EFCC’s searchlight on real estate: Experts call for caution

Following the recent comment by the Economic and Financial Crimes Commission (EFCC)’s Chairman, Abdulrasheed Bawa, that Nigeria’s real estate has become a haven of money laundering, with a promise to beam searchlight on the sector, many operators in the sector have expressed support, but want the anti-graft agency to apply caution in its approach in order not to disrupt the little growth in the industry. Dayo Ayeyemi reports

It is no longer news  that the Nigeria’s real estate sector  grew by 6.52 per cent to 1.77 per cent in the second quarter 2021 compared to -4.75 per cent in first quarter 2020 partly due to the improving interest rate environment.

For the fragile growth recorded in the sector  having been in negative for 17 consecutive quarters since 2016,  real estate operators comprising developers and  built environment professionals  are cautious of  any  action  that is capable of heating up the sector, thereby  causing inactivity despite thousands of vacant houses dotting the landscape of Lagos and Abuja.

Their current fear is hinged on recent comment by the Economic and Financial Crimes Commission (EFCC)’s Chairman, Abdulrasheed Bawa, claiming that  90 per cent of money laundering is  being done through the real estate sector.

Speaking on a television program last week, the anti-corruption agency boss stated that although the sector was monitored via the special control unit, more needed to be done. He said: “One of the problems we have now is the real estate. 90 to 100 per cent of the resources are being laundered through the real estate.”

He said there were  so many issues involved, but that he was  working with the National Assembly to stop what he called “the gate keepers” as there would be reduction in looting if there is no one to launder the money.

Since the comment by the EFCC boss, tongues have continued to wag among built environment experts. While majority of the professionals supported the anti-graft agency in its fight to rid the nation of money laundering and other financial crimes, they are of the opinion that it can as well go ahead with its probes in the real estate sector without  causing disruption to the industry.

Speaking with Nigerian Tribune when interviewed, former President of the Nigerian Institute of Building (NIOB), Chucks Omeife, noted that the real estate sector had been a thriving striving despite the prevailing COVID pandemic and other negative economic indices that are being branded around .

He said the comment of the chairman of EFCC could cause a toxic and negative ripple effect in the real estate sector.

According to him, this intention of the chairman could have  been carried silently without necessarily making a pronouncement which is capable of discouraging potential investors in the sector thereby causing a hill in the activities in the sector which is sustaining and contributing substantially to the economy.

His words: “It is a known fact that majority of the people consider real estate investment as a lifetime investment and also there is a strong assumption that looted monies are laundered through property acquisitions. I am sure this would  have informed the EFCC  Chairman’s pronouncement about beaming  searchlight to the sector.

“This sounds very encouraging if the fight against corruption must be thoroughly carried out , no sector must be left out . My concern however is that this intention of the chairman could have  been carried silently without necessary making a pronouncement which is capable of discouraging potential investors in the sector thereby causing a lure in the activities in the sector which is sustaining and contributing substantially to the economy.”

The former NIOB boss noted that Nigeria’s  cities are littered  with massive properties that are emptied and unoccupied especially in high brow areas, saying this made it obvious facts, and that  EFCC could start from there by carrying out  silently due diligence on these properties to ascertain their owners and how they came about the fund to acquire such properties.

He said: “The fact that they are empty shows that the said owners are not thinking of repaying any loan hence the source of such fund could be questioned.

“The situation. of things in this country is such that tracing laundered monies are not a difficult assignment if there is sincere  and deliberate intention to track down those who have fraudulently appropriated money that do not belong to them.”

Omeife pointed out that the process of development in Nigeria is quite demanding especially in the area of documentation, saying this  could give EFCC an important lead into knowing the genuine investors against those who want to launder stolen money through investment in the sector.

“I do not think these are difficult tasks to carry out except that it demands from those investigators sincerity of purpose and strong will power to do the needful in the face of anticipated uproar from those money launderers.

“I strongly believe that this is a noble intention to sanitize the sector and unmask those  who want to use the sector as a hiding place for their criminal activities. I also  think seriously that a lot can be achieved if the operation was to be carried out clandestinely without unnecessary heating up the sector .

 

Advice to developers

To avoid embarrassment, the erstwhile NIOB president,  advised  real estate developers to put in place proper and an exhaustive documentation to cover their investment.

“Today all fund in circulation can be traced to an extent talk less of the massive investment in real estate that we all are witnessing across the country. Good intention but wrong approach,” he said.

 

Other views

President of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Emma Okas Wike, during a press briefing heralding the annual conference of the group, said the institution wholeheartedly welcomed investigations into the allegation.

However,  he urged the anti-graft  commission to put its search light on non-professionals that are engaged in real estate transactions to curb the menace of fraud in the sector.

According to him, NIESV   had not only supported the anti-corruption agenda of the Muhammadu Buhari led administration, it also pledged to support the government in achieving this objective in any way possible

“As a professional body established on the moral values of honesty and devotion, a profession which operates on a Code of Professional Ethics and Practice, we wholeheartedly welcome investigations into the allegation. That is the proper thing to do.

“The virtues of honesty and trust are highly required of us because the services we offer are vital to the economic development and well-being of the society.  The profession keeps tab on members adherence to the guiding principles embedded in the Code of Professional Ethics and Practice, while applying the stick to erring members without fear or favour. This is the standard upon which the profession of estate surveying and valuation is anchored.

“We frown at professional misconduct and corrupt practices by members of our profession. We would cooperate with the EFCC to ensure that real estate is not used for money laundering,” the NIESV president said.

In his opinion, a Member of Town Planners Registration  Council of Nigeria (TOPREC), Mr. Moses Ogunleye, said the  comment by the Chairman of  EFCC  should  ordinarily  not distort  real estate market, but strengthen it .

According to him, it is an opportunity for key  actors in real estate business to embrace openness or to be more accountable .

“When businesses are run with high level of openness,  it tends to attract more respect and invariably  open more opportunities for the actors,” he said.

For genuine or registered  estate  agents or realtors,  Ogunleye said they  have nothing to fear, pointing out that by the  dictates of  the practice, it is expected that they operate with high level of accountability and integrity, adding that they are not expected to allow their organisations to be used for money laundering.

He said: “However , for those who operate in the ‘informal  ‘ sector or estate agency those not registered to do such business but do it , they have reasons to fear. If your business is genuine,  you have no reason to expect any embarrassment by EFCC.’

In a report, a real estate management professor at the University of Lagos Timothy Nubi,  stated that given  the huge disparities of wealth and opportunity across Lagos and Nigeria more broadly,  government should focus on driving investment in affordable housing in a city with a housing deficit of about 2.5million units and in which two-thirds of residents live in slums, according to UN estimates.

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