StAR: Stolen Asset Recovery Initiative

July 2019

Table of Contents: 


Foreword

Accountability in returns of confiscated assets

Sometimes the fight against corruption feels like the struggle of Sisyphus - rolling a stone up a hill, only for it to roll down again. The high and mighty appear untouchable and able to continue their theft of public assets with impunity and just as one country appears to make a bit of progress, a new scandal convinces us that nothing has changed. But as Transparency International reminds us in a recent article, a lot has happened since it was founded 25 years ago. What once was deemed acceptable, e.g. bribes as tax-deductible “costs of doing business” no longer is. We, those dedicated to anti-corruption in government, civil society, business and international organizations, are slowly changing mindsets by providing facts and holding those in power accountable. That progress is measured in years, not months or weeks.

Accountability in this context is not just about locking up perpetrators and confiscating their assets; it is also about making sure that when those assets are confiscated, they are put to public use, as originally intended. The funds should benefit the entire population, not just a few of its leaders. The issue of the management and use of returned assets is of increasing interest to both policy makers and practitioners as more and more instances arise of countries having to decide how to deal with confiscated proceeds of corruption. While the UNCAC is unequivocal about the principle that funds must be returned to a requesting state who can claim prior ownership of the funds (easy in the case of embezzlement, a bit more complicated in the case of bribery, see here for an interesting discussion), the modalities of the return still can take many different forms, and states can come to different types of agreements to resolve this. This is the topic of this issue’s “Spotlight” piece, and, judging by the chatter that this topic is generating, I think this discussion will be with us for some time to come.


I hope you will read this, and the summaries of our country and knowledge work with interest and I wish you all a wonderful summer.

Emile van der Does de Willebois
Coordinator StAR Initiative

 


Country Engagements

Updates from our country work during the past quarter

  • StAR conducted a workshop on the main pillars of asset recovery in Tashkent, Uzbekistan, in April and facilitated a discussion with practitioners on major challenges in pursuing stolen assets. Participants came from the General Prosecutor’s Office (GPO) and its academy, the FIU, the Ministry of Finance, the Ministry of Interior, and others. StAR will help strengthen practitioners’ investigation skills and capacity to engage in international cooperation and, based on the conclusions of the workshop, will provide advice on overcoming challenges to asset recovery, such as short procedural deadlines for investigations and trials of asset recovery cases under the country's Criminal Procedure Code, and unavailability of non-conviction based and extended confiscation.
     
  • In April, StAR traveled to Kampala, Uganda, to advise the Inspectorate of Government (IG) on the country's asset declaration system. The discussions focused on: (1) strengthening the legal framework, (2) finalizing the framework for automated verification of declarations, and (3) preparing data exchange and integration with existing electronic filing systems of databases held by other institutions, including land, vehicle, company registries.
     
  • In April, StAR facilitated a financial investigations training course in Ulaanbaatar, Mongolia for 34 participants from the FIU, Independent Authority Against Corruption (IAAC), Prosecutor General’s Office, Police, Customs, Taxation Authority, and Intelligence. Building on a prior introductory course delivered in October 2018, this workshop involved a series of exercises in which participants determined which steps they would take to initiate a financial investigation and trace related assets within the realm of their legal framework.


StAR delivered a training on financial investigations and asset tracing in Mongolia in April. 
  • StAR also delivered a workshop on the analysis of asset declarations of public officials for IAAC staff and civic oversight council members from all regions of Mongolia. We provided advice on advancing e-verification of declarations and other key reform areas needed to strengthen the country's asset declaration and conflict of interest system. Discussions were also held with NGOs and media representatives on the importance of asset declarations in watchdog activities.
     
  • In Quito, Ecuador, StAR conducted a workshop on the use of open sources for investigations, which was attended by participants from the FIU, National Police, and Prosecutor-General’s Office. On the sidelines of the workshop, StAR met with officials from the Anti-Corruption Secretariat to discuss requests for StAR assistance in reviewing anti-corruption and asset recovery legislation and bills. In May, StAR also participated in the launch of the Commission of International Experts in the Fight against Corruption in Ecuador and the International Anti-Corruption Congress organized by the Government. In June, StAR attended a high-level event on the signing of a Memorandum of Understanding between Ecuador's National Assembly and the Anti-Corruption Secretariat and participated in a round table discussion on non-conviction based forfeiture and asset recovery. 
     
