foreign exchange.

While stating that Nigeria's biggest macroeconomic achievement is the sharp reduction in its external debt, which declined from 36 per cent of GDP in 2004 to less than 4 per cent of GDP in 2007, it notes that Nigeria faces intense pressure to accept multibillion dollar loans for railroads, power plants, roads, and other infrastructure and that expanded government spending had also led to upward pressure on consumer prices.

Background Notes says while in 2009, Nigeria took significant steps to strengthen the banking sector with the financial audits of its 24 national banks by the Central Bank, as a follow up to the major banking overhaul in 2006 that reduced the number of banks from 89 to 24, increased a bank's minimal capital requirement to $190 million (N25 billion) and required banks to hold 40% of their deposits in liquid assets, about 65% of the economically active population is serviced by the informal financial sector such as microfinance institutions, money lenders, friends, relatives, and credit unions.

 “Since 1999, the Nigerian Stock Exchange has enjoyed strong performance, although equity as a means to foster corporate growth remains underutilised by Nigeria's private sector.” On the aviation sector, it says while air service among Nigeria's cities is generally dependable, the maintenance culture of Nigeria's domestic airlines is below international standards.

While noting that the Federal Government is implementing legislation on public procurement and fiscal transparency, it says it must ensure that Nigeria's 36 states pass and implement similar bills because “it is perceived that government contracting remains rife with corruption and kickbacks, and that many state and local officials continue to steal public monies outright.”

On the positive side, it said: “Nigeria's economic team had enjoyed an excellent reputation in the international community. It produced an encouraging body of work, notably budgets described as "prudent and responsible" by the IMF and a detailed economic reform blueprint, the National Economic Empowerment and Development Strategy (NEEDS).” The report says other positive developments include: “Government efforts to deregulate fuel price, Nigeria's participation in the EITI and commitment to the G8, the creation of what had been an effective Economic and Financial Crimes Commission (EFCC), which until 2008 had earned 150 convictions and recovered over $5 billion in mishandled funds; and the development of several governmental offices to better monitor official revenues and expenditures.