Prevention and Combat of Corrupt Practices; In Specific Transfer of Assets of Illicit Origin.It is widely recognized that corruption is a threat to the stability of societies, the establishment and maintenance of the rule of law and economic and political progress. Any meaningful solution to the problem must therefore account for the recovery of the assets derived from corruption. The recovery and return of those ill-gotten gains can make a significant difference to countries recovering from corruption and sends the important message that the international community will not tolerate such illegal conduct.
In cases of large-scale corruption the amounts of state resources illicitly converted to private ownership and exported to international banking centres and financial havens can be staggering. According to the Nyanga Declaration on the Recovery and Repatriation of Africa’s Wealth:
“An estimated US$ 20-40 billion has over the decades been illegally and
corruptly appropriated from some of the world’s poorest countries, most of
them in Africa, by politicians, soldiers, businesspersons and other leaders, and kept abroad in the form of cash, stocks and bonds, real estate and other
assets.”
Although the full extent of the transfers of illicit funds or assets is impossible to measure with precision, there can be very little doubt that corruption and the laundering of proceeds derived from corruption have a cancerous effect on economies and politics around the globe. The International Monetary Fund (IMF) has estimated that the total amount of money laundered on an annual basis is equivalent to three to five per cent of the world’s gross domestic product (GDP), an amount of between $600 billion and $1.8 trillion. It would be safe to assume that a significant portion of that activity involves funds derived from corruption.
MEASURES ADOPTED BY SOME MEMBER STATES:
Brazil
Brazil indicated that the Commission on Public Ethics, was responsible for reviewing the legislation on the ethical conduct of civil servants of the Federal Public Administration; for elaborating and proposing a Code of Conduct for authorities in the area of the executive branch of the Government; and for receiving and reviewing charges against authorities who are not performing in accordance with the Code of Conduct. In April 2001, the position of General Corregidor of the Union was created, with the responsibilities of assisting the President of the Republic in all matters related to public assets. Brazil has also indicated that complementary law No. 105, provides flexibility in the application of the rules concerning bank secrecy for financial operations, bank client information disclosure and capital movement. The purpose is to investigate practices of money laundering of resources originating from illicit and criminal activities, including corrupt practices.
Switzerland
Switzerland reported that, regarding mutual assistance in criminal matters, the return of objects and assets has been governed by law since 1 February 1997. There are two distinct forms of return: at the end of mutual assistance proceedings, objects or assets provisionally seized may, on request, be returned to the competent foreign authority, either to be confiscated or to be returned to the entitled parties abroad. The federal law on the sharing of confiscated financial assets empowers Swiss authorities to conclude sharing agreements with foreign States. The different parties to such an agreement agree on the distribution formula. As a general rule, assets are shared equally among the States concerned, but the draft law provides that, depending on the nature of the offence or other factors, it is possible to return all the assets to the requesting State. With regard to this last element, the draft law aims to give concrete expression to a practice already broadly applied in Switzerland. However the Swiss officials face continuous criticism from the world community over the complete and effective implementation of the above measures.
Turkey
Turkey reported that, in September 2001, it signed a series of Council of Europe conventions, including the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and the Civil Law and Criminal Law Conventions on Corruption. In January 2002, Turkey ratified the International Convention for the Suppression of the Financing of Terrorism.
INTERNATIONAL EFFORTS
The need to fight corruption at all levels was underlined in the Monterrey Consensus, adopted by the International Conference on Financing, held in Monterrey, Mexico, from 18 to 22 March 2002. In that Consensus, member States committed to negotiating and finalizing, as soon as possible, a United Nations Convention against Corruption in all its aspects, including the question of repatriation of funds illicitly acquired to countries of origin; and promoting stronger cooperation to eliminate money-laundering.
The Ad Hoc Committee for the Negotiation of a Convention against Corruption, whose terms of reference were adopted by General Assembly resolution 56/260 of 31 January 2002, held its first session in Vienna from 21 January to 1 February 2002, at which it began its first reading of the draft convention against corruption.5 The reading was completed during the second session of the Ad Hoc Committee, held from 17 to 28 June 2002, and several developments have been made since.
On the occasion of the second session, the Centre for International Crime Prevention organized a one-day technical workshop on the issue on “asset recovery”.
In accordance with Economic and Social Council resolution 2001/13, the Centre for International Crime Prevention has started the preparation of a global study on the transfer of funds of illicit origin, in particular funds derived from acts of corruption, and its impact on economic, social and political progress, in particular in developing countries.
In 2001, IMF and the World Bank divided the international efforts to counter money-laundering into three
categories:
(a) efforts concerned primarily with financial/supervisory matters (e.g. those of IMF, the World Bank and the Basle Committee on Banking Supervision);
(b) efforts concerned with both financial/supervisory and legal/criminal enforcement matters (e.g. United Nations activities); and
(c) efforts concerned primarily with legal/criminal enforcement matters (e.g. activities of the Egmont Group of Financial Intelligence Units and the International Criminal Police Organization (Interpol)).