  • A StAR team met with the judicial branch in Bogota, Colombia, in April to discuss the design of an asset recovery practical exercise for judges and prosecutors. The team also met with the General Prosecutor’s Office, the FIU, and the Office of the Vice Presidency to discuss the StAR program in Colombia. 
     
  • At the invitation of UNDP, StAR participated in a multi-stakeholder international expert conference in Yerevan, Armenia, on Armenia’s anti-corruption strategy in April, where we presented on the introduction of mechanisms for stolen asset recovery in the country. StAR also followed up on the government’s request to provide asset recovery support in Armenia and a scoping mission will take place in July.
     
  • In April, StAR facilitated a multi-agency workshop on asset recovery in Bangkok, Thailand, organized by the Office of the Attorney General. The event led to lively discussions on the legal and institutional framework required for asset recovery (Which institutions need to be involved? Which legal avenues are currently available? What are practical challenges to this process?). In a wrap-up meeting with the Attorney General, StAR welcomed the government’s commitment to making asset recovery a policy priority.
 
Participants of a workshop in Bangkok, Thailand, debate the country's framework for recovering assets. 
  • In January 2019, the government of Malaysia adopted a new National Anticorruption Plan and StAR participated in a roundtable discussion in May organized by the UN Resident Coordinator’s Office on the coordination of anti-corruption priorities in Malaysia, with UNODC, UNDP, UK FCO, together with national stakeholders. Among other things, we highlighted the importance of recovery of proceeds of corruption in the context of anti-corruption priorities.
     
  • In May, StAR delivered a training on using open source information in the process of verification of asset declarations for integrity inspectors of the National Integrity Agency of Romania
     
  • In May, a StAR team continued the dialogue with the National Anti-Corruption Bureau of Ukraine on effectively leveraging open sources of information, direct contacts with investigators and mutual legal assistance requests in complex transnational corruption investigations. The StAR team also discussed the experience of other countries in using money laundering as a stand-alone offence and avenues for changing misperceptions around it. Lastly, the team continued to advise authorities, including the Presidential Administration, and coordinate with international partners on the draft legislation on civil forfeiture and illicit enrichment.

Policy Influence and Partnerships

In May, a StAR team contributed to a UNODC International Expert Meeting on the Return of Stolen Assets in Addis Ababa, Ethiopia, (also referred to as "Addis II"). This workshop followed a first meeting, Addis I, which was held in February 2017, pursuant to the adoption of the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda of the 3rd International Conference on Financing for Development (2015). (Target 16.4 of Sustainable Development Goal (SDG) 16 requires States by 2030, to significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime. The Addis Ababa Action Agenda encourages the international community to develop good practices on asset return.) The StAR team contributed to the planning and organization of the Addis II meeting and led discussions on current trends in asset recovery and returns, StAR’s approach, and the Lausanne Guidelines for Efficient Recovery of Stolen Assets. We also moderated sessions and breakout groups to support the development of the meeting’s outcome recommendations. (Meeting documents are available here. A meeting report will be posted soon.) See the Spotlight piece for more on this subject. 


"Addis II" UNODC Expert Meeting on the return of stolen assets, held 7-9 2019 May in Addis Ababa

Presentation by Oleksandr Skomarov from Ukraine's National Anti-Corruption Bureau at Addis II on international cooperation in tracing of illegal assets
 

In May, StAR participated in a meeting organized by the President of the UN General Assembly on International Cooperation to Combat Illicit Financial Flows (IFF) and Strengthen Good Practices on Asset Return in New York. Discussants took stock of achievements from contemporary efforts to combat IFFs and core challenges yet to be addressed. In a panel moderated by the StAR coordinator, participants deliberated over the effectiveness of the existing global architecture in its ability to combat IFFs and strengthen recovery and return of illicit assets. As in the Addis II meeting, the 2030 Agenda for Sustainable Development was front and center in planning efforts. A recording of the session is available on the UN Web TV site. 



