The Economic Amnesty Bill, Annotated

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This is a Section-by-Section Fact- (and Law-) Check of the Economic Amnesty Bill, 2017 currently passing through the National Assembly,

 

 

The Provisions of the Economic Amnesty BillAnnotations
(Sponsored by Hon. Linus Okorie HoR)(Comments by The Bribecode Team)
BILL FOR AN ACT TO ESTABLISH A SCHEME TO HARNESS UNTAXED MONEY FOR INVESTMENT PURPOSES AND TO ASSURE ANY DECLARANT REGARDING INQUIRIES AND PROCEEDINGS UNDER NIGERIAN LAWS AND FOR OTHER MATTERS CONNECTED THEREWITH.·          A principal aim of this bill is to reassure declarants that the source of their loot will not be investigated.
·          In this sense it is a Blindfold and Gag Law: the government will see no evil, hear no evil, and speak no evil of the declarant, once the tax/surcharge is paid.
1
(1) There is established a scheme to be known as Voluntary Taxable Income Recovery and Amnesty Scheme (herein after called the Scheme”)

(2) The Scheme shall come into force on such other later date as the Federal Government may, by notification in the Official Gazette, specify in their behalf;

(3) The provision of this Scheme shall be implemented by the bank.
·          This is not really a ‘Recovery’ law. The Economic Amnesty Law proposed (and resisted) in Tunisia was a recovery law. That law offered looters amnesty in return for 100% recovery of the loot.
·          This bill leaves looters with 62.5% of their loot in return for a 37.5% tax/surcharge. So it is actually a Taxation and Amnesty law rather than a ‘Recovery’ law.
·          If this were a ‘recovery’ law, then our taxation laws which collect even higher percentages of taxes and surcharges are all ‘recovery’ laws.
2)       In this Scheme, unless the context otherwise requires,

a. “Amnesty” means state of being pardon;

b. ““Bank” means the Central Bank of Nigeria;

c.        Declarant” means a person making the declaration under section 1 sub-section (3) of this Bill;

d. “Income-tax Law” means the all existing Tax Laws in Nigeria;

e.       “remittance” means return of money made in foreign exchange by any person resident outside Nigeria to a person resident in Nigeria on or after the date of commencement of this Act but before the specified date, in the form of drafts, traveler’s cheques, cheques drawn on banks situated outside Nigeria, telegraphic transfer, mail transfers, money orders or by way of transfer from Non resident (External) Account, Foreign Currency Non resident Account or Foreign Currency Non-resident Special Deposit Account maintained in Nigeria under the rules made under any Law relating to Foreign Exchange;

f.         “specified date” means such later date as the Federal Government may, by notification in the Official Gazette specify in that behalf;
·          To be ‘pardon’ [sic], a looter has to be convicted in a criminal case. This definition of Amnesty is wrong because this bill does not intend for looters to face investigation or trial, how much more conviction.

· Also, the protection given by this bill extends to civil cases (See s.16, especially s.16(2)v).

· What this bill means by ‘amnesty’ is: ‘immunity from any legal proceedings whatsoever, including criminal investigation or prosecution under the criminal code, penal code, or any other laws of Nigeria, as well as any civil proceedings whatsoever, based on the money declared.’

· Based on this bill for instance, a fraudster who dupes a victim of N1m can ‘settle’ the tax office with N375,000, and keep N625,000 ‘legally’. The police cannot investigate victim’s complaint (s.16 ). And if the victim filed a civil case in court, he cannot use the declaration of the loot as evidence of the fraudster’s possession of the funds (s.16(2)v).
3 (1)     Subject to the provisions of this Scheme, any person may make, on or after the date of commencement of this Scheme but before a date to be notified by the Central bank of Nigeria in an Official Gazette, a declaration in respect of any income chargeable under the Income-tax Law for any assessment prior to the enactment of this Act;

a.        for which he has failed to furnish or disclose under the Income-tax Law;

b.       which he has failed to disclose or return under any law in operation before the date of commencement of this Scheme;

c.        which has escaped assessment by reason of the omission or failure on the part of such person to fully disclose all material facts necessary for the assessment of such income

(2)     Where the income chargeable to tax is declared in the form of investment in any asset, the fair market value of such asset as on the date of commencement of this Scheme shall be deemed to be the undisclosed income for the purposes of sub-section (1).

(3)     The fair market value of any asset shall be determined in such manner, as may be prescribed under section 22.

(4)     No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which declaration under this section is made.
·          For the first time, the law will treat armed robbers as leniently as treasury looters. Although specifically targeting funds abroad, the provisions are wide enough to cover loot that has never left Nigeria.

