Legal Tools for Asset Recovery

Depending on the type of case and jurisdictions involved, asset recovery practitioners have various legal tools available. The choice of a specific avenue depends on the legal frameworks involved and the practical or operational circumstances of the case.

Legal Avenues for Achieving Asset Recovery

The legal actions for pursuing asset recovery are diverse. Depending on whether they are only domestic or also international, they may include any of the following mechanisms: 

  • Domestic criminal prosecution and conviction-based confiscation, followed by an MLA request to enforce orders in foreign jurisdictions 

  • Non–Conviction based (NCB) Confiscation, followed by an MLA request to enforce orders in foreign jurisdictions 

  • Private civil actions, including formal insolvency proceedings 

  • Administrative confiscation 

  • Other avenues, such as taxation, fines, and compensation orders in criminal trials 

  • In addition, jurisdictions sometimes are able to take legal action by joining proceedings launched by foreign jurisdictions. 

The availability of these avenues, either domestically or in a foreign jurisdiction, will depend on the national and foreign laws and regulations as well as on international or bilateral instruments such as conventions and treaties. The legal framework for asset recovery is dispersed across different sources and may not be encompassed in a single asset recovery law, especially in transnational cases. The following box outlines the various laws and international instruments relevant for practitioners pursuing these avenues. This list is not an exhaustive one, given both the multiplicity of domestic laws and the existence of many treaties that may not be mentioned here. 

Legal Framework for Asset Recovery 

Legislation and Procedures (Domestic or Foreign Jurisdictions) 

Criminal law provisions (offenses such as bribery, embezzlement, money laundering) 

Criminal procedure provisions (for example, investigative powers, search and seizure) 

Provisional measures and confiscation provisions (for example, criminal, non-conviction based [NCB], administrative) 

Mutual legal assistance (MLA) provisions (for example, remedies)  

Civil law provisions (for example, remedies)  

Asset-sharing laws and regulations 

Other relevant laws (including proceeds of crime acts, asset declaration laws, tax laws, and so on) 

International Conventions and Treaties 

(year instrument adopted / year entered into force) 

United Nations 

  • United Nations Convention against Corruption (2003/2005) 
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988/1990) 
  • United Nations Convention against Transnational Organized Crime (2000/2003) and the Protocols Thereto 

Organization for Economic Co-operation and Development 

  • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997/1999, “the OECD Anti-Bribery Convention”) 

Organization of American States 

  • Inter-American Convention against Corruption (1996/1997) 
  • Inter-American Convention on Mutual Assistance in Criminal Matters (1992/1996) 

Selected Instruments from the European Union and the Council of Europe 

  • Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (1968/1973, “the Brussels Convention”) 
  • Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (1990/1993) and its update, Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime and on the Financing of Terrorism (2005/2008) 
  • European Convention on Mutual Assistance in Criminal Matters (1959/1962), with two additional protocols (1962) 
  • Council of the European Union Framework Decision 2003/577/JHA on the Execution in the European Union of Orders Freezing Property or Evidence (2003) 
  • Convention drawn up on the basis of Article K.3 (2) (c) of the Treaty on European Union on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union (1997) 
  • Council of Europe Criminal Law Convention on Corruption (1999/2002) 
  • Council of Europe Civil Law Convention on Corruption (1999/2003) 
  • Council of the European Union Framework Decision 2006/783/JHA on the Application of the Principle of Mutual Recognition to Confiscation Orders (2006) 
  • Regulation (EU) No. 1215/2012 on Jurisdiction and Recognition and Enforcement of Judgments in Civil and Commercial Matters (recast Brussels I Regulation) (2012) 
  • Directive 2014/42/EU of the European Parliament and of the Council on the Freezing and Confiscation of Instrumentalities and Proceeds of Crime in the European Union (2014) 
  • Regulation (EU) 2018/1805 of the European Parliament and of the Council of 14 November 2018 on the Mutual Recognition of Freezing Orders and Confiscation Orders (2018) 

African Union 

  • African Union Convention on Preventing and Combating Corruption and Related Offences (2003/2006) 

Other Regional Treaties 

Association of Southeast Asian Nations Treaty on Mutual Legal Assistance in Criminal Matters (2004) 

Southern African Development Community (SADC) Protocol against Corruption (2001) 

Southern African Development Community Protocol on Mutual Legal Assistance in Criminal Matters (2002/2007) 

Commonwealth of Independent States (CIS) Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters (1993/1994, “Minsk Convention”), amended (1997) 

Bilateral Mutual Legal Assistance Treaties 

Jurisdictions may have negotiated and signed bilateral treaties among themselves

Asset Recovery Handbook, Second Edition

Apart from the legal framework, the choice of a specific avenue may also depend on various legal, practical, or operational realities. The decisions about venue and type of action ought to be made at the strategic level, having due regard for each type’s advantages and disadvantages and any jurisdictional peculiarities that have a bearing on the matter.  

