Fighting impunity: Recent international asset recovery efforts to combat corruption

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End Notes: Fighting Impunity

While useful steps are being made by the international community to produce asset recovery policy papers and knowledge products, this should not overshadow the important advances conducted in prosecutors’ offices, law firms, justice ministries and court houses around the world. The difficult fight against impunity cannot be fought by ideas and information sharing alone.

The hard work of diligent asset recovery practitioners, whether it be the prosecutor, the lawyer, the advocate or the ministry official that takes-on an asset recovery case, is the essential component to international asset recovery efforts and demonstrates the critical connection between research products, international collaboration and recovery efforts that actually return ill-gotten gains. Therefore, in addition to the progress thus far, it is hoped that the international asset recovery movement will continue to follow its multifaceted approach and through this approach, incorporate attention to linking such research to how to best help the practitioner, and thus, best help the developing world recover its stolen assets. 

With the legal framework of the United Nations Convention against Corruption in place, the world is provided with the legal parameters necessary to frame the fight. And with the assistance of international organisations, countries and non-governmental organisations – providing policy research and technical assistance – the means to conduct the fight are also certainly available.
 
But what we are seeing is a need to better connect the two. Global asset recovery efforts that reinforce legal infrastructure, increase information sharing and strengthen international cooperation have become essential. With this in mind, information and knowledge sharing are lining up to be top priorities for upcoming asset recovery efforts. Using a ‘knowledge is power’ approach, which is already working to create useful tools, networks of international resources and practical guides, this momentary shift in asset recovery focus is hoped to produce great results. But much as these efforts are important, true results will always be measured in actual cases – and whether such efforts result in the actual return of stolen assets to their rightful owners.

I. UNCAC – The legal framework for global efforts to combat corruption

Over the last 20 years, international and national efforts to combat corruption have varied across the board. In need of a more comprehensive and global authority on anti-corruption matters, members of the international community worked together to negotiate the United Nations Convention against Corruption (UNCAC), which entered into force in 2005. With the creation of UNCAC, the world saw its first legally binding, global and comprehensive anti-corruption framework. By consolidating elements of past years’ efforts and including both international and national obligations, UNCAC quickly became and continues to be the pre-eminent international authority in the battle against global corruption.

A critical element of international anticorruption efforts is the recovery of assets obtained through corruption. Indeed, UNCAC outlines asset recovery as a “fundamental principle” of the Convention, and requires state parties to “… afford one another the widest measure of cooperation and assistance in this regard2.” The nine articles that make up Chapter V of the Convention lay out the asset recovery measures and mechanisms to be implemented by the state parties that commit themselves to undertake the Convention’s obligations3.
 
But what makes Chapter V distinctive from past asset recovery efforts is its multifaceted approach, which incorporates preventative, punitive and international cooperation elements into its general legal framework. The Convention also imposes obligations on both the public and private sector, which include financial institutions, public officials and national courts.

Among the important measures constructed to prevent the illicit flow of the proceeds of corruption are those measures that require state parties to maintain regulatory and oversight bodies, implement legislation requiring financial institutions to maintain appropriate record keeping practices and take reasonable steps to identify customers with high-value accounts4.
 
Such measures have become particularly important in the wake of the recent global financial crisis, which has highlighted a need for increased regulation and oversight in financial institutions. The most notable of these measures, however, is the ‘enhanced scrutiny’ that financial institutions are obligated to conduct on all customer accounts known to be held by public officials5.
 
When ‘safe havens’ no longer provide corrupt leaders with the anonymity they desire, this increased due diligence, if implemented effectively, has the potential to be a powerful deterrent. And to give these measures teeth, the Convention provides sanctions for non-compliance for those institutions or persons who fail to cooperate with UNCAC’s requirements.

Since corruption oftentimes involves cross-border issues, it is no surprise that UNCAC places international cooperation and collaboration at the forefront of its agenda. The fact that UNCAC requires state parties to provide mutual legal assistance and participate in information sharing with international counterparts is consistent with this agenda. Perhaps more unique however are the Convention’s provisions for direct recovery of stolen assets. In an attempt to resolve years-long delays that often accompany international asset recovery litigation, UNCAC seeks to provide a more direct and expeditious method of recovery by requiring that state parties permit civil suits by other state parties in their national courts and conversely, that state parties recognise the judgments of other state party courts. While timely recovery is not always the case, a few recent examples discussed below demonstrate that there is cause for some optimism.

