Anti-social financial practices in Nigeria. Significant others perceptions
| DOI | https://doi.org/10.1108/JFC-02-2013-0005 |
| Date | 29 April 2014 |
| Published date | 29 April 2014 |
| Pages | 149-173 |
| Author | Olatunde Julius Otusanya |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Anti-social nancial practices
in Nigeria
Signicant others perceptions
Olatunde Julius Otusanya
Department of Accounting, University of Lagos, Lagos, Nigeria
Abstract
Purpose – The purpose of the paper is to examine the problem of anti-social nancial practices which
seems to be a taken-for-granted reality in many parts of the world and particularly in developing
countries. The paper locates the role of actors within the theory of transformational model of social
activity proposed by Bhaskar (1989) and advocates radical reform to minimise attendant problems
created by these antisocial nancial practices.
Design/methodology/approach – The paper proposed Bhaskar’s (1989) theory of transformational
model of social activity which suggests that the society provides the necessary conditions for
intentional human activity and that intentional human action is a necessary condition for it. This is
because it is difcult to separate people’s perception from the wider social context in which the
phenomena arise and the way and manner in which the practices are constructed. To help understand
why antisocial nancial practices have become so deeply embedded in the Nigerian sociopolitical and
economic systems, the views of signicant others (professionals, tax ofcials, non-governmental
organisations, media and regulators) were solicited about the structures that inuence the activities of
the social actor involved in these antisocial nancial practices in Nigeria.
Findings – Using results from 24 interviews, the paper argues that social structures, such as
globalisation, history, politics and social networks, have inuenced and [re]shaped the attitudes and
behaviours of actors towards committing antisocial nancial practices.
Practical implications – The paper, therefore, advocates a radical reform that could minimise the
attendant problems created by these antisocial nancial practices of actors and the enabling structures.
Social implications – Where antisocial nancial practices are embedded in the society, they become
part of the daily routines and in that process are normalised.
Originality/value – The paper is a general review of the literature and evidence on contemporary
issues.
Keywords Corruption, Tax avoidance, Signicant others, Practices, Tax evasion, Antisocial
Paper type Research paper
1. Introduction
In common with other socially constructed practices, a study of tax avoidance/evasion
and corruption (hereafter referred to as “antisocial nancial practices”) presents
considerable challenges. The two practices overlap. The contemporary literature, often
from the Western world, offers a variety of competing and overlapping denitions,
causes and solutions. For example, the literature identies varieties of corruption,
covering political, social, economic, legal, electoral, institutional and other scenarios
(Rose-Ackerman, 1978;Johnston, 1983;Tanzi, 1994;Mbaku, 1996;Gyimah-Boadi, 2004).
In general, corruption is considered to be a negative activity, in other words, something
which undermines social welfare (Amundsen, 2006;Bakre, 2007;Sikka, 2008a). Some
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Anti-social
nancial
practices
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Journal of Financial Crime
Vol. 21 No. 2, 2014
pp. 149-173
© Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-02-2013-0005
writers have considered tax avoidance to be legal and tax evasion to be illegal (Flesch,
1968;Brown, 1983;Sommers, 1998). However, in the contemporary tax system, this is
not exclusively so (Feldman and Kay, 1981;Cowell, 1990;McBarnet, 1991). In general,
tax evasion and avoidance from the legal, moral or economic perspective are
interconnected, and both are considered to have negative consequences (Kirchler et al.,
2003;Cobham, 2005;Otusanya, 2011).
The global antisocial nancial practices’ industry has attracted the increasing
attention of international organisations, policymakers[1] and scholars[2], but
comparatively little scholarly attention has focused on the role of structure and agency
in facilitating antisocial nancial practices (Otusanya, 2010). A scholarly attention has
focused on the role of accountancy rms in facilitating tax avoidance, evasion and
corruption (Sikka, 2003,2005,2008a;Bakre, 2006,2007;Otusanya, 2011). A number of
other studies have paid attention to exploring the impact of a range of explanatory
variables (such as investment, bureaucratic efciency, growth, scal termites and
ethnolinguistic fractionalisation) on some aspects of antisocial practices generally
(Mauro, 1995;Schneider and Enste, 2000;Tanzi, 2000,Akindele, 2005). The literature in
this area is diffuse. While there is considerable research on the relatively narrow aspects
(causes, effects and consequences) of antisocial practices in developing countries
(Akindele, 2005;Peel, 2006;Martens, 2007), broader accounts of these antisocial
practices as impediments for sustainable development in developing countries are
scarce.
Antisocial nancial practices are not just the prerogative of developed economies
(Otusanya, 2010). They are also encountered in developing countries (Bakre, 2008;
Otusanya, 2010,2011). As a result of these informal economy[3] activities, developing
countries are estimated to be losing ⬎$385 billion in revenue annually due to tax
avoidance and tax evasion (Cobham, 2005), whilst paying around £100 million (US$190
million) a day in debt repayments alone to richer countries (Oxfam, 2004). The African
countries have been estimated to be losing $500 billion (£270 billion) a year in revenue
(Christian Aid, 2005)[4]. Corruption and the transfer of illicit funds have therefore
contributed to capital ight from Africa, with ⬎$400 billion having been looted and
stashed away in foreign countries (UN Ofce on Drugs and Crime, 2005). The former
Chairman of the Economic and Financial Crimes Commission (EFCC)[5], Nuhu Ribadu
disclosed that pervasive corruption in Africa bleeds the continent of $148 billion[6] each
year, representing 25 per cent of its gross national product. It is also estimated that
“African political elites hold somewhere in the range of $700 to $800 billion in accounts
outside the continent” (AAPPG, 2006, p. 15). Antisocial nancial practice is continually
depriving the African economy of sums large enough to make a real difference in social
investment in education, transport, pensions, housing, health care and for freeing people
from poverty and squalor (Oxfam, 2000;Filling and Sikka, 2004;Sikka, 2008a).
The foregoing pervasiveness of these antisocial nancial activities on the
development of a developmental state such as Nigeria draws attention to the
interrelation of different actors and structures facilitating these practices. Its
pervasiveness provides an opportunity for studying the social, political and economic
inuences which shape the variety of actors in this social practice and why it has become
institutionalized. There is a need for research to examine and explain the extent of these
antisocial nancial practices and their impact on the development of Nigeria. This
paper, therefore, intends to offer theoretical and empirical explanations of antisocial
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