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Judges and the Moral Burden of a Corrupt Society!! ——The Economic Consequences of a Corrupt Judiciary and How it Impedes Nigeria’s Economic Growth and Development.

“Equal treatment before the law is a pillar of democratic societies. When courts are corrupted by greed or political expediency, the scales of justice are tipped, and ordinary people suffer. Judicial corruption means the voice of the innocent goes unheard, while the guilty act with impunity”—–Huguette Labelle, former Chair Transparency International.

A Corrupt Judiciary is one of the Greatest Impediments to any nation’s Economic Growth and Development. In 2017, the United Nations Office on Drugs and Crime (UNODC) in partnership with the Nigeria Bureau of Statistics released a report on bribery in the public sector through a survey conducted in Nigeria, and the legal system turned out to be the highest collector of bribes, a compromised legal system will make it impossible to fight or curb corruption.

It is estimated that every year Africa loses about US$148 billion to corruption and the figure represents about 25% of Africa’s average GDP over time while between US$50 billion to US$80 billion annually is lost to illicit financial flows from Africa. In Nigeria, oil theft amounts to about US$6 billion annually, and it was reported in 2017 that the country lost US$9 billion in two years to illegal mining, particularly gold exportation, a corrupt judiciary not only makes it difficult to fight or curb corruption but also costs the economy billions annually in Investment opportunities.

With a corrupt legal system, fighting and curbing corruption through the enforcement of laws becomes very weak and ineffective, and the processes of subjugating the excesses of corruption by a judicial system becomes a moral burden between choosing what will either benefit a larger society, a chosen few, or a selfish interest. With a corrupt legal system incapable of enforcing the law the illicit financial flows from Nigeria and other countries in Africa will continue annually depriving the country and continent the resources they need for economic growth and development, impeding the creation of jobs and the economy unable to tap into full capacity utilization of its human resources. Basically it denies the country and continent the financial resources they need to close gaps in infrastructure and Human Capital Development.

The importance of the judiciary in any society cannot be over emphasized, the judiciary as a system of courts interprets and applies the law in the name of the state, it also acts as a mechanism for the resolution of disputes and must be held in high honors and respect while the Judges who head and dispense judgements must be beyond reproach, they must be men and women with impeccable characters, those whom the nation will and has bestowed much trust to protect the interest of the society and the innocent, and must not be seen to subvert the law in any circumstances.

The law which they interpret and apply serves as the standard of conduct, required guidelines, and societal order which sets the rules and regulations for all citizens keeping the society running and functional while at the same time ensuring equity on the three branches of government. The law is said to be the last hope of the common man and Judges the keepers of that hope, assuring the society that the Judiciary will act in Equity, Fairness, and Justice to protect all citizens and properties without fear or favour.

The common man and poor which the law is meant to protect against oppression and economic disadvantage are the very people the country ought to focus on and determined to lift out of poverty to grow the economy like most progressive and developing nations with strong legal institutions, these nations through their legal institutions have not only protected this class of people, but the society at large and the interest of the nation. Research by The World Bank found that corruption has the greatest negative impact on the poor, facts have shown that the poor pay the highest percentage of their income to bribes, as much as 13% of their annual income compared to 3.8% of high-income households.

But when the law is subverted and robs the people of Economic Development, Prosperity, and Wealth, it creates a poverty stricken society, eroding trust in Government where both state and regional insecurity is bound to increase which ultimately turns investors away and further deepens poverty. The World Bank Group considers corruption a major challenge in actualizing its twin goals of eradicating Extreme poverty by 2030 and boosting shared prosperity for the poorest 40% of people in developing countries. The poor feels the greater impact of corruption, reducing access to services such as education, health, and justice, it robs the poor of an equal opportunity in life and further prevents government from investing in their Human Capital to lift them out of poverty as funds are diverted.

 At their expiration in 2015, not one of the 8 millennium development goals was achieved by Nigeria, and going by the trends of things, the 17 Sustainability Development Goals (SDGs) may not be achieved either, and this is mainly due to corruption. For instance, SDG 1 is about eradicating poverty, but Nigeria is increasing in both Extreme Poverty and Poverty, SDG 4 is about providing Quality Education, Nigeria now has about 13.2 million kids outside school. SDG 10 is about reducing inequalities, with increasing poverty Inequality is bound to increase, SDG 16 is about access to Justice and building Strong Institutions, and with a corrupt judiciary it will be impossible to achieve.

