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International Asset Recovery and the United Nations Convention Against Corruption

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Abstract

The chapter analyses the procedures and conditions for asset recovery set by the United Nations Convention against Corruption (UNCAC). It presents the legal tools for international cooperation and mutual legal assistance in trans-border asset recovery. It explores the interconnection between grand corruption, money laundering and transnational organized crime (UNTOC) before addressing the problems of failed victim states and states in transition in recovering stolen assets as well as the implications of settlement agreements for victims’ rights. The research identifies national (Switzerland and Canada) and regional (Arab Forum on Asset Recovery) best practices in asset recovery and presents the Ao Man-Long case. The chapter argues that UNCAC’s full potential as an autonomous legal basis for asset recovery still remains to be discovered by recovering jurisdictions and practitioners.

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Notes

  1. 1.

    United Nations Convention Against Corruption (adopted 31 October 2003, entered into force 14 December 2005) (UNCAC), Foreword iii–iv.

  2. 2.

    The text of the UNCAC is available at <http://www.unodc.org> accessed 10 April 2017.

  3. 3.

    For further discussion, see Kevin M Stephenson and others, Barriers to Asset Recovery: An Analysis of the Key Barriers and Recommendations for Action (World Bank 2011); Indira Carr and Robert Jago, ‘Corruption, the United Nations Convention Against Corruption (‘UNCAC’) and Asset Recovery’ in Colin King and Clive Walker (eds), Dirty Assets: Emerging Issues in the Regulation of Criminal and Terrorist Assets (Ashgate Publishing 2014).

  4. 4.

    For discussion of illicit financial flows from developing countries, see Dev Kar and Joseph Spanjers, Illicit Financial Flows from Developing Countries: 2004–2013 (Global Financial Integrity 2015).

  5. 5.

    EU Anti-Corruption Report, ‘Report from the Commission to Council and the European Parliament’ COM (2014) 38 final, 3.

  6. 6.

    UNODC, Estimating Illicit Financial Flows Resulting From Drug Trafficking and Other Transnational Organized Crimes (UNODC 2011); For criticism of the UNODC report, see Chap. 15 (van Duyne, Harvey, and Gelemerova) in this collection.

  7. 7.

    UNODC and World Bank, Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities, and Action Plan (World Bank 2007) 1.

  8. 8.

    As of 10 April 2017.

  9. 9.

    For a brief overview of the anti-corruption Conventions, see Carr and Jago (n 3) 206–10, and for more detail, Marco Arnone and Leonardo Borlini, Corruption: Economic Analysis and International Law (Edward Elgar Publishing 2014) 219–270; Jan Wouters, Cedric Ryngaert, and Ann Sofie Cloots, ‘The International Legal Framework Against Corruption: Achievements and Challenges’ (2013) 14(1) Melbourne Journal of International Law 1.

  10. 10.

    UNCAC art 15.

  11. 11.

    UNCAC art 16.

  12. 12.

    UNCAC art 17.

  13. 13.

    UNCAC art 23.

  14. 14.

    UNCAC art 25.

  15. 15.

    UNCAC arts 21 and 22.

  16. 16.

    UNCAC art 20.

  17. 17.

    UNCAC art 19.

  18. 18.

    UNCAC art 18.

  19. 19.

    UNCAC art 24.

  20. 20.

    ‘Predicate offence’ means according to UNCAC art 2(h) any offence as a result of which proceeds have been generated that may become the subject of money laundering.

  21. 21.

    David Chaikin and Jason C Sharman, Corruption and Money Laundering: A Symbiotic Relationship (Palgrave Macmillan 2009), argue correctly that failure to properly understand the corruption-money laundering nexus undermines the success of policy measures to tackle them.

  22. 22.

    UNCAC art 23(2)(c).

  23. 23.

    Grand corruption as opposed to petty corruption is a non-legal term, which describes corruption occurring at the highest levels of (public or private) power and usually involving high sums of bribes or value of other undue advantages.

  24. 24.

