Game theory is one of the most exciting branches of economic science. As a methodology it focuses on human behaviour under differentcontexts or markets, as people seek to maximise gain while minimising pain and risk. Game theory is a marked departure from normative political economy. The latter is preoccupied with what is best for individuals and society based on principles of ethics and political theory.
There will, of course, always be a place for values and normative reason in economic and social life. But the essence of game theory is premised on the notion that you cannot even begin to fathom what is good for society without first understanding what inspires people to behave the way they do. Understanding the foundations and springs of human behaviour is the first step to steering people to behave in ways that promote the common good.
I believe game theory provides a good explanation for how politicians and public office-holders behave when it comes to managing public finances. Much of the rent-seeking activities that we dub ‘corruption’ derive from simple game-theoretic considerations. In a society where institutions are weak and the risk of getting caught in acts of rent-seeking rather low, it means that office-holders will take the necessary risk to make a killing at the expense of society.
The values that a society such as ours attaches to wealth are extremely inordinate. In most parts of Europe, stumbling into sudden riches, especially when one enters public office, is bound to raise many eyebrows. In our society, anyone who does not take steps to feather his own nest and those of his acolytes would be considered a fool.
When public office-holders steal public funds, they go into elaborate length to cover their own tracks. During the military era they used to put the cash in water tanks and sometimes in the ceilings of their homes. One military titan is known to have buried an entire fortune in his farm. Nobody sympathised with him when robbers invaded the farm and made away with the dosh. There is no honour among thieves.
During the first two decades of our statehood, the norm was for politicians to keep their stolen wealth in Swiss and other Western banks. However, in recent years, given the tightening of anti-money laundering regimes in the West, the current practice is to move the money to Dubai and the Gulf region. Many are investing in properties and other profitable outlets. Some, we are told, are taking their ill-gotten wealth to China.
The establishment of anti-corruption agencies such as EFCC and ICPC has obviously made things more difficult for those who engage in the looting of our national treasury. I admire Mallam Ibrahim Lamorde, who has served at the helm of the EFCC with courage and determination. Unfortunately, there have been critical limitations to what he could do. For example, when the agency makes a determination that a public officer may have been involved in serious financial crime, the agency would carry out its investigations and call the person concerned for questioning. Sometimes when the person is kept for prolonged questioning, orders will come “from above” that the suspect should be let off with absolutely no further investigation.
There have been many sacred cows in the outgoing government. The scale of grand corruption has been unprecedented in the annals of our benighted republic. A considerable part of the corruption did not necessarily involve people dipping their hands into the national treasury. More often, it would involve them simply operating their own oil wells and using the apparatus of state to ship the stolen oil across the seas at night. According to one estimate, we have been losing more than $1 billion monthly from such pillaging.
When some of the Niger Delta militants were given contracts to oversee the security of oil installations, it was the equivalent of recruiting bank robbers to look after the bank. The whole idea is intriguing, but it cannot be based on forensic or ethical soundness. When the oil thieves see that the government is unserious about real transparency in the oil sector, they take it as a cue to engage in as much pillaging as possible. Astonishingly, no single person, to the best of my knowledge, has ever been brought to justice for engaging in oil theft. From the perspective of game theory, only a fool would not engage in that kind of criminal activity if the state tacitly endorses it and the potential thieves are given a place of honour by the government of the day.
Come Friday, May 29th, Muhammadu Buhari will take over the mantles of the High Magistracy of our great Federal Republic. Buhari has been a crusader for anti-corruption and probity in public life. He has said in so many words that his administration will not engage in a witch-hunt. Rather, he is hoping to “draw the line” from the day he assumes office. It came to some of us as a bit of a surprise when outgoing President Goodluck Jonathan warned his cabinet members to prepare themselves for “persecution”. Meanwhile, we are told that some public figures are quietly returning their ill-gotten loot. Many among the chattering classes are insisting that the oil sector needs a rigorous searchlight to be cast on it. Buhari may well be left with no option.
From a game-theoretic perspective, the problem of corruption and rent-seeking cannot be solved by moral suasion alone. It requires the rebuilding of our core public institutions as well as taking steps to reinvigorate our justice system.
I think it would make sense to merge the EFCC and the ICPC and to create a single institution that can detect, arrest and prosecute offenders without any hindrance. We also need stiff laws disallowing the executive to interfere in the process of dealing with a corruption case once it has been set in motion. Corruption cases involving public officers should not be tried in the normal courts. The integrated EFCC/ICPC should be given enhanced regulatory and judicial powers to investigate, prosecute and sentence.
Secondly, I would recommend the reinstatement of the General Orders that underpinned all public financial expenditure right from the days of Lord Lugard until it was set aside during the Babangida years. Before that time, all public servants were subject to General Orders which specified how public funds should be spent. Nobody was exempt. When General Orders were thrown to the dogs, financial chaos ensued. Nigeria is yet to recover from that misfortune.
Thirdly, the Office of the Auditor-General needs to be enhanced. The trend so far has been to undermine that Office by starving it of funds and generally weakening its capacity to act. The financial autonomy of that agency needs to be guaranteed. The Auditor-General of the Federation should work routinely with the EFCC/ICPC. Whenever it comes across cases of graft, it should immediately communicate same to the former and they should work in tandem to investigate the matter in order to establish the facts. Punishment should follow swiftly and measures should be taken to recover the funds and confiscate the assets of corrupt officials.
Finally, I would suggest a declaration of a six-month moratorium on stolen funds. The Buhari administration should announce a moratorium on all stolen funds for a period of six months. Anyone who has squirrelled away public funds overseas should be allowed to bring back such funds and invest them in our country with no questions asked. After six months the government should institute an investigation on all stolen funds going back at least 20 years.
Let’s face it: our national treasury is virtually empty. The Buhari administration will be taking over dwindling coffers and foreign reserves that are being depleted at the speed of light. Meanwhile, it is estimated that Nigerians have about $200 billion stashed in foreign bank accounts. Declaring a moratorium offers the best hope of getting a sizeable proportion of our stolen patrimony. If people know that they could bring back their stolen funds with no questions asked, they would bring back such funds in no time. It is the fear of being caught that has made our big thieves to stash the funds abroad. That money is benefitting others while the Nigerian masses continue to suffer with no respite. It does not make economic sense to stash away money in
Western banks, given the low interest rates and low returns in those jurisdictions.
Encouraging people to bring back the funds will be a great boon for our economy. It will boost investment, create jobs and bring renewed hope. After the six months would have passed, those who are known to have pillaged our country should be pursued until they cough out the last naira. Their assets would also have to be confiscated. Giving the criminals a window of opportunity offers the best chance of getting the money and making it work for the good of the Nigerian people.
Obadiah Mailafia
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