The legal & financial chronicle (1)

Massandouno Doussou Komara is a lawyer specialized in banking and financial law and CAMS certified.

By Massandouno Doussou Komara.

Repatriation of assets stolen by corrupt leaders: from theory to reality

The return of stolen assets by corrupt leaders to their countries of origin has been a concern of several, mostly African, states since the late 1990s. In 1999, the newly elected Nigerian President, Olusegun Obasanjo, appealed to the General Assembly the United Nations to the creation of an international convention on the repatriation of African wealth illegally acquired and held abroad. This position was, of course, motivated by the colossal sums diverted by one of his predecessors, the dictator Sani Abacha, estimated at between $ 3 and $ 5 billion.

In 2001, the representatives of the NGO Transparency International from 11 African countries took over the Olusegun Obasanjo proposal in the Nyanga Declaration on the recovery and repatriation of African wealth.

It is very difficult, if not impossible, to accurately quantify amounts misappropriated as part of corruption in Africa and “sheltered” abroad. In a document of the United Nations Office on Drugs and Crime (UNODC) entitled “Corruption in Facts and Figures”, it is estimated that over $ 400 billion in illicit capital transfers to Africa, of which about 100 billion would come solely from Nigeria.

More specifically, according to Ms. Vera Songwe, executive secretary of the United Nations Economic Commission for Africa, corruption would drain $ 148 billion out of the continent every year, which is about 25 percent of Africa’s average GDP.
Repatriation of stolen assets can be defined as the judicial process by which a “state and / or its citizens recover public resources diverted by a present or past regime, by the family or allies of the leaders, or by foreign actors “(Transparency International 2009).

In parallel with the fight against corruption, and in view of the enormous amounts illegally transferred abroad, it seems essential, if not indispensable, to work for the seizure and repatriation of stolen goods to their countries of origin, so that these riches can benefit the people who have been robbed.

These funds, if repatriated, could make a significant contribution to the continent’s huge resource needs, for example, to finance social programs or basic infrastructure that are critical to people’s well-being. Moreover, this solution would be the most logical and the most fair from the point of view of morality. It would, in a way, repair the damage caused by embezzlement.

As a reference, a joint report by UNODC and the World Bank on asset recovery, whose figures speak for themselves: “the recovery of $ 100 million in illicit assets would make it possible to finance and 10 million insecticide-treated mosquito nets, one year of treatment for more than 600,000 people affected by HIV, between 50 and 100 million treatments to treat malaria, the complete vaccination of 4 million children, access water to some 250 000 homes or 240 km of paved two-lane roads “.

The recovery of stolen assets would also serve to put an end to the feeling of impunity, which would send a strong signal to those guilty of corruption, dissuading them from stealing the resources of their country in order to enjoy them peacefully abroad.
Although the procedures are complex and not very standardized across countries, there are now reliable international legal tools and many inter-legal aid networks that fight against corruption and for the restitution of assets. stolen. The main ones are the United Nations Convention against Corruption, the Stolen Asset Recovery Initiative (STAR) and, on a sub-regional scale, the ARINSA network (Asset Recovery Inter-Agency Network for Southern Africa) which is a network of asset recovery from Southern African countries.

The United Nations Convention against Corruption (also known as the Merida Convention) is the first global instrument to fight corruption, organized crime and economic crime including money laundering. This agreement provides, in particular, a general legal framework to fight against corruption through preventive measures, law enforcement and the recovery of stolen assets. It is in the 2009 recommendation, accompanying the Convention, that the subject of the return of assets is directly addressed. States parties are required to consult and cooperate with other countries, whether they are members or not, for the confiscation and repatriation of the proceeds of assets resulting from the bribery of foreign public officials.

Everything seems obvious under the Convention, yet all the countries that have ratified it have not transposed into their laws this principle of restitution of assets derived from corruption. This is for example the case of France, whose law provides that the funds confiscated as well as the sums resulting from the sale of the confiscated assets return to the general budget of the French State. It is therefore necessary and urgent to change the French legislative framework, especially in view of huge investments and other sumptuary spending, not to say extravagant, made in France by several African dictators.

In France, the confiscated assets resulting from the corruption return to the general budget of the French State

As a recent example, we can quote the judgment of the Criminal Court of Paris intervened on October 27, 2017 which sentenced Teodoro Nguema Obiang Mangue, nicknamed Teodorin, Vice-President of Equatorial Guinea, to 3 years of suspended imprisonment, € 30 million suspended fine and, above all, the full confiscation of his property seized on French territory, with an estimated value of more than 150 million euros. This judgment is not final because all the remedies are not yet exhausted, but would not it be totally immoral that all this fortune returns to France, which would draw somehow a real benefit of the criminal behavior of corrupt leaders , to the detriment of the dispossessed populations?
NGOs such as Transparency International France are fighting for the French legislation to be amended to incorporate the principle of restitution of assets as provided for in the United Nations Convention against Corruption, a principle that has been reaffirmed in various bodies, particularly when “The G8 declaration on the Arab Spring” at the Deauville summit, May 26-27, 2011.