 

In May, a StAR team traveled to Vienna, Austria, to contribute to the 13th session of the UNCAC Working Group on Asset Recovery (ARWG), which is a subsidiary body of the Conference of the States Parties to the UN Convention Against Corruption (UNCAC). For this session, the ARWG was held back to back with the UNCAC Implementation Review Group (IRG) that oversees the work of the UNCAC Implementation Review Mechanism due to the fact that the current second cycle of country reviews focuses on Chapter V (asset recovery). The StAR Initiative played a prominent role in the sessions of the Working Group, as it does each year, through contributions to its background documentation, a presentation on technical assistance, and preparations of plenary and side meetings. There were frequent references to StAR’s work during the sessions. Over a dozen countries mentioned StAR during their interventions during the IRG and the ARWG: two countries highlighted that StAR had facilitated contacts with other jurisdictions, several countries highlighted other aspects of StAR assistance, and at least five countries expressed their support for the proposed StAR study on data collection on international asset recovery efforts (see Knowledge section below) in their statements. On the margins of the meeting, StAR organized a donor coordination breakfast and a briefing with representatives of Transparency International's national chapters.


Transparency International also organized a side event on GFAR follow-up, at which representatives from Tunisia, France, UK, Nigeria, Ukraine, and Brazil discussed lessons learnt, progress and obstacles to asset recovery in their countries since GFAR. Panelists called for greater transparency and better data on progress in asset recovery. Notably, a civil society representative from Nigeria called the Abacha II return a “success story” in its inclusion of civil society and robust monitoring mechanism.

 

In May, StAR also participated in an African Union dialogue on preventing illicit financial flows and recovering stolen assets to better serve the African continent, held in Addis Ababa, Ethiopia. StAR's contributions focused on how Africa can recover proceeds of corruption from offshore jurisdictions; overcoming asset recovery bottlenecks, institutional, policy and legal frameworks needed for successful asset recovery in Africa, and disposal and management of returned assets for development purposes. The event brought together key policy and decision makers, as well as delegates from African institutions, multilateral organizations, civil society organizations and independent experts to deliberate on how Africa and its strategic partners must act independently and together to further prevent IFFs.

 

At the request of the Executive Secretary of the Group of States against Corruption, StAR chaired a panel at GRECOs 20th anniversary on Prevention of Corruption and Promotion of Integrity of Top Executive Functions.



From left to right Elena Koncevičiūtė, Senior Anti-Corruption Adviser EU delegation to Ukraine, Lisa Gamgani, Secretary General of the High-Authority for Transparency in Public Life, France, Emile van der Does de Willebois, StAR, Frans Timmermans, First Vice-President of the European Commission. 
 

In June, StAR participated in a UNODC Expert Group Meeting on the topic of Corruption Involving Vast Quantities of Assets in Oslo, Norway, organized by UNODC in partnership with the Ministry of Foreign Affairs of Norway, with the support of the Norwegian Agency for Development Cooperation (Norad). This meeting was a follow-up to an earlier meeting on the same topic held in Lima, Peru, in December 2018, which StAR supported through presenting research on case studies of corruption cases involving vast quantities of assets. (Lima meeting documents available here; reported in StAR’s January 2019 newsletter.) In Oslo, StAR moderated a session on sanctions, victim compensation, and social damages and contributed to discussions and drafting of recommendations related to beneficial ownership, legal professional privilege, related party transactions, and non-trial resolution of corruption cases. The meeting was attended by over 140 experts specialized in preventing, investigating and prosecuting corruption, including government officials, prosecutors, CSOs, journalists, and academics. Based on the discussions, a set of 64 recommendations were presented and adopted on the final day of the meeting, which will be presented at the Conference of States Parties to UNCAC in December 2019. The Oslo meeting’s agenda, presentations, and outcome statement, incl. recommendations are available here.



UNODC and the Ministry of Foreign Affairs of Norway convened an international conference in Oslo in June to discuss preventing and combating corruption involving vast quantities of assets. 
 

In June, StAR attended and presented at the Global Illicit Trade Summit in Addis Ababa, Ethiopia, organized by the Economist magazine. This was the fourth installment of this summit, which examines illicit trade in the region, its causes and enables, and the African response. StAR participated in a panel on illicit financial flows (IFFs), and focused on the effects of IFFs on development, and the work carried out by the World Bank and the StAR initiative to repatriate proceeds of crime.