    UNTOC itself proscribes four types of ‘core’ crimes: participation in an organised criminal group (Article 5), corruption (Article 6), money laundering (Article 8) and obstruction of justice (Article 23).

  25. 25.

    See United Nations Convention Against Transnational Organized Crime (UNTOC) (adopted on 15 November 2000, entered into force on 29 September 2003). The Convention has 147 signatories and 187 Parties as of 10 April 2017. For a comprehensive overview of the criminal provisions of the UNTOC, see Neil Boister, ‘The UN Convention Against Transnational Organized Crime 2000’ in Pierre Hauck and Sven Peterke (eds), International Law and Transnational Organised Crime (OUP 2016).

  26. 26.

    See generally Roger S Clark, ‘The United Nations Convention against Transnational Organized Crime’ (2004) 50(1) Wayne Law Review 161; David McClean, Transnational Organized Crime: A Commentary on the UN Convention and its Protocols (OUP 2007); Dimitri Vlassis, ‘The United Nations Convention Against Transnational Organized Crime and its Protocols: A New Era in International Cooperation’ in International Centre for Criminal Law Reform and Criminal Justice Policy (ed), The Changing Face of International Criminal Law (International Centre for Criminal Law Reform and Criminal Justice 2002).

  27. 27.

    Article 8 UNTOC corresponds to Article 15 UNCAC, although it has a much broader title: ‘criminalization of corruption’. Criminalizing bribery of foreign public officials or other forms of corruption remains a non-binding recommendation towards UNTOC States Parties.

  28. 28.

    The definition of ‘organized criminal group’ is set out in UNTOC art 2(a).

  29. 29.

    As defined in UNTOC art 2(b).

  30. 30.

    See UNTOC art 3(1). For the criteria of ‘transnationality’, see UNTOC art 3(2).

  31. 31.

    See UNTOC art 19 (‘Joint investigations’) and art 20 (‘Special investigative techniques’).

  32. 32.

    UNTOC’s provisions are generally phrased and very basic when compared with UNCAC’s thorough and clearly outlined procedures for international cooperation in asset recovery, as outlined below.

  33. 33.

    See Philippa Webb, ‘The United Nations Convention Against Corruption: Global Achievement or Missed Opportunity?’ (2005) 8(1) Journal of International Economic Law 191, 204. UNTOC’s lacking precision and consequently enforceability is also seen in the loose definitions of ‘organised criminal group’ and ‘serious crime’. See Boister (n 25) 149.

  34. 34.

    The Conference of Parties to the UNTOC has no clear powers: reviews need only be made ‘periodically’, and there is no process for verifying country reports. See Webb (n 33).

  35. 35.

    See, UNODC, Legislative Guide for the Implementation of the United Nations Convention Against Corruption (2nd edn, United Nations 2012) <http://www.unodc.org/pdf/corruption/CoC_LegislativeGuide.pdf> accessed 10 April 2017; UNODC and United Nations Interregional Crime and Justice Research Institute (UNICRI), Technical Guide to the United Nations Convention Against Corruption (United Nations 2009) <http://www.unodc.org/documents/corruption/Technial_Guide_UNCAC.pdf> accessed 10 April 2017.

  36. 36.

    See Stephenson and others (n 3) 50.

  37. 37.

    UNCAC art 65(1).

  38. 38.

    Mutual legal assistance may be requested according to Article 46 for various purposes, including: ‘(j) Identifying, freezing and tracing proceeds of crime in accordance with the provisions of chapter V of this Convention; (k) The recovery of assets, in accordance with the provisions of chapter V of this Convention’.

  39. 39.

    UNCAC art 57.

  40. 40.

    UNCAC arts 31, 54, and 55 in conjunction with Chapter III on corruption crimes.

  41. 41.

    UNCAC art 54(1)(c).

  42. 42.

    UNCAC art 53.

  43. 43.

    UNCAC art 52(1).

  44. 44.

    See FATF, ‘International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation—the FATF Recommendations’ (2012, last updated 2016), 113 <http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf> accessed 10 April 2017.

