It’s been over ten years since countries formally recognized that asset recovery is fundamental to fighting corruption, carving out a specific section on it in the United Nations Convention against Corruption.
Now after a decade it is worth examining if there been any progress against corruption, as well as what is working and what isn’t.
The answer to some of these questions is set out in ‘Few and Far: The Hard Facts on Asset Recovery’, a recent report of the Stolen Asset Recovery Initiative (StAR) and the Organisation of Economic Cooperation and Development (OECD). The paper looks at the progress made by the 34 OECD members – many of the world’s most economically advanced countries – both in terms of the cases and assets frozen or returned, as well as laws or institutions aimed at advancing asset recovery. It covers the period 2010-2012, and compares progress with that of an earlier StAR/OECD report covering 2006-2009.
‘Few and Far’ reveals that there has been an increase in terms of the assets frozen to US$1.398 billion in 2010-2012, up from US$1.225 billion in the period 2006-2009. A total of US$423.5 million was returned during the entire period, from 2006-2012, with an increasing proportion of the returns going to developing countries in the more recent period (this compares with earlier data showing most returns from OECD countries went to developed countries). On their own, these numbers might seem impressive. But when compared to the estimated US$20-40 billion stolen each year, they reveal that we are still very much in the early days and have a long way to go.
Where do we go from here? Fortunately the report documents the various avenues that countries are using to freeze and return assets, and highlights some of the positive trends or features of success. It concludes with a call for all countries to increase their asset recovery efforts, and provides a series of recommendations that are the main building blocks for success.
The first recommendation has to do with attitude: asset recovery needs to be a policy priority and high-level commitment is essential. Three countries – Switzerland, United Kingdom, and United States – have returned assets in both periods and together have frozen over 75% of the total assets. These same countries are the only ones to have made asset recovery a policy priority with support from the highest levels of government. They have also followed through with continual advances in laws to overcome barriers, proactive actions, and resourcing specialized units to work on kleptocracy and asset recovery cases. While these countries have room for improvement, setting asset recovery as a priority has provided them the much needed resources, laws, tools, and proactive mandate to work on these cases.
Another recommendation focuses more practically on having a range of tools in the toolkit. A revealing finding in ‘Few and Far’ was the success achieved by new and innovative legal avenues to freeze and confiscate assets and the extent to which this outweighed the more “traditional” methods. For example, in the wake of the Arab Spring some countries adopted laws and decrees to proactively freeze assets held by individuals suspected of misappropriating funds rather than waiting for a request from the country harmed by corruption. Such actions helped avoid further dissipation of assets, giving time for the country to initiate a request for mutual legal assistance. This course of action accounted for 39% of the assets frozen between 2010 and 2012. Since only a handful of countries use this multipronged approach, there is much room for progress in both developed and developing countries. On the asset return side, there were more returns through non-conviction based asset confiscation and settlement agreements rather than criminal confiscation, typically thought to be more “traditional” method.
Finally, the report introduces a new partner to support asset recovery efforts: development agencies. Given the devastating impact of corruption on developing and transition countries and the potential impact of the return of the stolen proceeds, development agencies need to be involved. Development agencies have been involved in the areas of advocacy, training for domestic and foreign practitioners, and funding for domestic law enforcement to conduct asset recovery cases. In one particular case, the advice and assistance of the United Kingdom’s Department for International Development supported the government of Tanzania in planning for the return of proceeds, resulting in money being allocated to primary schools in the country.
Looking at the numbers and the data on asset recovery can be disheartening. ‘Few and Far ‘provides some cause for optimism by identifying some of the common features of success. Given that few countries have incorporated these features, there is much room for growth. The challenge remains in convincing both developed and developing countries that these assets ultimately impact their bottom-line of assets for development and thus the need for decisive, innovative and systematic action.
Larissa Gray is a Senior Financial Sector Specialist with the Stolen Asset Recovery Initiative, and one of the authors of ‘Few and Far: The Hard Facts on Asset Recovery’.