6 April 2021 –
What role can asset and interest declarations of public officials play in preventing and detecting conflicts of interest and possible corruption cases? What are good practice approaches and common challenges in asset declaration frameworks? These questions were at the center of an informal briefing session the UNCAC Coalition organized on 23 March that was attended by delegates from over 40 States who are currently negotiating the Political Declaration of the UN General Assembly Special Session (UNGASS) against Corruption.
The presentation was delivered by Dr. Tilman Hoppe, an advisor on international anti-corruption projects for the Council of Europe, EU and UNODC who has worked in more than 30 countries on strengthening asset and interest disclosure mechanisms.
Dr. Tilman Hoppe discussing asset declarations & disclosure (2:42)
Hoppe presented his personal reflections on why asset declarations are so crucial – what we stand to learn from success stories, and where large strides for meaningful progress are still necessary. He identified civil society organizations (CSOs) as key partners working in tandem with the international community to introduce and implement the practice of making asset declarations on the ground.
Countries with good practices for asset declarations and the publications of the declarations mentioned by Hoppe include Indonesia as well as Georgia, which publishes asset declaration information in an easily searchable format online.
The recent ruling by the European Court of Human Rights (ECtHR) on the case of Xhoxhaj v. Albania is an example of a successful corruption clean-up operation within the Albanian judiciary, largely based on asset declarations, with over 100 judges being dismissed among other promising developments in the country. While numerous countries struggle to expose and prosecute public officials on the basis of asset declarations (and some actively steer clear of doing so), the rising trend of moving assets abroad, storing them in safe havens and offshore accounts complicates matters further.
The signing of the International Treaty on Exchange of Data for the Verification of Asset Declarations in March 2021, a regional agreement between several countries in South East Europe, is the first of its kind on direct administrative exchange regarding data on foreign assets and interests, significantly enhancing the verification of declarations. Neither the UN Convention against Corruption (UNCAC) nor other bilateral or multilateral agreements provide a legal basis for the exchange of data for the purpose of verifying asset declarations of public officials.
In a Q&A, several important issues were brought to the fore by both delegates and Hoppe, as summarized below:
From fines to criminal sanctions, what is on the ‘menu’ of possible sanctions when a control body identifies problems in an asset declaration?
The ‘menu’ of sanctions is very large – it could be disciplinary such as dismissal, to fines, confiscations, special taxation measures as well as criminal sanctions. Some countries foresee up to ten years in prison for serious declaration violations. Other countries fail to provide for effective sanctions in their asset declaration regime. The lack of uniformity on sanctions is an international weak spot.
In certain countries, there is a concern that asset declaration information may be exploited by criminal groups and used for kidnappings or as ransom. How can the security of public officials be maintained?
The data contained in asset declarations is usually contained in other registries, such as land registries and or vehicle registries – thus, asset declarations are not adding any risk.
Hoppe says that after years of working on the issue in many countries, he is not aware of a single case of a public official being attacked due to information from an asset declaration. Highly sensitive private data (number plates of cars of the official, bank account numbers, residential address) are withheld in most, if not all countries. Details vary from country to country.
What are some good practices regarding verification of declarations, and what are the benefits of using random verification?
Countries may ask themselves: how do you prioritize a big pool of asset declarations with thousands of documents? Where do you start from?
- Random selection involves drawing a lottery and selecting a fixed number of declarations that will be handled in a set time period. This approach is important, as declarations that might not raise any red flag or suspicion are also selected. Random selection is also a good basis for identifying patterns of hiding wealth. These patterns can then be built on, to develop verification criteria for the next few years, depending on risk indicators that are identified.
- Another approach would be to go for the ‘big shots’ – directly identifying and targeting high level officials with significant decision power and often with rather higher values of wealth.
- Risk criteria can also relate to ‘risky’ sectors: such as tax authorities, the health sector, police forces and so forth, and then verifying the declarations of individuals involved in these particular sectors.
- A more refined option would be pooling all the data collected into a system and looking for declarations with significant deviations from the average “normal.”
Whichever method is selected, in all cases, the question remains: can the verification hold those individuals to account who pretend to be upstanding officials, whilst actually concealing illicit assets?
If only officials are required to disclose declarations and interests, how far should the scope of an asset declaration reach? What kind of assets are commonly forgotten or overlooked in the asset declaration regime?
More thoughtful provisions in the asset declaration regime will include indirectly held assets – including those held by close relatives (and thus registered under a different name). While financial transactions can be tracked and traced in a bank account, a common challenge in all countries is cash – it is not registered and can easily be concealed.
A public official could enter office and declare a large (made up) cash sum which cannot be physically verified, and then use this (made up) sum as an excuse in the future years when reaping illicit income from office, and then having to justify this increase in wealth. Some countries require that officials deposit cash holdings in a bank account.
The rise of crypto currencies presents another challenge to asset recovery frameworks: in some countries it is explicitly included among assets that need to be declared, while in others it is not yet recognized or even acknowledged. The lack of international standardization is a glaring weakness in the system.
Are there software programs that countries can make use of to assist them in effectively verifying asset declarations?
The present challenge is that all countries have very different platforms with different approaches for what is declared and how it is declared. Standardized software is unlikely to supersede custom-made solutions in each country (which is common practice). However, such custom-made programs tend to be very affordable and are not overly complex systems requiring substantial expertise.
For the UNGASS’ Political Declaration, what would an expert’s expectations be for the declaration to reflect in regards to asset and interest declarations?
A strong international standard should replace the soft standards currently being used to “coax” governments into reforms. Collaboration across countries would be greatly facilitated by a standardized reference point to go by. In addition, a treaty on exchanging data cross-country would be beneficial.
International organizations should also provide more practical guidance to practitioners on the ground. Lastly, the declaration should emphasize that enforcing sanctions for non-compliance is necessary, as well as the publication of asset declarations, so they can be used and analyzed by all relevant stakeholders, such as journalists, the media and civil society.