  45. 45.

    OECD, ‘Global Forum on Transparency and Exchange of Information for Tax Purposes’ <http://www.oecd.org/tax/transparency> accessed 10 April 2017, has identified a list of jurisdictions as ‘tax havens’.

  46. 46.

    Public functions are exercised by ‘public officials’. The latter are defined in UNCAC art 2(a).

  47. 47.

    FATF (n 44) 123.

  48. 48.

    See the Cayman Islands Guardian Bank and Trust case (Russo Cable case) in OECD, Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes (OECD 2001), 93 <http://www.oecd.org/corporate/ca/43703185.pdf> accessed 10 April 2017.

  49. 49.

    For further discussion of correspondent banks, see Chapter 11 (Ramachandran, Collin, and Juden) and Chapter 12 (Levi) in this collection.

  50. 50.

    ‘… requiring public officials to make declarations to appropriate authorities regarding, inter alia, their outside activities, employment, investments, assets and substantial gifts or benefits from which a conflict of interest may result with respect to their functions as public officials’: UNCAC art 8(5).

  51. 51.

    Stephenson and others, (n 3) 55, recommend that jurisdictions should introduce mechanisms that allow for prompt tracing and temporary freezing of assets before a formal MLA request is filed.

  52. 52.

    UNCAC art 2(e). The same definition is adopted in UNTOC art 2(e). For ‘property’, see UNCAC art 2(d). Converted or mixed property is dealt with by UNCAC art 31(4)–(6).

  53. 53.

    Adopted from the training Module of the World Bank, Asset Recovery Process and Avenues for Recovering Assets (complementing the Asset Recovery Handbook: A Guide for Practitioners (World Bank 2011)), 12 <http://pubdocs.worldbank.org/en/824561427730120107/AML-Module-5.pdf> accessed 10 April 2017.

  54. 54.

    According to UNCAC art 46(1), ‘States Parties shall afford one another the widest measure of mutual legal assistance in investigations, prosecutions and judicial proceedings in relation to the offences covered by this Convention’.

  55. 55.

    UNCAC art 54(2)(a)–(b).

  56. 56.

    UNODC, Legislative Guide (n 35) 255.

  57. 57.

    StAR Asset Recovery Watch is a project of the Stolen Asset Recovery (StAR) Initiative of the UNODC and the World Bank. The database compiles, systematizes and publishes information about completed and active asset recovery efforts around the world. For more information, see their website <http://star.worldbank.org/corruption-cases/arwcases> accessed 10 April 2017.

  58. 58.

    See further Chapter 26 (Lord and Levi) in this collection.

  59. 59.

    Some see in this assumption a fundamental weakness of the UNCAC: Tim Daniel and James Maton, ‘Is the UNCAC an Effective Deterrent to Grand Corruption?’ in Jeremy Horder and Peter Alldridge (eds), Modern Bribery Law: Comparative Perspectives (CUP 2013) 322.

  60. 60.

    This was the case with the assets of Zaire’s (now the Democratic Republic of the Congo) corrupt President Mobutu Sese Sisoko. See Daniel and Maton (n 59) 321; Konye Obaji Ori, ‘Swiss Court Approves African Kleptocracy: Mobutu’s Loot to Go to his Family’ Afrik News (15 July 2009) <http://www.afrik-news.com/article15923.html> accessed 10 April 2017.

  61. 61.

    Stephenson and others (n 3) 24 define lacking political will to mean a lack of a comprehensive, sustained, and concerted policy or strategy to identify asset recovery as a priority and to ensure alignment of objectives, tools, and resources to this end.

  62. 62.

    Daniel and Maton (n 59) 316 name Indonesia and Kenya as states which request assistance abroad but fail to produce evidence of any will to prosecute at home and the Democratic Republic of the Congo (DRC), Haiti, Equatorial Guinea, Gabon and the Congo Republic (Congo Brazzaville) as victim states which fail to take any action whatsoever.