In November 2017, Transparency International France organized a symposium in Paris on the subject of “restitution of assets derived from corruption”. At this symposium, the legal analyst of the anti-corruption division of the OECD, France Chain, recalled in her introductory remarks that the OECD countries should take the initiative to freeze, confiscate and repatriate assets from corruption.

In addition, French law does not allow for civil forfeiture, but only for criminal confiscation. This brings an additional difficulty, because it is necessary to obtain, beforehand, a criminal conviction of the person prosecuted for corruption. However, there are cases in which it is difficult to obtain such a conviction, especially in the event of the death of the person prosecuted, or when the latter raises an immunity (as is the case for leaders still in office) .

The United Kingdom, the USA and Switzerland

On this particular point, France must be inspired by foreign examples such as the United Kingdom and the United States which are among the countries that authorize the recovery of laundered funds on their territory by means of a civil procedure of seizure . In the case of civil procedure, the legal action is against the property, not against a particular person. This procedure only requires proof that the property is the product or the instrument of a crime (without the need to establish the culpability of the person who allegedly committed the crime). This eases the burden on the government seeking seizure and means that confiscation of property can be obtained even when there is insufficient evidence to support a criminal conviction.

Switzerland, for its part, devoted administrative confiscation to a law passed in 2011 (Federal Act on the Restitution of Patrimonial Values ​​of Illicit Origin of Politically Exposed Persons, known as Lex Duvalier). This law states that in cases where the state is unable to fully collaborate in asset recovery proceedings because of a failure of the judiciary, the burden of proof is reversed: to prove that the assets in question were legally acquired. Otherwise, the property may be returned to the country of origin without prior criminal conviction in that country.

The StAR Stolen Asset Recovery Initiative (StAR), launched in December 2007 by UNODC and the World Bank, supports international efforts to remove shelters for funds derived from corruption. StAR also produces help guides to search for stolen assets. It estimates between $ 20 and $ 40 billion the amounts diverted each year by corrupt public officials in developing countries and transferred abroad. Most of this money comes from misappropriated public funds or bribes received in connection with public decisions, such as the awarding of public contracts or obtaining permits.

Unfortunately, only a small part of these sums are repatriated to the countries of origin. In 2014, the StAR initiative estimated that only $ 5 billion of misappropriated assets had been returned between 1999 and 2014, representing between 1% and 2% of assets that were diverted and transferred abroad over the same period. And according to the StAR Initiative, OECD member states would have returned between 2006 and 2012, only $ 423.5 million, which represents barely 0.2% of the bribes paid annually.

Of the few states that return these funds, Switzerland is a model. In 2006, she returned to Nigeria $ 723 million, illegally acquired by Abacha’s family. Since the end of the 1990s until 2016, the Swiss Confederation alone has returned nearly $ 2 billion of funds diverted by potentates, and the World Bank estimates that this amount represents almost half of the sums recovered by States of origin at the global level.

Among the initiatives that work in the same direction, we can also mention, at sub-regional level, the ARINSA Network (Asset Recovery Inter-Agency Network for Southern Africa), which brings together the Southern African authorities responsible for asset recovery, all financial crimes, including corruption. It is an informal network created in 2009 that currently includes a prosecutor and an investigator from each member of Southern Africa. A total of 16 southern African countries were part of the ARINSA network in 2018.

At the moment, there are still no similar networks of mutual legal assistance in the states of East, West and North Africa, which has been underlined by the Group since 2011. Intergovernmental Working Group on Asset Recovery, at the UNCAC Conference of States Parties.

Another major challenge is the use of repatriated funds. Indeed, when we know how corruption gangrene again and again the highest institutions of several African states, how to ensure that these funds are not again diverted by other corrupt officials? One can not be totally utopian and ignore this big obstacle. It is therefore imperative to question upstream the implementation of any return of funds, when the State of origin is in a situation of default, that is to say when the public officials who run the countries are directly involved or where there is a risk that returned assets may be “recycled” into the channels of corruption. Indeed, there are indeed precedents for restitution of illicit assets that have been diverted again.

For example, the US $ 723 million returned in 2006 to Nigeria by Switzerland. A large part of these funds would have been … evaporated! l The same as the $ 140 million returned by Liechtenstein. Switzerland had insisted that the World Bank exercise some form of control over money directly returned from the state budget, with extremely mixed results. The World Bank could not help but notice powerlessness: at least half of the projects did not see the light of day, and in the other half that realized, many were dysfunctional. To avoid the same fiasco, Switzerland agreed to conclude a tripartite agreement with Nigeria and the World Bank in December 2016 to repay the second installment of $ 321 million. In particular, the development bank should oversee the allocation of these funds to strengthen the social security of the poorest sections of the population, who make up more than 60 percent of Nigeria’s population of 190 million.

The issue of repatriation of stolen assets is even more complex when governments accused of embezzlement and illicit transfers of funds are still in power.
We can not for all that renounce the repatriation of illicit assets whatever the possible obstacles. The only viable solution is to involve civil society in the solution envisaged for restitution.

Notes:

This Legal and Financial section deals with major African issues such as corruption, the fight against money laundering and legal issues involving banks and the financial sector in general.

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