II. International support of global asset recovery efforts, StAR & ICAR
A joint effort by the World Bank Group and the United Nations Office on Drugs and Crime (UNODC), the Stolen Asset Recovery (StAR) Initiative, launched in September 2007 by Robert B. Zoellick of the Bank and Ban Ki-moon and Antonio Maria Costa of the UN, serves as one important component of the global ‘good governance’ and anti-corruption agenda. Recent statements by the international community have underlined the importance of good governance and the need for global collective action to prevent asset theft and facilitate asset recovery.

Through the September 2008 Accra Agenda for Action, donor countries committed to taking steps to track, freeze and recover illegally acquired assets. Subsequently, at the November 2008 G20 heads of state meeting on the international financial crisis, the heads of state of nineteen countries, plus the European Union, specifically endorsed the work of the StAR Initiative, stating, “…we support the efforts of the World Bank – UN Stolen Asset Recovery (StAR) Initiative.”

Indeed, what started as a modest effort to help countries track down and recover stolen assets, has slowly come to the forefront of the international community’s development discussion as an international development tool that can be used by developed and developing countries alike to help end the impunity of grand corruption. However, more attention to this topic is needed before large-scale efforts can be made to translate international discussion into international action. Such action is critical, due to the destructive impact of grand corruption.

In line with these sentiments, in a September 2008 meeting, the Open-ended Intergovernmental Working Group on Asset Recovery identified information sharing and increasing knowledge on asset recovery as top priorities9.
 
In response, StAR has expanded its efforts to mirror these priorities10. The StAR Initiative’s agenda is supported by three primary components:
(1) increasing global knowledge and advocacy;
(2) providing assistance in the recovery of stolen assets; and,
(3) building national capacity11. While all three components remain in operation, StAR has placed the development of knowledge products and policy analysis, already its priority in 2009, at the top of its agenda for 201012. Commitment to this agenda is manifested in a series of ‘how to’ guides, practice tools and handbooks, such as the Asset Recovery Handbook, which serves as a reference work covering jurisdictional requirements, best practices, common challenges and modern solutions for asset recovery.

Tasked by the G20’s request to “develop mechanisms for strengthening global cooperation” and strengthening enforcement standards related to “the identification of beneficial ownership and monitoring of politically exposed persons13,” StAR is currently analysing policy through a series of studies and surveys. In one study, which focuses on politically exposed persons (PEPs), the StAR Initiative identifies best practices and makes key recommendations that will assist financial institutions with their obligations in conducting enhanced scrutiny on PEPs14.
 
Similarly, through a ‘Barriers’ survey that will study 15 financial centres, experts will attempt to identify country-specific barriers that impede asset recovery at the national level and make necessary recommendations to assist in improving country procedures.

With the advancement of asset recovery knowledge and policy analysis moving ahead at a steady pace, continued progress remains difficult when countries fail to fully implement the foundational legal instrument from which their obligations derive – the UNCAC. Since its entry into force in 2005, the UNCAC has gained worldwide recognition, as evidenced by the 140 states that have committed to undertake the Convention’s obligations15. Despite the positively high number of state parties, implementation at the national level has been slow moving. Contributing factors include lack of resources and manpower, ill-equipped institutional frameworks and lack of political will16.
 
These issues highlight the need for an effective review mechanism to identify and assist in eliminating barriers and monitor overall implementation.

In November 2009, at the Conference of States Parties of the United Nations Convention against Corruption, in Doha, Qatar, state parties adopted a review mechanism. But the mechanism’s effectiveness is still yet to be determined. The new mechanism has been hailed by some including UNODC Executive Director Antonio Maria Costa and the President of the Conference Ali Al-Marri17. Others, however, such as the UNCAC Civil Society Coalition18, are disappointed, noting that the mechanism is too flawed to actually be effective19. The Coalition cites to the mechanism’s non-mandatory provisions for civil society involvement and its failure to set up an effective review body as a few of the contributing factors to their disappointment20.

In addition to the work of the international community and StAR, a critical non-governmental partner in the global effort to assist asset recovery efforts is the International Centre for Asset Recovery (ICAR), part of the Basel Institute on Governance. Answering the call for increased global knowledge and information sharing ICAR launched its Asset Recovery Knowledge Centre (KC). A practitioner-oriented, interactive website, the KC shares best practices, compares national legislation, treaties and mechanisms for mutual legal assistance and offers administrative assistance to help facilitate asset recovery21.
 
ICAR also recently launched its Asset Recovery Experts Network (AREN), in order to help link asset recovery professionals around the world. According to ICAR, “AREN is an informal online forum for professionals, who are involved in processes of recovering stolen assets, to connect, network, communicate and exchange information, at all times, on issues associated and related to asset recovery.”