The following is an excerpt from the StAR Asset Recovery Handbook Second Edition, which was updated in 2020. Further discussion of the different legal mechanisms can be found in the Handbook.

Full text available here
Asset Recovery Handbook 2nd Edition cover

Criminal Prosecution and Conviction-Based Confiscation 

When authorities seeking to recover stolen assets decide to pursue a criminal case, criminal confiscation is a possible means of redress. Practitioners must gather evidence, trace, and secure the assets; initiate a prosecution action against an individual and/ or a legal entity; and obtain a conviction. After obtaining a conviction, confiscation can be ordered by the court. 

In some jurisdictions, the standard of proof for confiscation will be lower than the standard required for obtaining a conviction. In the United Kingdom, for example, proof on a “balance of probabilities” may be needed for confiscation, whereas proof “beyond a reasonable doubt” will be required for the underlying conviction. Other jurisdictions apply the same higher standard of proof (“beyond a reasonable doubt”) to both conviction and confiscation. Generally, unless enhanced or extended confiscation provisions apply, relevant legislation may provide for the confiscation of instrumentalities, proceeds, and other benefits that are directly or indirectly traceable to the crime. 

International cooperation, including informal cooperation and formal mutual legal assistance, will be required throughout the process to identify, trace, and secure assets in foreign jurisdictions as well as to enforce the final order of confiscation. In most jurisdictions, formal mutual legal assistance is provided only in the context of criminal investigations. 

Among the advantages of criminal prosecution and confiscation is the societal recognition of the criminal nature of corruption and the accountability of the perpetrator. Furthermore, penalties such as imprisonment, fines, and confiscation may have a deterrent effect on potential offenders. In addition, criminal investigators generally have the most intrusive means of gathering information and intelligence, including access to data from law enforcement sources and FIUs; use of provisional measures and coercive investigative techniques, such as searches, electronic surveillance, examination of financial records, or access to documents held by third parties; and recourse to grand juries, subpoenas, or other means of compelling appearance, testimony, or evidence.  

However, significant barriers may impede criminal conviction and confiscation, such as insufficient evidence, lack of capacity or political will, and time limits (statutes of limitation). In addition, it may be impossible to obtain a conviction in cases of the perpetrator’s death, flight, or immunity. Furthermore, the requested jurisdiction might not recognize the alleged crime for which MLA is sought as a criminal offense per se (dual criminality).  

Non–Conviction based (NCB) Confiscation

Another type of confiscation gaining traction throughout the world is confiscation without a conviction, referred to as non–conviction based (NCB) confiscation or forfeiture. NCB confiscation shares common objectives with criminal confiscation, namely the recovery and return of the proceeds and instrumentalities of crime. Likewise, NCB confiscation also realizes the goals of deterrence, equity, and restitution. 

Nonetheless, criminal conviction–based confiscation and NCB confiscation are substantively different. A criminal conviction–based confiscation requires a conviction, followed by the confiscation proceedings. In contrast, NCB confiscation requires only the confiscation proceedings, not a criminal conviction. In many jurisdictions, NCB confiscation can be established based on a lower standard of proof—such as a “balance of probabilities” or “preponderance of the evidence”—thus helping to ease the evidentiary burden on the authorities. Other jurisdictions, mainly civil law ones, require the same higher standard of proof used for criminal conviction: “intimate conviction of the truth.

NCB confiscation is not available in all jurisdictions. As a result, practitioners may encounter difficulties in obtaining formal mutual legal assistance to carry out investigations and enforce NCB confiscation orders in jurisdictions that lack legislation on this type of confiscation. Some of these jurisdictions, however, may recognize and enforce foreign NCB confiscation orders, as in the European Union. In addition, requesting jurisdictions may benefit from cooperating with NCB confiscation proceedings conducted in countries where this legislation is frequently applied in money-laundering cases, including the United Kingdom and the United States. 

More information on NCB confiscation can be found in A Good Practice Guide for Non-conviction based Asset Forfeiture

Private Civil Action

States seeking to recover stolen assets have the option of initiating proceedings in domestic or foreign civil courts to secure and recover the assets and to seek damages based on misappropriation, tort, breach of contract, or illicit enrichment. The courts of the foreign jurisdiction may be competent if (a) the defendant is a person, individual, or legal entity that is a national of or residing or having its seat, respectively, in that country (personal jurisdiction); (b) the assets are within or have transited the jurisdiction (subject-matter jurisdiction); or (c) an act of corruption or money laundering has been committed within the jurisdiction.As a private litigant, a state seeking redress can hire lawyers to explore potential claims and remedies (such as ownership of the misappropriated assets, tort, disgorgement of illicit profits, and contractual breach). The initiation of a civil action will be costly and requires collection of evidence to prove the misappropriation of assets or liability on the basis of contract or tort. Evidence gathered in the course of criminal proceedings may, in certain circumstances, also be used in a civil trial. It is also possible to seek evidence with the assistance of a court before an action is filed. 