·          Under S.3, just before the three-year amnesty starts, one can, for instance, hijack government vehicles, declare them as loot, pay 37.5% of their value, and start a spare parts business with the balance, free from armed robbery investigation or prosecution.

·          This immunity is equally available to kidnappers for ransom, 419 practitioners, and any other variety of criminals under the Criminal and Penal Codes.( See s.6 below.)
4 (1)        Not withstanding anything contained in the Income-tax Law or in any Law, the undisclosed income declared under section 3 within the time specified therein shall be chargeable to tax at the rate of thirty per cent of such undisclosed income.

(2)        The amount of tax chargeable under sub-section (1) shall be increased by a surcharge, calculated at the rate of twenty-five percent of such tax to contribute to The Agricultural Research Council of Nigeria and the Nigerian Infrastructure fund, towards fulfilling Government’s commitment to agricultural and Economic development.

·          Petroleum tax may be as high as 85%, but untaxed petroleum proceeds can be declared as loot, and legally taxed at 30%, thanks to s.4.1.

· Spending public funds without National Assembly appropriation and oversight is unconstitutional (See s. 80 of the constitution). This lack of oversight enabled the diversion of the N60 billion Abacha loot ‘recovered’ under the government of President Jonathan.

· In any case, funds are usually stolen from an appropriated budget. If for instance, a billion naira is stolen from the health ministry, and 37.5% of it is recovered, it still belongs to that same ministry.
5)       The amount declared from the undisclosed income Shall, (after payment of the tax, surcharge in respect of the declaration) be invested in Nigeria by the declarant in any sector of the Nigerian economy, and in accordance with the regulations made under section 22.·          If the goal is to grow the Nigerian economy with loot stored in foreign banks, this is a meaningless provision.

· A N1bn looter could pay the N375m tax/surcharge for his amnesty, invest the balance of N635m in Nigerian cocoa beans, sell them abroad, and invest the now-legit proceeds permanently in the New York Exchange.

· Once the tax/surcharge is paid, the declarant cannot face any other penalty under any Nigerian law.
6)       Notwithstanding anything contained in the Income-tax Law or in any Law, the person making such a declaration shall not, in addition to tax and surcharge under section 4, be liable to penalty of such income. ·          This section contradicts s.9 of the Constitution (The National Assembly… shall not, in relation to any criminal offence whatsoever have power to make an law which shall have retrospective effect) and may therefore be unconstitutional.
7 1)       A declaration under section 3 shall be made to the Chairman of the Federal Inland Revenue Service and shall be in such form and be verified in such manner, as may be prescribed under section 19

2) The declaration shall be signed,

a) Where the Declarant is an individual, by the individual himself; where such individual is absent from Nigeria, by the individual concerned or by his solicitor or person duly authorized by him in this behalf; and where the individual is mentally incapacitated, by his guardian or by any other person competent to act on his behalf;

b) Where the declarant is a family, by any adult member of such family;

c) where the declarant is a company, by the Managing Director thereof, or where for any reason the Managing Director is not able to sign the declaration or where there is no Managing Director, by any director thereof;

d) where the declarant is a firm, by the managing partner thereof , or where for any reason such managing partner is not able to sign the declaration, or where there is no managing partner as such, by any partner thereof, not being a minor;

e) where the declarant is any other association, by any member of the association or the principal officer thereof; and

f)        where the declarant is any other person, by that person or by some other person competent to act on his behalf.

3) Any person, who has made a declaration under sub-section (1) of section 3 in respect of his income or as a representative in respect of the income of any other person, shall not be entitled to make any other declaration, under that sub-section in respect of his income or the income of such other person, and any such other declaration, if made, shall be void.

·          These provisions are wide enough to cover individuals, families, partnerships and corporate bodies.

·          By s.7.2.a, if an armed robber is shot during an operation and later dies, his family can keep the loot, even against the original owners, by making a declaration under this law.

· A political or mafia family can use S. 7.2.b. to legitimize the loot of a dead patriarch or godfather.

· With s. 7.2.c, any construction company in Nigeria can now declare its N1bn contract mobilization fees as loot, pay N375million tax/surcharge, keep N625million as profit and abandon the contract. This will be perfectly legal under this bill. The company can neither be prosecuted under the Criminal nor Penal code.

