Anti-corruption advocates are finding international opposition to legal regimes to reclaim looted assets, but the tide may be turning.
A Paris court last year ordered French detectives to draw up a list of assets held in France by the leaders of five oil-producing countries in Africa. Three anti-corruption organizations had brought a case before the court alleging that the leaders of Angola, Congo, Burkina Faso, Gabon, and Guinea had bought luxury cars and homes in France with money they had obtained illegally.
The officers found property worth hundreds of millions of euros registered under the names of the five presidents and their families. The most remarkable assets were those owned by the president of Gabon and his family. For instance, a property management company bought a town house near the Champs-Elysées for €18.9 million last June on behalf of the wife and teenage children of Gabon’s President El Hadj Omar Bongo Ondimba. Bongo has led the oil-rich but impoverished West African country since 1967.
The Bongos own other properties in high-end Parisian neighborhoods, as well as a lavish compound on the French Riviera. Altogether, the family owns 33 properties in France. They also own a fleet of luxury cars. In 2007, Bongo’s wife bought a Mercedes-Benz Maybach limousine for nearly $600,000. His son, defense minister since 1999, owns two Ferraris.
Bongo’s lawyer dismissed claims he had enriched himself improperly, and the French courts later dropped the investigation for procedural reasons.
The Bongo affair seems to fit a well-established pattern. An autocrat becomes wealthy and salts his assets away in Europe and the United States. Willing participants in the process include international banks, investment advisers, law firms, top accountants, and tax advisers, not to mention real-estate brokers and car dealers. A 2007 United Nations and World Bank report estimates the value of the “stock of assets acquired by corrupt leaders of poor countries, mostly in Africa, and stashed overseas” at $20 billion to $40 billion.
Recent setbacks in preventing the flow of suspect wealth means this pattern will likely continue unimpeded for the time being. This is despite pressure on Western governments to impose tighter controls on questionable financial transfers.
In February, delegates to a UN conference failed to agree on how to make the 2003 UN Convention against Corruption (UNCAC) enforceable. Three G-8 governments—Germany, Italy, and Japan—have still not ratified the convention at all. China, Pakistan, and Iran also opposed tightening UNCAC’s provisions at the February conference.
A Stolen Asset Recovery (StAR) initiative to expedite the return of looted assets, launched last June by the World Bank and the UN, has also received an unenthusiastic welcome. Governments, meanwhile, often ignore the anti-corruption convention of the Organization for Economic Cooperation and Development (OECD). Last December, the United Kingdom halted a police bribery investigation in which defense contactor BAE Systems is suspected of paying billions of dollars to Saudi princes.
Legislation in most developed countries makes it hard to locate and repatriate these assets, even when governments are sympathetic. For instance, it took the Philippine government 18 years to reclaim $624 million deposited in Swiss banks by Ferdinand and Imelda Marcos. Swiss officials supported litigation by the post-Marcos Philippine government, but procedural hurdles and delaying tactics by defense attorneys took years to overcome, both in Switzerland and in the Philippines. “You have to bear in mind that there are things that need to be balanced” such as due process and privacy rights, says Patrick Moulette, head of the OECD’s anti-corruption division.
Yet there are those who believe the tide is starting to turn. “The optimists among us say that you need a legal tool to tackle this, but it won’t be immediately effective,” says Christiaan Poortman, global programs director at anti-corruption group Transparency International. He notes that British courts may reopen the BAE investigation. Moulette says OECD inspectors are carrying out unusually close scrutiny of British anti-corruption practices following the BAE case.
Poortman also points to legal innovations that make fighting corruption in the West easier, principally the concept of nonconviction-based asset forfeiture, which allows authorities to freeze suspect assets in anticipation of a guilty verdict. “This means that if there is sufficient indication that money has been stolen, then a claim can be made without winning a conviction. The authorities can freeze the assets while the case is fought in the courts,” says Poortman. “Speed is of the essence because money can be moved in a blink of an eye.”