PROBLEMS THAT NEED TO BE TACKLED:
Laundering activities
Corrupt officials do not always disguise their transfers of illegally acquired wealth through laundering activity. In some remarkable examples of corruption, little if any effort was made to hide the systematic embezzlement. For instance, when Jean-Claude Duvalier fled Haiti, investigators had little trouble locating incriminating paperwork that showed that the former “President for Life” had embezzled more than $120 million.
the money-laundering process is most susceptible to detection during the so-called “placement” stage, when the assets are being physically deposited into a financial institution, because the wealth is still close to the original criminal activity. For that reason, transparency is necessary for the international financial and banking markets to prevent money-launderers from placing profits gained from corruption into financial institutions. The principle of “sunlight” works particularly well because money laundering
is an inherently hidden activity. Simply put, the more banks and other financial institutions report suspicious transactions, the more information authorities receive about possible laundering operations.
Opaque financial systems
Both practical and legal obstacles, including the absence of a comprehensive international instrument relating to corruption and money-laundering, impede the international efforts to create transparency. One basic hindrance is that the rapid movement of funds complicates efforts to recover and return money because the electronic transfers, in particular via the Internet, lend anonymity to the transactions and can be extremely difficult to trace.
A second practical problem is the continued lack of transparency in many of the world’s financial systems. For example, one conduit for laundered funds continues to be the correspondent accounts that certain financial institutions provide to foreign banks. Correspondent banking involves one bank providing services to another bank to move funds, exchange currency and carry out other transactions. Those accounts can provide the owners and clients of a poorly regulated, and even corrupt, bank with the ability to move money freely around the world. Trusts are also increasingly being recognized as a gap in transparency that enables complex laundering schemes.
Likewise, offshore accounts and personal investment companies provide havens and opportunities for any laundering activity, including the laundering of funds derived from corruption.
Lack of uniformity of laws
A fundamental complication facing recovery actions is the diversity of legal systems. Governments and financial institutions from different legal systems can have difficulties bridging differences in concepts and procedures. The resulting legal problems in recovery actions vary, depending upon the jurisdiction (common law/civil law) and the recovery approach (civil/criminal).
Another common legal complication to recovery actions arises because the tracing and freezing of illicitly transferred assets straddle the boundary between civil and criminal proceedings. Each type of proceeding is distinct and may not be available in every State under the same circumstances.
WHAT NEEDS TO BE DONE NOW?
1. Legal measures
Expansion of predicate offences to include foreign corruption
Measures that enable the confiscation of the proceeds of corruption in national legislation appear important. Those measures would become considerably more effective if they were combined with an expansion of anti-money-laundering provisions to include foreign corruption as a predicate offence.
Pre-trial seizure or restraining orders or other action to prevent the dissipation or disappearance of assets
To provide for the type of expeditious legal action often necessary to seize funds in the modern global economy, it would appear necessary to have measures that would enable authorities, at the request of another State, to prevent any transfer of those assets for which there is a reasonable basis to believe that they will be subject to recovery as the proceeds of corruption. Such legal mechanisms should also allow for the restraining of assets based on a foreign order or the issuance of an appropriate restraining order by a court in the requesting State. At the same time, however, those mechanisms should ensure that the foreign action has a legitimate
basis and impose reasonable deadlines on the requesting State to submit evidence supporting the seizure.
2. Organizational arrangements
Spontaneous disclosure of information on assets of illicit origin
The spontaneous sharing of information between States is an important
component of the international cooperation necessary to recover and return funds derived from corruption. Therefore international cooperation would be significantly strengthened by measures that allow the forwarding of information on funds of illicit origin to another State without prior request, and without endangering ongoing investigations in the State offering the information, when the disclosure would assist the other State in a recovery action.
3. Methods for recovery
The expanded use of civil proceedings as a replacement of, criminal actions, when appropriate, could be considered as a vehicle for recovery.
As discussed during the technical workshop on asset recovery civil
proceedings instituted by the Philippines and the Russian Federation have allowed those countries to recover nearly $1 billion and $180 million, respectively. More recently, Nigeria has recovered over $1 billion in Abacha funds (to date) in large part because of a civil lawsuit filed in the United Kingdom.
4. Preventing the transfer of funds or assets of illicit origin
The recovery and return of diverted funds is similarly complex and cumbersome, with efforts to trace and return the wealth frequently frustrated by a combination of legal and practical factors. For those reasons, it is important that all States take steps to prevent the transfer of illicit funds or assets derived from corruption. For example:
a. Establishment of financial intelligence units and increased voluntary information-sharing
b. The United Nations as a repository for information on due diligence and on suspicious transaction reporting
c. Development of early warning
Conclusion:
As noted above, the difficulties and complexities inherent in combating the
transfer of illicit funds arising from acts of corruption cannot be underestimated. It is an ongoing process and can deeply hamper the economic growth and the social stability of a nation. Thus it is of supreme importance that assets of a country are used for its development and communal growth which will also lead to international economic stability.
Questions to consider:
• What is the current economic policy and Growth rate of your country?
• What is the exact history with reference to corruption such as transfer of illicit assets in the form of money laundering goods etc.?What steps were taken to prevent the incident?
• What measures have been implemented to combat corruption? Include treaties, laws international conventions etc.
• What is the chief cause for social corruption- economic divide, backward economy etc.?
• What steps have international bodies taken to help your nation and how successful have they been?
• How is your nation planning to contribute to the world stage? Does it require aid or can it provide it?
REFERENCE LINKS:
http://www.mfa.gov.cn/ce/ceun/eng/chinaandun/economicdevelopment/qqh/t276898.htm
http://www.un.org/esa/documents/draft87cCorruptpractices.pdf
http://www.un.org/News/Press/docs/2003/gaef3041.doc.htm
http://www.un.org/documents/ga/docs/56/a56186.pdf
No comments:
Post a Comment