· S.7(3) tries to limit looters to a single declaration under this amnesty bill. But this limitation is meaningless because declarations have no upper limit. Besides, if a declarant does transfer assets to an accomplice to make a second declaration, since it is illegal to investigate the source of the assets, S.7(3) is actually unenforceable.
8 1)       The tax and surcharge payable under section 4 in respect of the
undisclosed income, shall be paid on or before a date to be notified by the Federal Government in the Official Gazette.

2) The declarant shall file the proof of payment of tax, and surcharge on or before the date notified under sub-section (1), before whom the declaration under section 3 was made.


3) If the declarant fails to pay the tax, surcharge in respect of the Declaration made under section 3 on or before the date specified under sub-section (1), the declaration filed by him shall be deemed never to have been made under this Scheme.
·          This amnesty bill will allow citizens to plan their criminality well ahead of time.

· For instance, if the amnesty is to run between 2018 and 2021, citizens can plan their crimes just before 2018, so that their declarations can be filed immediately after the theft, eliminating any risk of arrest and prosecution.
9)       The amount of undisclosed income declared in accordance with section 3 shall not be included in the total income of the declarant for any assessment year under the Income-tax Law, if the declarant makes the payment of tax and surcharge referred to in section 4, by the date specified under sub-section (1) of section 7.This section eliminates the risk of treasury looters suffering double-taxation on the proceeds of crime. Legitimate businessmen who bring their income from countries with no tax treaties with Nigeria may suffer double taxation. Not looters.
10)    A declarant under this Scheme shall not be entitled, in respect of undisclosed income declared, or any amount of tax and surcharge paid thereon, to re-open any assessment or reassessment made), or claim any set off or relief in any appeal, reference or other proceeding assessment or reassessment in relation to any such of undisclosed income declared . This section prevents a declarant from trying to reduce his usual tax bill by the tax/surcharge paid on his loot.
11)    The provisions of this Act shall apply to transactions where a property is held by or transferred to a person, but has been provided for or paid for, by another person and such property transactions where:

1. the transaction is made in a fictitious name,

2. the owner is not aware or had denied knowledge of the ownership of the property, or

3. the person who provided the consideration for the property is not traceable;

And shall apply in respect of the declaration of undisclosed income made in the form of investment in any asset, if the asset existing in the name of another, is transferred to the declarant, being the person who provides the consideration for such asset, or his legal representative, within the period specified by the Central bank of Nigeria.
·          This section will be useful for those wishing to convert government property within their control, such as vehicles and corporate securities, into loot via fictitious transactions.

· Judges and other public officers can now claim ignorance of the source of millions of dollars that suddenly appear in their bank accounts, pay a 37.5% tax/surcharge, and then continue in their jobs without the nuisance of police investigations into the source of their wealth, or the favours they promised or delivered, or the godfathers they now serve.
12)    Any amount of tax and surcharge paid under section 4 or made pursuance to the declaration made under section 3 shall not be refundable.The declared assets could be stolen property belonging to individuals or communities. This clause makes it impossible to recover 37.5% of such stolen personal or community property even after tracing.
13)    Except in “matters of National Security”, any declaration made under section 3 shall not be admissible in evidence against the declarant for the purpose of any proceeding relating to prosecution, imposition of penalty, or a jail sentence, other than the tax and surcharge leviable under section 4, or for this Act, notwithstanding anything contained in any other law for the time being in force:

Provided that in “matters of national security” such facts and issues relating to shall first be determined by a court of competent Jurisdiction before effect is given to the exception in section 12.
·          This is the Immunity Clause: a declaration of loot cannot be used in any prosecution under any law whatsoever. This immunity is wide enough to cover kidnappers, drug dealers, mafia families, money launderers and embezzlers.

· There is no exception in s.12. This proviso does not make sense.
14)    Notwithstanding anything contained in this Scheme, where a declaration has been made by misrepresentation or suppression of facts, such declaration shall be void and shall be deemed not to have been made under this Scheme. ·          This section contradicts s. 16(1)b of this same bill (which says: “no inquiry of investigation shall be commenced against the recipient under any such law on the ground that he has received such remittance”).

· If it is illegal to investigate declarations under this bill, it means that any lies or suppression of facts in them can never be determined.

· Even if a whistleblower delivers a dossier proving misrepresentation, S.16(1)b prevents the Police from opening it, or a court from considering it.