When those who represent the highest authorities of the judiciary become corrupted then the very trust from the society becomes broken, and when trust is broken in a society, it negatively affects other facets of the society and other institutions. Judicial corruption falls under two categories: 1.) Political Interference in the process by the legislative or executive branch, and 2.) bribery. In both cases it deals a devastating blow on both society and economy as everyone is bound to lose especially the poor which the law is meant to protect, including local and international investments meant to lift the poor out of poverty to grow a middle class economy.

Percentage that Paid Bribes and to which Public Official

In 2017, the United Nations Office on Drugs and Crime (UNODC) in partnership with the Nigerian Bureau of Statistics (NBS) carried out a survey on the quality and integrity of public services in Nigeria, it released a report titled “Corruption in Nigeria, Bribery: Public Experience and Response”. The report which was based on a nationwide survey covering all the 36 states including the Federal Capital Territory was the first detailed household survey on corruption to be conducted in Nigeria and Africa through detailed data and empirical facts. The report highlights the concentration of bribe payments in Nigeria as an important aspect of administrative bribery and that it is linked to the accessibility of public services and interactions with public officials, stating that only citizens who come into contact with public officials are exposed to bribery in the public sector.

 The survey found that almost a third of Nigerian Adult (32.3%) paid a bribe to public officials they had contact with between June 2015 and May 2016, according to the survey, an average of six bribes is paid annually bringing it to an average of one bribe every two months. Of the total number of adult surveyed, 52% had contact with public officials and 32.3% of the number that made up the 52% paid a bribe or were asked to pay a bribe. The survey estimates that about 82.3 million bribes were paid in the 12 months before the survey in Nigeria resulting in an average of 0.93 bribes paid per adult, concluding that almost one bribe is paid by every adult in Nigeria annually.

 The report estimates about N400 billion is being paid on bribes annually in Nigeria as the same amount was paid out in the 12 months preceding the survey, the equivalent of US$4.6 billion in Purchasing Power Parity (PPP) and equal to 39% of the combined state and federal budget on Education in 2016. The average sum paid in cash amounts to N5,300 which is equivalent to an average of about 28.2% of the average monthly salary of N18,900. The survey discovered that bribe-payers pay an average of 5.8 bribes over a period of one, and with 92% paid in cash, they spend an average of N28,200 annually on cash bribes, which is equivalent to 12.5% of the annual minimum wage.

Why is Corruption dangerous for the poor?….The World Bank estimates that to get out of poverty, developing countries need to invest about 20.5% of their annual income into some kind of investments to build wealth which is the average saving rates in developing countries, corruption robs the poor of the chance of building this wealth to invest and enable them escape poverty. The constant perpetration of the poor in the state of poverty hurts the economy on a larger scale and everyone loses as the country is deprived of the middle class it needs to grow the economy.

Factors Affecting Investment Decisions

This is where the report gets interesting, the report states that law enforcement and the judiciary are the areas of particular concern, the survey revealed that of the total adult who had direct contact with the Nigerian Police 12 months prior to the survey, 46.4% paid bribe or bribes to the Police, while 33% paid bribe to prosecutors, and 31.5% paid bribes to either Judges or Magistrates. The interesting thing is that Persecutors, Judges, and Magistrates fall under the Legal System, hence between these categories of people 64.5% of adults who came in direct contact with them paid one form of bribe or the other, making that institution the most corrupt in the country. While the legal institution which is saddled with interpreting laws and upholding the rule of law is the highest collector of bribes, the Police which is supposed to enforce the laws and prevent crimes is the second highest collector of bribes. We can now see where the devastating problem lies.

In 2017, The World Bank conducted a survey on Multinational Corporation CEO’s on the factors they consider before investing in emerging economies, Legal and Regulatory Environment came third on the list of factors affecting investment decisions with 40% saying it is critically important and 46% claiming it is important. Political Stability and Security came first while large Domestic market Size came second with 50% and 42% holding on to the factors as critically important. But combining both critically important and important factors as one, Legal and regulatory Environment will come second on the list making up 86% in total after Political Stability and Security with a combined score of 87%, while Large and Domestic Market will come third with a combined score of 80%. While Nigeria boasts of a market size of 198 million people which is an investors dream, factors like the Legal Environment has continued to hinder the influx of investors to the detriment of the economy at large.

Why is Legal and Regulatory Environment Important?……This is because corruption can affect business operations from licenses to contracts and even law suits. These may come in the form of corruption like hidden prices, or where companies are not truthful with their terms of competition, or where a company may have infringed on the intellectual properties of another company, or may be a patent or copyright violation, stealing of trade secret, etc. the problem and challenge is if there is rampant corruption within the legal system it may be impossible to get a fair trial or other legal redress for abuse or cheating. One major aspect multinational companies dread is having invested billions of dollars in Research and Development of a product and operating in a country with a weak or corrupt legal system, how they will recoup their billions in investments if their intellectual properties are stolen.

