21 October 2015, by Maud Perdriel-Vaissiere, Asset Recovery Advisor, UNCAC Coalition.
The last Conference of States Parties to the UN Convention against Corruption (UNCAC) in Panama adopted a resolution on asset recovery (Resolution 5/3). It included concrete measures aimed to enhance the implementation of Chapter V and ultimately to make further progress on asset recovery.
Two years have passed since then and so one may well ask whether there has actually been any progress: What volume of assets has been recovered? How much has been returned to victim countries? How has it been used? Has it benefited the victim populations?
The answers to these questions are difficult to find, as most States Parties do not collect or publish data relating to asset recovery, and many have yet to recognise the importance of the principles of transparency and accountability with regards to the use of returned assets.
Lack of information also prevents the effective implementation of the UNCAC Article 53 on measures for direct recovery of property. In fact, the right to bring civil claims with a view to recovering assets (as provided by this article) is of no use if countries are not aware of the existence of legal proceedings and settlements abroad and, as a consequence, are not in a position to claim ownership of property or compensation. What’s more, it appears that in a blatant violation of UNCAC provisions, some jurisdictions do not even recognise a foreign state’s right to sue.
Given all this, how are countries supposed to make use of the asset recovery remedies provided for under Article 53?
The low level of recoveries under Article 53 is further explained by governance failures. While Article 53 lays out a comprehensive legal framework to support countries in their asset recovery efforts, these provisions become almost toothless whenever they are run (or otherwise controlled) by those engaged in large-scale corruption. Indeed, under this scenario government claims as envisioned by Article 53 are either rendered unlikely or unlikely to succeed. In particular, given that under Article 53 once ownership or damage is established no further step is required to repatriate the ill-gotten gains to the defrauded state, many jurisdictions prefer not to comply with this provision rather than return assets to corrupt regimes. These are legitimate concerns, but lead to the unfortunate situation where the citizens of these countries – the true victims – are doubly penalised for the corrupt behaviour of their public officials.
UNCAC Article 53.b poses additional challenges. This article – which provides for the direct recovery of property through compensation claims – was established as a concrete remedy to states harmed by corruption in situations, such as bribery or trading in influence, where the proceeds of corruption involve funds of private origin, over which states cannot establish prior ownership. However, many States Parties have yet to acknowledge that the award of damages constitutes a way of recovering the proceeds of corruption under the UNCAC. According to a recent report produced by StAR, in the majority of foreign bribery cases settled abroad, victim countries are left out of the bargain. This is all the more unfortunate given the heavy and increasing reliance on negotiated settlements in both common law and civil law jurisdictions. Regrettably, those findings are believed to be equally true when it comes to ordinary court proceedings.
More generally, for far too long there has been a global misreading of what precisely asset recovery entails under the UNCAC. It is not only about recovering stolen or embezzled public funds stashed away by corrupt agents, or confiscating the lavish properties they have illicitly acquired abroad. Instead, the process involves any proceeds of corruption transferred abroad, including those of private origin such as the illicit profits, benefits or advantages of monetary value gained by companies as a result of paying a bribe to a foreign official. In that regard, much also remains to be done to confiscate the proceeds of active bribery – the benefits derived by the payer of the bribe. While some countries still lack the legislation required to address the confiscation of the proceeds of active bribery, considering such calculations too complicated, others may have legislation in place that has never been implemented in practice.
That being said, a lot still needs to be done to recover the assets stolen or embezzled by corrupt officials. The Resolution that was adopted in Panama stressed “the need to hold corrupt officials accountable by depriving them of their stolen assets” (preamble; Resolution 5/3), and in various parts of the Resolution urged States Parties to actively and robustly pursue domestic investigations and prosecutions of those engaged in acts of corruption (preamble, op. clauses n° 2 & 28; Resolution 5/3). All these language items are welcome, but the Resolution has failed to address key issues, such as political interference in the criminal justice system or immunity, which prevent proactive enforcement action from taking place.
Since the 2013 Resolution on asset recovery, many more millions of dollars in much needed state funds – including money destined for health, education and poverty alleviation – have been stolen and deposited abroad by corrupt individuals. The few have enriched themselves at the expense of the many for too long and it is essential that States Parties address these failures to adequately prosecute and punish the corrupt and recover the proceeds of their crime.
The UNCAC Coalition has developed concrete proposals to ensure that a 2015 resolution is both strong and comprehensive, and will actively promote them at the 6th Conference of States Parties in St Petersburg this November.