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In May, StAR published a new report, E-filing Asset Declarations: Benefits and Challenges, a resource for policymakers and practitioners considering the transition to electronic filing of asset declarations. The study shows that the benefits of e-filing outweigh implementation challenges. The recommendations in the paper are supported by the experiences of France, Ukraine and United States in their respective transitions to a digital solution for asset declarations. The report was launched at a roundtable discussion on international trends in asset declaration regimes in Bucharest, Romania, and has been translated into Romanian to support the national dialogue on the transition to electronic filing of asset declarations. The report is available here.

On the margins of the UNCAC Working Group on Asset Recovery in May, StAR organized a side event to discuss data collection and launching a new study on progress in international asset recovery efforts in corruption cases. There is a substantial demand for new data on corruption-related asset recoveries and returns. The 2014 StAR/OECD “Few and Far” report is the most recent study that includes figures for quantities of assets frozen and returned - and it only covers freezes and returns by OECD countries between 2006 and June 2012. No comparative data on international returns of proceeds of corruption since 2012 is available and this information has never been systematically collected at a global level.  At the side event, StAR led a discussion of issues and practical challenges related to data collection with States parties’ delegations, distributed a draft questionnaire to around 70 attendees of the event, and collected feedback. StAR will incorporate countries’ inputs on scope and methodology, and proposes to conduct a questionnaire-based survey of all UNCAC States parties for a new study.

 
Please visit our website for a complete list of StAR publications
 

StAR's Handbook and NCB Good Practice Guide in Action in Armenia

In 2018, Armenia’s Interdepartmental Commission on Combating Money Laundering and Financing of Terrorism approved the introduction of NCB asset forfeiture. A task force was set up in March 2019 to develop a legislative proposal, resulting in a draft law on non-conviction-based (NCB) forfeiture, the “law on confiscation of ill-earned assets”.

In a speech on this subject, Prime Minister Nikol Pashinyan repeatedly referred to StAR's Asset Recovery Handbook. Members of the task force also noted that they had extensively consulted our Good Practice Guide for NCB Asset Forfeiture during the drafting process. 
 

Source: ARKA News Agency. Full article available here

Spotlight On

Asset returns: from theory to practice (and policy)

As we covered in our April newsletter, StAR has been following the development of new legislation in France on the return of proceeds of corruption. The cover memo to the draft law identifies transparency, accountability, efficiency, solidarity and integrity as principles that should govern the return of assets. The GFAR principles that were adopted by the cohosts and four focus countries in December 2017 focus on return and disposition and contain a number of overlapping principles that the drafters of the French law were thus inspired by.
 
The draft has since been adopted by the Senate and a “mission parlementaire” of two members was set up to make further proposals on operationalizing its different measures pending its discussion by the National Assembly. The draft law seeks to determine what to do with confiscated assets in the (admittedly rare) case where there is no request from the country of origin for their return as the French government is facing with the Obiang case. However, its emphasis on victim populations and sustainable development could apply more broadly.
 
Also at GFAR, Nigeria, Switzerland and the World Bank entered into a tripartite agreement for the return of the ‘Abacha II’ funds. Its implementation through the World Bank with a monitoring mechanism involving civil society is yielding information and experience on the nuts and bolts of carrying out a return that have rarely been captured until now. US$37 million of the US$321 million returned have already been disbursed in the framework of the National Social Safety Net project that is the vehicle for the return.  Read More 


Looking Ahead

Upcoming events

Regional Workshop: Promoting Beneficial Ownership Transparency in Southeast-Asia, organized by the Malaysia Anti-Corruption Commission (MACC), UNODC, and StAR | 22-23 July | Kuala Lumpur, Malaysia

Cambridge International Symposium on Economic Crime | 1-8 September | Cambridge, UK

10th session of the UNCAC Implementation Review Group | 2-4 September 2019 | Vienna, Austria
ARIN-AP Steering Group and Annual General Meeting | 23-24 September, and Workshop on beneficial ownership “Finding the Hidden Assets: Concealing the Beneficial Ownership of Proceeds of Crime” | 25-27 September | Ulaanbaatar, Mongolia

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Foreign & Commonwealth Office of the UK (FCO)
U.S. State Department Bureau of Narcotics and Law Enforcement Affairs (INL)

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