For instance in the United States, Pharmaceutical companies go through stringent processes of getting drugs approved, studies have found out that for every 5,000 to 10,000 experimental medicines considered, only one will gain Food and Drug Administration (FDA) approval which is majorly a 10 to 15 years of Research and Development with an average investment of US$1.2 billion, the one or two successes must make up for the thousands of failures and it is estimated that at the end of the day only two out of every ten medicines will completely regain the money spent on their Research and Development.

Currently the United States through its Commission on the Theft of American Intellectual Property claims the United States loses between US$180 billion to US$540 billion annually to Intellectual Property Theft. This is not limited to the United States alone, it is a known fact that companies file for bankruptcy annually because of Intellectual property theft as they are not able to recoup investment funds as competitors flood the market either with counterfeit or genuine products derived from stealing the original research and development from companies that have invested billions of dollars in such products and in almost all cases the products are sold at cheaper prices with the original owners not being able to compete with the low selling prices because of their investment cost in Research and development.

Intellectual property is protected in law by patents, copyright and trademarks, enabling people to earn recognition or financial benefit from what they invent or create and when a judicial system is corrupt and such laws cannot be protected investors stay away from such markets. With the world relying less and less on a mineral resource economy and more on an educational and knowledge driven economy where technology drives inventions and innovations, protection of intellectual property rights becomes a high priority for foreign investors and they avoid an economy with high level of judicial corruption.

This is why it is important to have a strong and independent judicial system that is not corrupt, will root out corruption, respect the rule of law, and hold all parties equally accountable. While Nigeria may have moved up from 169 position in 2016 to 145 in 2017 on the Ease of Doing Business index due to better and easier regulations, Nigeria could have and can do a lot better on the index to attract foreign investments with a legal system devoid of corruption.

Every year the Property Rights Alliance (PRA), an organization based in Washington D.C, The United States of America,  releases its International Property Rights Index Report, the 2018 edition was carried out on 125 countries covering 93% of the world population and covering 98% of world Gross Domestic Product (GDP). The organization is dedicated to the protection of property rights around the world, and the index serves as a barometer of the state of property rights in all countries using three major categories for its rankings: Legal and Political Environment, Physical Property Rights, and Intellectual Property Rights, these three major categories are further broken down into ten sub-factors.

International Property Rights Index Ranking

Nigeria has not really fared well on the rankings going back from 2010, Nigeria has averaged 113 out of an average of 121 countries spanning over a nine year ranking. In 2010, Nigeria ranked 107 out of 119 countries surveyed, while in 2018 it ranked 116 out of 125 countries surveyed making the country amongst the ten worst, the trust in the legal system to protect property and intellectual property rights are slim and therefore a hindrance to Foreign Direct Investments. As mentioned earlier, with Legal and Regulatory Environment being a crucial factor to multinational CEO’s hoping to invest in developing economies and Intellectual Property being the foundation of most businesses, the Legal environment must command a good score to attract investors into the Nigerian market. This is a major reason why most of investments coming into the country are in the extractive sector.

Another International Index which exposes the level of the Nigerian judicial system is the Index of Economic Freedom. Economic Freedom is defined as the fundamental right of every human to control his or her own labour, and the report is published annually by The Heritage Foundation, Washington’s number one think tank, the index which includes a Property Rights component is an assessment of the ability of individuals to accumulate private property, secured by clear laws that are fully enforced by the state. It measures the degree to which a country’s laws protect private property rights and the degree to which its government enforces those laws. It also assesses the likelihood that private property will be expropriated and analyzes the independence of the judiciary, the existence of corruption within the judiciary, and the ability of individuals and businesses to enforce contracts.

The property rights promotes productivity and nurture economic growth and development. Since 1995, The Heritage Foundation has published an annual report of its findings measured through 12 qualitative and quantitative factors grouped into four broad categories. 1) Rule of Law which measures property rights as one of its factors, 2) Government Size, 3) Regulatory Efficiency, and 4) Open Market. While each of the 12 factors that make up the economic freedoms is graded on a scale of zero to 100, a country’s overall score is an average of the total score. In 2019, Nigeria’s total average score was 57.3% down from 58.5% in 2018, and a total average score from inception in 1995 to 2019 of 53.4%.

 The interesting thing which the index and report revealed is that….of the four broad categories, the factors which make up the Rule of Law has the least score with an average of 30.4% in 2019, while factors that make up the broad category of Regulatory Efficiency has an average score of 66.5%, those of Government Size came up with an average of 83.2%, and factors of Open Markets with an average score of 49.1%. While the other broad categories of the index are relatively doing well, the Rule of Law which has Property Rights, Judicial Effectiveness, and Government Integrity as three of its factors is and has actually been lagging behind and has been pulling Nigeria down on the total score of Index of Economic Freedom Report annually since year 2000, coincidentally, one year after Nigeria transited to democratic rule.