· The true intent of this bill is that the looter’s declaration is to be taken at face value. This provision is therefore a dead letter.
15) 1.        Where the undisclosed income is represented by cash (including bank deposits), bullion, investment in shares or any other assets specified in the declaration made under section 3—

(a) in respect of which the declarant has failed to furnish a return under any Law in operation, for the assessment year commencing on or before the commencement of this Act; or

(b) which have not been declared in any return form furnished by him for the said assessment year or years; notwithstanding anything contained in any Law or any rules made thereunder,—

(i) Such assessment shall not be payable by the declarant in respect of the assets referred to in clause (a) or clause (b) and such assets shall not be included in his net-worth for the said assessment year or years;

2. The provisions of sub-section (1) shall not apply unless the conditions specified in section 7 (1) and (2) are fulfilled the declarant
·          S.15 is another provision to protect the declarant from double-taxation.

· This bill is designed to protect the declarant from the whistleblower for reward. Current government policy is to reward whistleblowers who expose looters with up to 5% of the loot. The looter ends up with nothing and possible jail time.

· Under this bill, the looter gets immunity from prosecution by blowing the whistle on himself. He keeps 62.5% of his loot, gags and blinds the government, and earns permanent immunity from other whistleblowers.

· Even if the looter only declares 10% of his ill-gotten loot, s.16(1)b of this bill blocks any investigation. This checkmates the dossiers of future whistleblowers.

· Missing word/s at the end of s.15(2). Meaning unclear.
16) 1. Where the undisclosed income is represented in foreign bank deposits, foreign investment or any other assets outside Nigeria, specified in the declaration made under section 3, requiring remittance from outside Nigeria —

a. no Declarant, (for the purposes of receiving remittance under this Act) who claims immunity in accordance with this scheme shall be required to disclose, for any purpose whatsoever, the nature and source of the remittance made to him;

b. no inquiry of investigation shall be commenced against the recipient under any such law on the ground that he has received such remittance;

c. the fact that the recipient has received a remittance shall not be taken into account and shall be inadmissible as evidence in any proceedings relating to any offence or the imposition of any penalty under any law;

2. Nothing in sub-section 15 (1) shall apply in relation to any foreign exchange, to be brought into Nigeria under any of the provisions of-

(i) Money Laundering Act or;

(ii) the Income-tax Law;

(iii) Exchange Regulation law applicable in Nigeria;

(iv) prosecution for any offence punishable under Nigeria Penal / criminal Code, Laws on the Narcotic /Drugs and Substances, and laws for Prevention of Corruption or;

(v) or for the purpose of enforcement of any civil liability;

if the period notified by the Central bank of Nigeria, in an Official Gazette, within which remittance of such foreign exchanges is to be brought into Nigeria under this Act has expired
·          For 37.5% of declared loot, the government is gagged, blinded and deafened by this section. Thus, a looter can steal a billion naira, declare a million, pay N375,000, and get immunity for the entire looting transaction because by this section it is illegal to investigate the actual declaration.

· Since the declarant does not have to disclose the nature or source of the remittance, the racket that generated the loot in the first place, as well as the syndicate of public officers exploiting it can stay in business.

· By virtue of s.16(2), the Money Laundering Acts and other listed laws have no application to the loot declared during the amnesty period. Indeed, for the purpose of a civil action, the loot cannot be considered part of the looter’s net assets and so cannot be, for instance, attached in court judgment.

· This attempt to attract loot from abroad is not likely to succeed. Foreign countries, especially the OECD states that mostly attract loot from Nigerian corruptocrats are not bound by Nigerian laws forbidding investigation into corruption. Loot declared in Nigeria under this bill will legally be investigated by the foreign countries where they are expatriated from and where the owners are resident or doing business (s.2(e)).
17)    For Avoidance of doubts, it is hereby declared that—

(a) save as otherwise expressly provided in this Act, nothing contained in this Scheme shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Scheme;

(b) where any declaration has been made under section 3 but no tax, surcharge referred to in section 4 has been paid within the time specified under section 7, the undisclosed income shall be chargeable to tax under the Income-tax Law in the previous year in which such declaration is made;
·          If a single member of a conspiracy of looters makes a declaration, it does not grant immunity to all. To get immunity, each person would have to make his/her own declaration.

· This is a distinction without a difference though: by s.7(2), a person can make a declaration on behalf of a family, company, partnership, or association of people, and all the members of such groups would be covered by the immunity granted by this bill.
18) 1.        If any difficulty arises in giving effect to the provisions of this Scheme, the Federal Government may, by order, not inconsistent with the this Scheme, remove the difficulty: Provided that no such order shall be made after the expiry of the date on which the provisions of this Scheme shall come to an end.

2. Every order made under this section shall take effect until such order is laid before each House of National Assembly and approved.

