Asset recovery discussions have traditionally focused on stolen public money, that is, funds taken directly from states by corrupt officials and their associates, rather than on what could be described as profits from corporate corruption. These profits are generated when companies secure contracts, concessions or other commercial advantages through bribery. Increasingly, governments are taking action against this type of corruption, with companies facing fines, confiscation, settlements and other enforcement measures that can result in the recovery of these profits.
However, it is important to note that recovering money is not the same as returning it to those affected by corruption. In many foreign bribery cases, large financial penalties are paid to the countries prosecuting the companies while little or no money reaches the countries or communities where the corruption occurred. This raises a fundamental question for asset recovery – what should happen to the profits made through corruption, and who should benefit when those profits are recovered?
This was the focus of a June 10th webinar led by the Coalition’s Asset Recovery Working Group, co chaired by Jackson Oldfield of CiFAR – Civil Forum for Asset Recovery and Sara Brimbeuf of Transparency International France, during which a distinguished panel of speakers came together to discuss the challenges of repatriating profits from corporate corruption and the compensation for victims.
When enforcement does not lead to restitution
The experience discussed by Mouna Algelly from Public Eye provided insights into the challenges in Switzerland, where several cases involving companies convicted of corruption abroad have resulted in equivalent claims corresponding to around CHF 900 million in illicit profits. Notably, no fraction of this money had been returned to the countries affected by the corruption.
She highlighted legal requirements that can make restitution difficult such as the requirements for cooperation by affected states in Swiss proceedings. In practice, such cooperation may not happen because of limited capacity, political considerations or other obstacles. It is for this challenge that Public Eye has campaigned for changes to the law and practice.
The discussion also showed why profits from corporate corruption are more complicated to recover than directly stolen public assets. Unlike money that can sometimes be traced to a specific public account, profits generated through bribery may result from contracts, concessions or other commercial advantages. Establishing the value of the benefit gained and the harm caused can be difficult.
The Glencore case provides a clear example of this. Helen Taylor of Spotlight on Corruption explained that the company paid more than $1.1 billion in penalties following coordinated investigations in the United States, the United Kingdom and Brazil. In the UK, Glencore pleaded guilty and received financial penalties totaling £280 million but no compensation was awarded to affected countries or communities. Nigeria had sought to intervene in the proceedings as a victim and seek compensation but the court did not allow it to do so pointing to a wider weakness in existing enforcement mechanisms. Since 2014, she noted that the UK’s Serious Fraud Office has secured more than £1.8 billion in financial penalties in foreign bribery cases involving 16 companies but money was returned to affected countries in only four cases, totaling $16.2 million.
The people affected cannot remain outside the process
A recurring theme through the discussion was the limited role of victims in determining what happens to recovered funds. Akere Muna an International Consultant on Governance and Anti-Corruption emphasized that corruption has consequences that extend beyond the financial loss itself. Communities may experience poorer public services, inadequate infrastructure, increased poverty and other forms of harm. In his view, the difficulty of calculating these harms should not become a reason for not pursuing their compensation.
This also raises questions about who can participate in proceedings. In some jurisdictions, affected states have limited opportunities to intervene, while civil society organizations and victims’ groups may have no legal standing at all. The panel discussed expanding legal standing so that civil society organizations or victims’ groups can represent affected communities where states are unwilling to do so.
The consensus was that victim participation should be accompanied by greater transparency which means that at minimum agreements, statements of facts and relevant court decisions should be made publicly available in settlement processes. Judicial oversight and public approval hearings could also help ensure that negotiated settlements are transparent and open to public scrutiny.
Reforms – From enforcement to return
Settlement mechanisms are not necessarily a problem but they need safeguards to ensure that they lead to meaningful asset return. The proposals discussed included stronger judicial oversight, limiting settlement mechanisms to certain types of transnational economic crime and ensuring that individuals are not protected from prosecution through corporate settlements. Financial penalties should also be high enough to provide a meaningful deterrent.
Taylor also outlined possible reforms to the UK system including considering compensation from the beginning of corruption investigations, developing better ways to assess the harm caused, strengthening compensation requirements in deferred prosecution agreements, creating more opportunities for victims to seek compensation through civil proceedings, and developing a mechanism to support victims in corruption cases.
Muna also proposed using escrow arrangements to hold recovered or frozen assets while proceedings are ongoing. This could help protect the funds and ensure that they are managed transparently while decisions are being made about how and where they should ultimately be returned.
Making recovery meaningful
The webinar highlighted a growing gap between enforcing foreign bribery laws and delivering justice to those affected by corruption. As more countries recover illicit profits through corporate enforcement, settlements and confiscation, greater attention is needed on what happens to these funds and whether they reach the countries and communities affected.
There is an opportunity to develop approaches that combine effective enforcement with greater transparency, meaningful victim participation and fairer asset return. As Jackson Oldfield and Sara Brimbeuf, the Co-Chairs of the Working Group, noted in closing that victims’ risk being overlooked in discussions about settlements and financial penalties. Future reforms should therefore ensure that victims can participate meaningfully in these processes and have a real opportunity to benefit from compensation.
For civil society, this remains an important area for continued engagement. The next frontier of asset recovery is not simply recovering more money, it is ensuring that when profits generated through corruption are recovered, the people and communities affected by that corruption are not left out of the process.