Index of Economic Freedom - Average Rating Nigeria 1995 to 2019

While Nigeria records these low scores on Property Rights, it is pertinent to note that Nigeria’s score is below both the World average of 52.3% and Sub-Saharan Average of 38.9%. Before year 2000, precisely from 1995 to 1999, Nigeria scored an average of 50% on Property Rights annually, but all that changed in year 2000 when it dropped to 30% and only going above 30% in 2017 to 35.3% for the first time in 17 years and 36.5% in 2019. So what happened between 1999 to year 2000 when Nigeria dropped from 50% to 30% and remained at 30% for 17 years?.

On the 21st of January 2019, Chief Robert Clark, a Senior Advocate of Nigeria, SAN appeared on National Television in Nigeria to share his views and perspective on the allegations levelled against the Chief Justice of Nigeria (CJN) Walter Onnoghen by the Code of Conduct Bureau (CCB) on the false declaration of assets which centered around funds found in  account he could not account for, the CJN faced 6 count charges and was to face the Code of Conduct Tribunal.

Chief Robert Clark during his interview had stated that there was rot in the Supreme Court, he further stated that the question of corruption was the brain work of politicians and that cases that were to end at the Courts of Appeal were being taken to the Supreme Court because the constitution was amended to follow suit, he stated that cases of governorship elections that were supposed to end at the Courts of Appeal were being taking to the Supreme Courts. Quoting Chief Robert Clark….“Since the operation of this constitution in 1999, the politicians have been corrupting all judges, let me say this, I once had an opportunity, a governor was telling me, Chief Clark it is not how much we are going to pay you lawyers, but it is how much we are going to pay the Judges”….he further stated that the case was very bad.

Interestingly, looking at data it reinforces the stance of Chief Robert Clark, from 1995 at the start of the report on the Index of Economic Freedom to year 2000, Nigeria’s average score was 50% under the category of the Rule of Law, but it nosedived to a score of 30% in year 2000. Why?…..The year 2000 Report on Index of Economic Freedom was Nigeria’s first rating after the elections of 1999, by year 2000 elections cases were already in court and it is certain that from this point the integrity of the Judiciary was further compromised and has continued to be compromised till date.

Between 2003 and 2015 the courts in Nigeria handled various litigations arising from election petitions, while there are no available data for 1999, in 2003 there were a total of 574 litigations, and in 2007 a total of 1,291, in 2011 a total of 731, and in 2015 a total of 730, bringing the overall total to 3,326 litigations in four election periods with an average of 831.5 per election year. With this much cases before the judiciary, and politicians desperate and ready to spend money, judgements are sometimes compromised. The danger is as the judges are corrupted, Nigeria’s rating falls and it effects the confidence of investors in the market and reduces the chances of investments, hence the integrity of the judiciary is very crucial to Nigeria’s economic growth, development, and survival as a nation.

Index of Economic Freedom - Nigeria 1995 to 2019

So what does a score of 30% to 39% in the Property Rights signify?….the score is graded as the following criteria: “Property ownership is weakly protected. The court system is highly inefficient. Corruption is extensive, and the judiciary is strongly influenced by other branches of government. Expropriation is possible”. As the score gets higher the criteria becomes better, so a score of 40% is better than 30% to 39% and commands a batter confidence in an economy. Between 1995 and 1999 Nigeria’s score averaged 50% and the score graded according to the following criteria: “The court system is inefficient and subject to delays. Corruption may be present, and the judiciary may be influenced by other branches of government. Expropriation is possible but rare”.

A score under 50% is categorized as being Repressed, a score of 50% to 59% is categorized as Mostly Unfree, 60% to 69% as being Moderately Free, 70% to 79% is categorized as Mostly Free, and a score of 80% to 100% as being Free. Hong Kong has an overall score of 90.2% in the Index of Economic Freedom, and making its economy the freest in the world in 2019, with its Rule of Law having an average score of 84%, while Singapore comes second in the overall rankings with a score of 89.4% and its Rule of Law category having an average score of 95%. These are some of the reasons why both countries have remained at the top of global competition in their economies. One major aspect of economic success of Singapore, Hong Kong, and South Korea which transformed the countries from third world countries to first world countries was the reforms in the Judiciary that wiped out corruption, boosting investors’ confidence and investors flooding the country.

