Fraudulent business activity is growing in Nigeria, and efforts are often made to involve foreign firms

Business America, Jan 13, 1992

Attempts by some residents of Nigeria to involve citizens of the United States and other countries in fraudulent business activities have increased greatly in the past year. The illegitimate activities of a small number of individuals have contributed to an unfavorable reputation for Nigeria in foreign business circles. These fraudulent activities have adversely affected Nigerian efforts to expand legitimate commercial links with its trading partners.

Although the vast majority of Nigerian business firms are legitimate and reputable, business fraud in Nigeria has grown in volume, profitability, and sophistication from a cottage industry to a significant commercial enterprise. The U.S. Embassy in Lagos, Nigeria estimates that attempts to involve foreign firms in frauds now number in the thousands, and worldwide financial losses in the millions of dollars.

Scam artists develop mailing lists from every conceivable source, including business directories, advertising, trade shows, chance encounters, magazines, newspapers, trade journals, and past contact information gleaned from the files of legitimate companies and government agencies. They use these lists to solicit U.S. firms to cooperate in a variety of activities, many of which may appear inncent, but which may violate Nigerian or U.S. laws, or may result in major financial loss to the American firms.

The U.S. and Foreign Commercial Service (US&FCS) in Lagos, Nigeria issued advisories to the U.S. business community in March and November 1991 regarding the increased incidence of business frauds. The advisories served as the basis for Department of Commerce press releases to warn U.S. residents against possibly fraudulent business activities in Nigeria.

Fraudulent operations range from the simple and obvious to the complex and sophisticated. Nigerian residents may communicate with Americans to request their assistance in some of the following actions, which are sometimes combined to form highly elaborate and illegal activities:

* efforts by Nigerian nationals to acquire a U.S. visa under the pretext of visiting the United States for legitimate business purposes;

* shipment of products or samples to Nigeria before securing payment or with promise of later payment;

* shipment of products under false letters of credit;

* efforts to obtain blank company letterhead, proforma invoices, or bank account information from a U.S. firm on the pretext of a promised transfer of funds from a blocked account in Nigeria;

* payment by a U.S. citizen of an alleged Nigerian tax or fee, to finalize a transaction;

* promise of contracts to supply goods or services to the Nigerian government, or contracts to purchase petroleum from the Nigerian National Petroleum Corporation.

Travel to Nigeria. In some cases the scam artists may attempt to entice the victim to travel to Nigeria, with or without a valid entry visa. The victim may be told that because of the special nature of the proposed transaction, e.g., a government contract award, no visa is required, or that a diplomatic visa has been arranged in Nigeria and that no contact with Nigerian authorities in the United States is necessary. Once the victim is in Nigeria, various forms of extortion may be used by the scam artists, including threats and even physical harm. The U.S. Embassy in Lagos reports that in several recent cases, Nigerian scam artists have operated out of third countries, particularly Togo and Benin. They have offered the victim auto transport to Lagos, crossing the Nigerian border without a visa. All U.S. travelers, including diplomats and government officials, must have a valid Nigerian entry visa before entering Nigeria. Entry into Nigeria without a visa is a violation of Nigerian law, and has been used by scam artists as leverage against their victims.

A bogus government contract may also be used as bait to entice the unsuspecting victim to travel to Nigeria. The alleged contracts are for multimillion-dollar procurements of whatever product the victim produces. The victim receives an unsolicited letter, informing him that the "Federal Tenders Board" (which does not exist) or some other agency has awarded a huge contract to the company, by way of its new Nigerian "agent." This may be followed by detailed listing of specific product, quantity, sizes, item numbers, etc. The victim will then be told that, because this is a government contract, travel to Nigeria will be necessary to sign some papers, without which the deal cannot go forward.

Once in Nigeria, the victim may be set up for any number of "stings," including that of a bogus registration fee. The government contract is said to require that the U.S. firm register in Nigeria for a sizeable fee, or that a fee is required before a contract can be finalized.

There is no requirement that an exporter travel to Nigeria in order to sell to the Nigerian government. If an exporter sells through a Nigerian agent, there is no registration requirement. The U.S. Embassy in Lagos strongly recommends that U.S. citizens entering into new business relationships with Nigerian residents and/or businesses defer travel and make no payments until the bona fides of the transaction can be confirmed by the Embassy. Department of Commerce district offices can assist firms in contacting the Embassy for this purpose.