As many of our readers might be aware, the French chapter of Transparency International has recently filed an anti-corruption case against the presidents of Gabon, Congo and Equitorial Guinea regarding the millions of dollars in embezzled funds they have allegedly stashed in the form of property and other goods in France. This case broke new ground in international jurisprudence since this is the first time a civil society organisation was deemed admissible to launch such a legal action against sitting presidents.
Although the case brought by TI France is the first of its kind, stealing of public assets is by no means a new problem. It is estimated that between US $100 to $180 billion has been stolen by corrupt dictators in the last few decades, and this is just the known, big cases. If we consider the amounts routinely stolen by lower level officials then the sum of stolen funds is bound to get much higher.
Recovery of these stolen assets is a multi-layered process involving many different players and institutions. So far, international efforts have focused on the corrupt leaders of developing countries. However, a closer look at the trail of money shows us that financial centres (often based in the ‘clean’ Northern countries) are a big part of the problem. Theft of public funds is made possible by using the same secretive legal instruments (e.g. shell corporations) and loopholes (e.g. bank secrecy) that are utilised for other crimes such as tax evasion and money laundering. Currently there is critical global political momentum, particularly from the G20, to tackle the issue of opaque financial centres. Therefore, this is the perfect time to strengthen advocacy efforts to put pressure on both sides responsible for stolen assets: the corrupt leaders (and their associates) and their enablers in the financial havens.
To contribute to the international dialogue on asset recovery, TI has recently published a paper which summarizes the state-of-play and highlights some current challenges and policy considerations. We hope that this paper will strengthen your understanding of the issue. We welcome your comments on the topic and your feedback on anything we might have missed. Happy reading!
Download and read the paper “Recovering stolen assets: A problem of scope and dimension” here.
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Freezing, seizing and confiscating ill gotten and often laundered assets stashed abroad is a perpetual quagmire at this time , said to be on account of asymetry in legal interpretation of corruption , asymetry in procedure and lastly lack of will among the the nations.The last of the factors is the chief villain in retarding the process. If there were a will to seize and return the stolen funds, we have no doubt that the political establishment would have engaged the law enforcement agencies and convinced the judiciary to relent. The fact that statistics are being generated in stead of actual recovery suggests that we are not yet ready to walk the talk.
Continuing with what I wrote before, the spectre of ex-dictators buying up prime expensive properties in countries ,which end up as asylums for them after they are deposed or are deported ,is a case in point. Political leaders are not, as a rule, business tycoons and the kind of money they end up with after their stint at the office , do not come from lawful exercise of authority or as a remuneration for holding an office of profit or an office under the constitution. All these investments are ill gotten. The world should wake up to the reality not just in Africa, but also in south Asia .Before granting asylum, one may as well ask, how many of the countries seek from these asylum seekers the sources of their funds and investments ,despite knowing way too well that the funds are tainted. Second, the so called liberal democracies have close tenuous relation with big business ,paving the way for mutual aggrandisement at the cost of the polity. The illicit proceeds , while running a liberal democracy , most times parked in safe havens and jurisdictions with lax control and supervision , and few times repatriated home ward to finance elections , deserve to be handled the same way as illicit funds of dictators in Africa.
Much as one would appreciate the Swiss banking industry for its adherence to secrecy laws on client confidentiality , of late it has been pilloried for very valid reasons ,concerning its acquiescence to global crime through laundering of untaxed and often criminal proceeds. Take the case of UBS and the type of resistance it has put up in sharing information about its US account holders, the latter suspected to have suppressed declaring or mis-declaring their deposits with UBS to the IRS. UBS would labor at formulating an imaginary difference of tax fraud vis-a-vis tax evasion, and put up a theory that cases of fishing enquiry in tax evasion cases are not open for disclosure. The very basis of UBS’s defense is flawed, in as much as tax evasion is an event orchestrated through an act of fraud. In any case , a democratic set up as big and powerful as US can not in all honesty be accused of a type of McCarthysim, if it were seeking information about its own citizens’ account details , on the basis of its own considered view that its citizens have parked funds elsewhere to render its sovereign tax laws otiose. It is about time countries expand the definition of serious crime from narcotics and psychotropic substances trading or gun running or alien smuggling to situations emerging from tax evasion and smuggling. If the asset recovery process is ever to be fructified , a basic common denominator of listed crimes ( including tax evasion )for the purposes of money laundering legislation would go a long way in quietly establishing which of the foreign asset is tainted and requires repatriation. UBS is a test case and may in all probability render valuable interpretations of law on the subject.
I very much agree with the comments regarding the responsibility of the countries giving asylum to corrupt leaders and storing their illicit funds. As the working paper highlights, there is currently a big push towards enhancing transparency in the financial centres and offshore havens. The UBS case has also demonstrated that the wall of secrecy can be cracked. However, what we need is big systemic changes (as opposed to case-based exceptions) and this situation needs to be closely monitored to ensure that the big international proclamations don’t turn out to be just empty words.
UBS has till very recently opposed to any suggestion on opening up its clients’s accounts for inspection, save situations arising on divorce, inheritance , or legitimate concerns on drug trafficking or tax fraud. The last on the list of misconduct ,tax fraud, gave enough elbow room to quibble on varieties of interpretations covering tax fraud vs tax avoidance vs tax evasion , and thus was seized upon by a zealous banking industry to safeguard its business. Now that news has started trickling in that UBS has agreed to release some 4500 account details, the question uppermost is , whether US on its part has supplied the details of all 4500 accounts to UBS , or whether Article 26 or 27 of the OECD model tax convention on income and capital have been interpreted in favor of US despite US not complying to the reqirements of the model tax convention ( no-fishing -inquiry restriction ). These are critical issues and the world has the right to know the detailed reasons for UBS to supply the account information to the US. The release of confidential client information to a requesting state has to have a basis , and UBS should come out with an answer as to what was the basis for its action . None would agree that political might is a relevant factor in considering claims under Article 26 or 27 of the OECD model tax convention.
This is Western Hypocrisy at it’s finest.
So much for these kleptocrats,but the bigger question is how much is oil company Total and other french companies looting from these poor nations-why single out the leaders?For every $1 dollar of profit of gas,how much goes to the country?1 CENT?
If Transperency is really concerened about all the poor people in these nations,then they should investigate the greedy western corporations that go to these places extract their resources,pollute and leave them with pocket change!
Lets stop the hypocrisy!
Transnational Corporations from the days of Francis Drake and Sea Dogs are historically and genetically programmed for exploitation . But it would be belittling thair notoreity if one looks at the economic explotation alone . Chevron , Exxon Mobil or Total would have damaged national economies in much the same measure as they would have impacted the environment,employment,law and order,societal values , and quality of national governance. Judith Kimerling’s Amazon Crude is a classic read on the subject. Thankfully , international legislation of UN ( Global Compact ), EU, OECD have been put in place , and civil society does not fail to retaliate in case of excesses as it would have done a century back.