THE INTANGIBLE ASSETS A CORRUPT JUDICIARY IS COSTING THE COUNTRY!!….

While it is possible to calculate the tangible assets lost to corruption annually, a major aspects which has consistently been overlooked and cannot be ascertain of actual figures are the intangible assets. Consider a scenario where a Judge obstructs justice and sells an election petition to the highest bidder, most competent and credible people who contest for elections do not have the financial capacity to pursue election petitions especially when they do not belong to the major parties that are mostly financed by state funds.

These competent and credible candidates have not only been robbed of their mandate, the country and the electorates would have been robbed of the candidates that can contribute effectively to economic growth and development to move the country forward, these are corruptions plaguing the country from the Judiciary that cannot be quantified. Those who buy the Judiciary all have one purpose when they get into office….to recoup the funds spent on both elections and the bribing of the Judiciary and they will do it at the expense of investments to the state. When they do this, investments in key areas of the economy suffers, majorly investments in Human Capital Development and Infrastructures…..salaries and expenditures to run the government cannot be owed or sometimes owed for a while but they are eventually paid.

For instance, a lack of Investment in infrastructures which enhances Human Capital Development namely Schools and Hospital has led to massive brain drain in mass exodus of Professors, Students, Medical Practitioners, and a lot of other Professionals from the country. The question is how do you quantify these loses to the country?….another way to look at the humongous loss of the mass Exodus to the Nigeria’s Economy is through the educational system, Nigeria Subsidizes Education to University Level.  

When graduates and skilled individuals leave for other countries it means Nigeria is actually subsidizing Human Capital Development to these countries up to university level, example are the 75,000 registered doctors in Nigeria, only 35,000 are currently practicing in Nigeria with about 40,000 practicing abroad as noted by the chairman of the Nigerian Medical Association, Dr. Olu Muyiwa Odusote. With lesser doctors, capacity utilization in the economy is affected as some people will not meet up with their full potentials due to lack of medical personnel and facilities, and when people cannot achieve their full potentials it affects the economy, the ripple effects of corruption are huge and a future disaster for everyone if not curbed.

Consider another scenario where a company invests hundreds of dollars in both local and international trainings of an employee after graduating from the university and the employee has risen to executive management level only for the company to lose such a staff to accident because of bad roads, these are the intangible assets that are unquantifiable, or is it the traffic that cost employees at least an hour of company time daily which is paid for by the employers because of insufficient roads, all these affect companies revenue which ultimately affects state revenue and a country’s GDP and GDP Per Capita.

CONCLUSIONS!!…

“The Legal System can be described as the backbone which holds every other Institution together and promotes the establishment of public order in a country, it plays a vital role in economic growth and development and if compromised every other facets of the society ultimately starts to fall apart, hence it is an institution that should have zero tolerance for corrupt individuals”…..Roman Oseghale

The Legal System can be described as the backbone which holds every other Institution together and promotes the establishment of public order in a country, it plays a vital role in economic growth and development and if compromised every other facets of the society ultimately starts to fall apart, hence it is an institution that should have zero tolerance for corrupt individuals. The exercise of freedom of market and entrepreneurship including the protection of ownership rights can only be possible when the entities acting on the market or the holders of the property feel confident, it is therefore imperative that the Judiciary must be incorruptible to promote long-term control of government through the Rule of Law helping build investors’ and societal confidence for significant effect in economic development and growth.

The Judiciary must alienate itself from the influence of other branches of government to build public trust on the Rule of Law, and must hold itself accountable. Government Integrity which is one of the factors grouped under the broad category of The Rule of Law scores the lowest in the 12 qualitative and quantitative factors with a score of 20.5%…..this shows that Government Integrity which is a crucial determinant of trust within the three arms of government is abysmally low, holding people accountable for their actions through a legal system is an important factor to building integrity within the government, when people know they will be sent to prison for the consequences of their actions and cannot buy their way through, their actions would be geared towards avoiding such consequences by doing the right thing. The Executive and the Legislative arms of government must also reframe from influencing the Judiciary and allow the rule of law guide in running all branches of government this gives more credibility and score in international ratings.

Judicial reforms to root out corrupt judges and prosecutors to restore confidence in the judiciary must be top priority, subverting the wish of the people through the sales of judgement erodes confidence from both the public and the international observers. A group of 20 Senior Advocate of Nigeria (SAN) meet earlier this year to kick start the judicial reforms, the SAN’s must understand that the judicial reforms if achieved will not only stamp out corruption but will also improve the economy tremendously. With the new cases of election petitions from the 2019 elections, and corruption cases before the courts, the judgments will tell if indeed the Legal System as a whole is ready to rid itself of corruption.