  63. 63.

    Muammar Gaddafi, Hosni Mubarak and Zine El-Abidine Ben Ali, respectively.

  64. 64.

    See The Economist, ‘Making a Hash of Finding the Cash’ The Economist (Cairo, 11 May 2013) <http://www.economist.com/news/international/21577368-why-have-arab-countries-recovered-so-little-money-thought-have-been-nabbed> accessed 12 May 2017.

  65. 65.

    Oliver Bullough, ‘The Money Machine: How a High-Profile Corruption Investigation Fell Apart’ The Guardian (London, 12 April 2017) <http://www.theguardian.com/world/2017/apr/12/the-money-machine-how-a-high-profile-corruption-investigation-fell-apart> accessed 12 May 2017.

  66. 66.

    See full text of the ‘Federal Act on the Restitution of Assets illicitly obtained by Politically Exposed Persons’ (RIAA) <http://www.admin.ch/opc/en/classified-compilation/20100418/201102010000/196.1.pdf> accessed 10 April 2017.

  67. 67.

    For a discussion of the case of former (1971–1986) Haitian dictator Jean-Claude ‘Baby Doc’ Duvalier, see Daniel and Maton (n 59) 320ff, and the StAR, ‘Asset Recovery Watch Report’ <http://star.worldbank.org/corruption-cases/node/18515> accessed 10 April 2017.

  68. 68.

    RIAA (n 66) art 2 (c). For a detailed analysis of the RIAA, see Frank Meyer, ‘Restitution of Dirty Assets: A Swiss Template for the International Community’ in Katalin Ligeti and Michele Simonato (eds), Chasing Criminal Money: Challenges and Perspectives on Asset Recovery in the EU (Hart Publishing 2017).

  69. 69.

    Article 4(2)(b)-(c). See full text <http://laws.justice.gc.ca/PDF/F-31.6.pdf> accessed 10 April 2017.

  70. 70.

    Jean-Pierre Brun and Richard Miron, ‘Tunisia’s-Cash-Back: The Start of More to Come?’ StAR Asset Recovery Blog (12 April 2013) <https://star.worldbank.org/star/news/tunisia’s-cash-back> accessed 10 April 2017; The Guardian, ‘Tunisia Recovers $28m From Wife of Deposed President’ The Guardian (London, 11 April 2013) <www.theguardian.com/world/2013/apr/11/tunisia-28m-wife-deposed-president> accessed 12 May 2017.

  71. 71.

    For more information about AFAR <https://star.worldbank.org/star/ArabForum/About> accessed 10 April 2017.

  72. 72.

    See Jacinta Anyango Oduor and others, Left Out of the Bargain: Settlements in Foreign Bribery Cases and Implications for Asset Recovery (World Bank 2014), 2 <http://star.worldbank.org/star/sites/star/files/9781464800863.pdf> accessed 10 April 2017.

  73. 73.

    Daniel Claman, ‘The Promise and Limitations of Asset Recovery Under the UNCAC’ in Mark Pieth (ed), Recovering Stolen Assets (Peter Lang 2008) 350.

  74. 74.

    Article 32 (Protection of witnesses, experts and victims) para 5 requires that States Parties ‘enable the views and concerns of victims to be presented and considered at appropriate stages of criminal proceedings’.

  75. 75.

    Article 57(3)(c), as already discussed, asks States Parties to ‘give priority consideration to returning confiscated property to the requesting State Party, returning such property to its prior legitimate owners or compensating the victims of the crime’.

  76. 76.

    For the principal-agent model as perceived by neo-institutional economics, see among others Niko Groenendijk, ‘A Principal-Agent Model of Corruption’ (1997) 27(3) Crime, Law and Social Change 207.

  77. 77.

    Oduor and others (n 72).

  78. 78.

    StAR Corruption Cases Search Center <http://star.worldbank.org/corruption-cases/assetrecovery> accessed 10 April 2017.

  79. 79.