III. Recent developments – Asset recovery cases
In courtrooms across the world, asset recovery efforts have been making steady progress in their charge to hold corrupt leaders accountable. At least part of the success can be attributed to the development of more defined global and national legal frameworks addressing the proceeds of corruption. One such example, presently ongoing in a national court, is the case of APDHE v. Obiang Family, where a Canary Islands court admitted a criminal complaint against Equatorial Guinean President Obiang and his family members, alleging the crime of money laundering for illegally diverting large sums of public funds to purchase private real estate in Spain.

In another case, we see a similar claim being pursued before a regional human rights court. In APDHE v. Equatorial Guinea, a complaint was recently filed with the African Commission on Human and Peoples’ Rights alleging that the Equatorial Guinean government’s plundering of national oil revenues violates the right of the Equatorial Guinean people to freely dispose of their natural wealth, a right protected by the African Charter. Through these cases we see how two similarly situated claims are being pursued in entirely different forums – a far cry from asset recovery practice in the past.

We have also witnessed the positive effect that international collaboration can have on asset recovery litigation. Earlier this year in Switzerland, in a case involving former Haitian President Jean-Claude Duvalier, a Swiss court ordered approximately $6.5 million of misappropriated public funds to be returned to the people of Haiti. The effort, led by the Haitian and Swiss governments, and assisted by the StAR Initiative, illustrates the success that can result when members of the international community work together to pursue a common goal. Switzerland, a country known in the past for its privacy in banking, has proven to be a trendsetter in the pursuit of corrupt leaders in possession of ill-gotten gains. Through progressive banking regulation reforms, Switzerland has made it more difficult than in years past, for corrupt leaders to hide behind the private banking veil of secrecy.

The fact that the StAR Initiative played an important role in Haiti’s success – the first time ever that the international community (in the form of the World Bank and the UN) worked together to help recover stolen assets – is a cause for optimism, in that our international institutions are finally working together to help fight the impunity that is so often associated with economic crime. StAR, working with Haiti’s government officials and lawyers, provided the Haitian government with critical technical and diplomatic assistance in an area that few developing countries have the necessary expertise to achieve asset recovery success. Now, millions of dollars are on-track to be returned to the people of Haiti for use in development and humanitarian projects, rather than to purchase yachts and villas.

However, with every few steps forward, it is not uncommon for an occasional step back. Asset recovery progress is certainly no exception. This was most recently seen last month with the dismissal of a complaint that alleged several African heads of state and their families’ had acquired property in France with misappropriated public funds. Regrettably, the French Court of Appeal ruled that Transparency-International (France), an anti-corruption NGO, could not bring a complaint against foreign heads of state. The court’s decision represents a significant setback for organisations with respect to how they file complaints. It also reveals a recurring weakness present in asset recovery efforts, not only in France, but globally. This weakness, as stated above, is that state parties to the UNCAC are failing to adequately implement UNCAC into their national legislation. This serves as an important reminder of the work that still lies ahead. 

IV. Conclusion
While useful steps are being made by the international community to produce asset recovery policy papers and knowledge products, this should not overshadow the important advances conducted in prosecutors’ offices, law firms, justice ministries and court houses around the world. The difficult fight against impunity cannot be fought by ideas and information sharing alone.
 
The hard work of diligent asset recovery practitioners, whether it be the prosecutor, the lawyer, the advocate or the ministry official that takes-on an asset recovery case, is the essential component to international asset recovery efforts and demonstrates the critical connection between research products, international collaboration and recovery efforts that actually return ill-gotten gains. Therefore, in addition to the progress thus far, it is hoped that the international asset recovery movement will continue to follow its multifaceted approach and through this approach, incorporate attention to linking such research to how to best help the practitioner, and thus, best help the developing world recover its stolen assets. 

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Mark Vlasic

Mark V. Vlasic, an adjunct professor of law at Georgetown University Law Center and senior fellow at Georgetown's Institute for Law, Science & Global Security, worked on the Haiti/Duvalier asset recovery team while serving as head of operations of the World Bank's StAR Secretariat. A former White House Fellow to Secretary of Defense Robert Gates and Slobodan Milosevic prosecution team member, he served as international legal adviser to the Charles Taylor/Liberia asset recovery team, and now leads the international practice at Madison Law & Strategy Group.
 

Mark Vlasic
Senior Fellow & Adjunct Professor of Law
Institute for Law, Science & Global Security
Georgetown University
2020 N St. NW,
Washington DC 20036
USA

T. +1 (202) 247 5585
E. vlasicm@georgetown.edu
W. www.wardlawdc.com 

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Georgetown University
2020 N St. NW,
Washington DC 20036
USA

T. +1 (202) 247 5585
E. vlasicm@georgetown.edu
W. www.wardlawdc.com