Liberia’s “tardiness” over money laundering investigations “condemned” by West African regional court

Judges of the West African regional court have joined the fight against money laundering. They have delivered a major new decision permitting the Liberian government’s continued freezing of an account through which vast sums of money have been moving back and forth. This despite the account-holders allegedly not having carried out a single business activity. At the same time, however, the court was not afraid to hold that government to account, criticising it for tardy investigation of the matter. The new judgment is also significant for clarifying an ambiguity that has troubled the court’s jurisprudence for some time and has given rise to contradictory decisions.

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At the heart of the case is Dexter Oil Ltd, based in the Liberian capital of Monrovia, but whose shareholders and directors are Nigerian. Fed up because the Liberian authorities froze $3m that was in Dexter Oil’s account, its directors asked the judges of the regional court – the Community Court of Justice of the Economic Community of West African States (ECOWAS) – to find that the company’s right to property was violated.

The company’s representatives told a long story about the delays they had experienced since the funds were frozen and complained that the Liberian government had not informed them of the outcome of investigations into the account’s allegedly “suspicious" activities.

The Liberian government, however, said that Dexter Oil had not “carried out” a single business activity in Liberia. It claimed that the company came to Liberia “with the sole purpose of establishing two shell companies”, later used as vehicles for laundering money from Nigeria, and that, in its actions, the government did not infringe Dexter’s rights.

Counsel took the court through the transactions in Dexter’s account, with many millions of USD coming in from Nigeria, before being transferred to Kenya, Singapore, the UK, Taiwan and Egypt.

The court also heard that the sole signatory on the account is Chukwuemeka Ekwunife, who left Liberia in 2012 and did not return – despite the seizure of the funds – until mid-2016. During that visit he lobbied members of the Liberian Senate, in what counsel said was a violation of the constitution, urging that they intervene in the matter.

Further investigations showed that Ekwunife was being prosecuted in Nigeria by the Economic and Financial Crimes Commission for an alleged theft of Naira 432-million.

Explaining the delays in dealing with the matter, counsel said Liberia was investigating laundering transactions between different countries but that it would jeopardise the case to say more.

The court listed three issues for decision, including whether, as a company, Dexter was a “proper person” to access the court under the Protocol establishing the Community Court of Justice, ECOWAS, and its amendments.

A “strict” interpretation of the English text suggested that only individuals had capacity to bring action against a member state for human rights violations. While most of the court’s decisions reflected this view, there were a few cases in which the court has ruled that the French text accommodated both individual and legal persons. There was thus a “divergence” in the court’s decisions about whether legal persons could claim rights’ violations.

The difference lies in the fact that the English version refers to individuals having access for rights’ violations, while the French gives access to “every person that is a victim”. The French text has thus been interpreted to mean both natural and legal persons had access to a human rights claim. As a result, the court has seen the growth of two different streams of interpretation, with some judgments allowing access on human rights issues only to individuals, and others admitting legal persons as well.

The time was ripe to revisit the question, said the judges, to “reconcile the divergent jurisprudence”. They declared that the text did not intend to allow legal persons to access the court on human rights issues, but only natural persons. And they further declared that they had now “departed” from all previous decisions to the contrary.

Legal persons were however bearers of other rights, not dependent on human rights, such as the right to property, and could access the court to protect those rights.

Had the company’s rights to property been violated? – The answer would depend on whether Liberia’s confiscation of the funds had been lawful. In the court’s opinion freezing the account was a lawful action and served a legitimate aim. On the other hand, Liberia had “a duty” to make sure that its investigation into the matter was “very prompt and effective”, so as to avoid infringing the rights of citizens. Had it discharged its duty to avoid infringing the rights of citizens? No, not really, was the inevitable answer of the court.

Liberia’s investigation was characterized by “inadequate and imprecise record of the steps that were taken”. Just as the company had failed to show the legitimacy of the frozen funds, so the government had been “tardy” in its investigations, this being a “breach of its obligations” and something that was “condemned by the court”. Despite the government’s slow pace, however, the court could not make any order in favour of Dexter. The company had not shown that the funds were legitimate and the government was entitled to freeze an account “with the legitimate aim of protecting public interest”.

The court’s finding was thus that Dexter’s right to property had not been violated by Liberia and that the parties should both bear their own costs.