    The database reports a further US $4 billion of monetary sanctions imposed between mid-2012 and mid-2016.

  80. 80.

    The concluded settlements in the corruption cases of Ferdinand Marcos in the Philippines, Sani Abacha in Nigeria and Muammar el-Qaddafi in Libya (ongoing) and the individuals and entities associated with them make up the biggest portion of the recovered amount.

  81. 81.

    The United States, Germany, the United Kingdom and Switzerland lead the list, with approximately two-thirds of the cases having been settled by the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC).

  82. 82.

    Conference of the States Parties to the United Nations Convention against Corruption, Open-ended Intergovernmental Working Group on Asset Recovery, 10th Intersessional Meeting (Vienna, 25–26 August 2016), Note by the Secretariat on ‘Settlements and other alternative mechanisms in transnational bribery cases and their implications for the recovery and return of stolen assets’ CAC/COSP/WG.2/2016/2 (2016), 18.

  83. 83.

    Due consideration of victims’ rights is not a novelty of the UNCAC. It is also manifested in UNTOC art 14(2).

  84. 84.

    The James Giffen—Mercator Corporation oil mining case (see the StAR Asset Recovery Watch report <http://star.worldbank.org/corruption-cases/node/18528> accessed 10 April 2017, and the subsequent establishment in Kazakhstan of the BOTA foundation for the repatriation of US $ 115 million following a MoU between the governments of the United States, Switzerland and Kazakhstan is a successful case of assets invested in affected local communities and overseen by the World Bank. See Aaron Bornstein, ‘Key Lessons of the BOTA foundation’ The FCPA Blog (5 April 2017) <www.fcpablog.com/blog/2017/4/5/aaron-bornstein-key-lessons-of-the-bota-foundation.html> accessed 10 April 2017.

  85. 85.

    Arnone and Borlini (n 9) 258 argue that ‘the drafters of the UNCAC gave “too” high a priority to flexibility with the purpose of accommodating an agreement meeting the various contracting parties’ positions’.

  86. 86.

    See Dimitri Vlassis, ‘The United Nations Convention Against Corruption: A Way of Life’ in Nikos Passas and Dimitri Vlassis (eds), The United Nations Convention Against Corruption As a Way of Life: Selected Papers and Contributions from the International Conference on ‘The United Nations Convention Against Corruption As a Way of Life’ (Courmayeur, 15–17 December 2006) (ISPAC—International Scientific and Professional Advisory Council of the United Nations Crime Prevention and Criminal Justice Programme 2007) 15, 32 <http://ispac.cnpds.org/publications-22-the-united-nations-convention-against-corruption-as-a-way-of-life-22.html> accessed 10 April 2017.

  87. 87.

    For the importance of domestic legislation permitting NCB confiscation, see Stephenson and others (n 3) 66. For a list of jurisdictions permitting NCB confiscation and relevant legislation, see Theodore Greenberg and others, ‘Stolen Asset Recovery: A Good Practices Guide for NCB Asset Forfeiture’ (World Bank 2009).

  88. 88.

    Stephenson and others (n 3) 50.

  89. 89.

    Ibid. 50.

  90. 90.

    Speech at the Opening Plenary of the VI Ministerial Global Forum on Fighting Corruption and Safeguarding Integrity (Doha, 7 November 2009) <https://www.justice.gov/ag/speeches/2009/ag-speech-091107.html> accessed 10 April 2017.

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  1. Sussex Law School, School of Law, Politics and Sociology, University of Sussex, Brighton, UK

    Dimitris Ziouvas

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  1. University of Sussex, Falmer, United Kingdom

    Colin King

  2. University of Leeds, Leeds, United Kingdom

    Clive Walker

  3. Notre Dame Law School, Notre Dame, IN, USA

    Jimmy Gurulé

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Ziouvas, D. (2018). International Asset Recovery and the United Nations Convention Against Corruption. In: King, C., Walker, C., Gurulé, J. (eds) The Palgrave Handbook of Criminal and Terrorism Financing Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-64498-1_25

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