Provided that where National Assembly fails to act on the order after 30 Days of its being laid, the order shall immediately come in to effect and become applicable notwithstanding the provisions of subsection 18(2)
·          In addition to the Central Bank, which can make rules under this Law (s.21 and s.22), the Federal Government is given powers to ‘remove the difficulty’ that arises in operating the scheme.

· S.18(2) is either poorly drafted or has missing words.
19)    Notwithstanding any law, a declarant shall be entitled to automatic amnesty, and the sources(s) of such money shall not be required to·          S.19 grants looters automatic immunity. This means that a looter can end, say, an EFCC investigation/ prosecution by filing a declaration and paying the tax/surcharge. No further administrative action is required.

· This may have been denied in the press, but it is the clear interpretation of this section and the overall bill.

· This section appears incomplete.
20. The Central Bank of Nigeria may by regulation set time frame within which such declaration made; Provide that where the declaration is made after the lapse of time, the declarant shall not be entitled to economic amnesty thereof.·          Nigeria has reporting obligations under the Multinational Convention on Mutual Assistance in Tax Matters. That convention is in force and has so far been signed by 112 states, including Nigeria and all the OECD countries .

· The blindfold clause in S.16 of this bill will not blind civilized countries where the looters or their partners are resident (see S.2e) from investigating declarants who move assets and funds under this bill. The ‘Economic Amnesty’ offered by this bill might therefore liberalize local looting without bringing the expected bonanza from loot domiciled abroad.
21. (1) The Bill shall cease to apply three years after its commencement.

(2) The Central Bank of Nigeria may provide regulations for giving effect to this Bill.
This bill may establish Nigeria as an international money laundering centre for the three years of this scheme as there is no requirement of Nigerian nationality for the remitter of the funds from abroad. Funds legitimated by declaration in Nigeria can subsequently be exported.
22)     1. The Central Bank Governor, by notification in the Official Gazette make regulation for carrying out the provisions of this Scheme.

2. Without prejudice to the generality of the foregoing, such regulations may provide for the form in which a declaration may be made under section 3 subsection (2).

3. Every regulation made under this Scheme shall be laid, as soon as it is made, before both Houses of the National Assembly, while it is in session, for a total period of thirty (30) days, and both Houses may before the expiry of the 30 days do the following;

i. approve the rules as it is;

ii. agree and make modifications in the rule or

iii. agree that the rule should not be made

Thereafter the rules shall have effect only in such approved form, modified form or be of no effect as the case may be; so, however, that such any approval, modification or annulment shall be without prejudice to the validity of any previously done under that rule.
·          This bill gives both the Central Bank and the Presidency similar power to make decisions and subsidiary legislation.

· The conflicting sections are 1,3,11,16,20,22 and 23 (enabling the Central Bank) and 1,2, and 8 (enabling the Presidency)
23)    The Central Bank shall quarterly transmit to each House of the National Assembly;

1. a report on the evaluation of the scheme;

2. the evaluation report shall include particulars of assets and funds declared, total amount of Tax and Surcharges recovered;

3. any other information as may be determined and required by the National Assembly;

4. recommendations for improving implementation of this Act.
·          Our own Evaluation of the bill is that it ignores the opportunity cost of looted funds because what is lost when a billion naira is stolen from health, education or infrastructure budget is more than a hundred million naira and the interest on it.

· Corruption costs LIVES. Nigerians die daily from diseases that would have been eliminated from Nigeria, but for corruption. They die from accidents caused by roads that were budgeted for, but never built. Millions of children are abandoned to illiteracy every year. Their lives and the lives of their future families are damaged forever.

· The dead are lost for ever.

· Even if 100% of loot is recovered after one year, a country and its people never fully recover from the effects of corruption and the gaps in provision caused by looted resources.

24) 1.        This Bill may be cited as “the Voluntary Income Declaration, Recovery and Amnesty Scheme, 2017”

 

Our Takeaway?

By announcing a 3-year jubilee at a future date, this bill will open the floodgates for people to loot with impunity, either to take advantage of the coming amnesty, or with the hope that the Amnesty will become a regular programme. From the day it is passed, it will confirm every person who has ever had access to the treasury, and NOT looted, to be a fool. This bill bill reboots public morality, by focusing on ‘recovering’ 37.5% of yesterday’s loot, it endangers our current budget and mortgages our future. Our laws should be making corruption High Risk and Low Reward, rather than Low risk and Legal. The NASS should focus on preventing corruption and protecting the budget from being looted in the first place. <a href=”http://www.bribecode.org/signup”>To this end, we recommend the Bribecode to the members of the NASS.</a>

The Bribecode & The Economic Amnesty Bill, Compared.

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