In common law jurisdictions, the plaintiff usually has the option to petition a court to issue a variety of orders, whereas in civil law countries, the options may be more limited. Potential types of orders may include the following:  

  • Freezing, embargo, sequestration, or restraining orders (potentially with worldwide effect, called “Mareva injunctions” under UK law) to secure assets suspected to be the proceeds of corruption, pending the resolution of a lawsuit, by laying claim to those assets. In some jurisdictions, interim or provisional restraining orders can be issued pending the outcome of a lawsuit or even before the lawsuit has been filed with a court, without notice, and with extraterritorial effect. These orders usually require the posting of a bond, guarantee, or other undertaking by the petitioner. 

  • Orders that oblige defendants to provide information about the source of their assets and transactions involving them.  

  • Orders to disclose relevant documents that are useful in obtaining evidence against third parties, such as banks, financial advisers, or solicitors.  

  • “No-say” (gag) orders that prevent banks and other parties from informing the defendants of a freezing injunction or disclosure order. Generic protective or conservative orders that preserve the status quo and prevent deterioration of the assets, legal interests, or both. Such orders usually require a showing of the likelihood of success on the merits and thus pose an imminent risk in delaying a decision. 

In civil law countries, the possibilities of seeking the types of orders in all but the first bullet may be limited. 

The principal disadvantages of litigating as a civil party, especially in a foreign jurisdiction, are the costs of tracing the assets and the legal fees required to obtain relevant court orders. However, the litigant has more control over the case when pursuing civil proceedings and going after assets in the hands of third parties and will typically have the advantage of a lower standard of proof than that required in criminal law avenues. 

It should be noted that arbitration proceedings in the case of international contracts obtained through bribes or illicit advantages awarded to corrupt officials may open promising avenues, including the cancellation of contracts and potential claims for torts or damages.  

More information on private civil action can be found in Going for Broke: Insolvency Tools to Support Cross-Border Asset Recovery in Corruption Cases  

Administrative Confiscation

Unlike criminal or NCB confiscation, both of which require criminal court action, administrative forfeiture generally involves a noncriminal, sometimes also nonjudicial, mechanism for confiscating assets used or involved in the commission of an offense or infraction falling short of the requirements of a criminal offense. Forfeiture may occur by operation of a statute, or pursuant to specific legislation or regulations, and is typically used to address uncontested confiscation cases or to deal with administrative infractions.  

Administrative confiscation is typically carried out by an authorized agency (such as a police unit or a designated law enforcement agency)—often following a process similar to the one traditionally used in customs smuggling cases—or by a court in noncriminal administrative proceedings.  

The procedure usually requires notice to persons with a legal interest in the assets and publication to the public at large. Otherwise, it may be a full-fledged quasi-criminal court proceeding requiring participation of the state representative and defendant. 

Generally, administrative confiscation is restricted to certain types of offenses, low-value assets, or certain classes of assets. However, some jurisdictions have made innovative use of administrative processes in high-value cases. Some jurisdictions have adopted a variation of administrative confiscation called “abandonment,” employing similar procedures.  

Other Methods

In addition to the above-described avenues, certain alternative methods apply in some jurisdictions and to specific situations. Although they do not display a general or universal pattern, they still have peculiar features that distinguish them from avenues described earlier and therefore merit mentioning. They are useful—if not for practical application, as sources of inspiration to seek innovative solutions and methods in asset recovery.

Taxation of Illicit Profits 

A public official or an executive from a state-owned company who receives bribes, misappropriates funds, or steals assets may be liable for income taxes on this income even if authorities do not prove the illicit origin of assets. It is sufficient to prove that the assets represent undisclosed revenue. The authorities simply prove that the taxpayer has made a taxable gain or received taxable income and is liable for the appropriate amount of taxes, including interest and penalties, if the tax is not paid on time. Therefore, the evidentiary burden is less than in a civil recovery case. Given that this approach generally does not involve court proceedings, this mechanism is potentially cheaper and faster than civil recovery or criminal proceedings. 

Fines and Compensation Orders in Criminal Trials 

In criminal cases, courts may order defendants to pay fines, compensation to victims, or both. Such orders may accompany confiscation orders or may be ordered in lieu of confiscation orders. Fines against individuals or corporations may be based on the value of the advantage gained or intended to be gained. Countries that permit calculation of fines based on the benefits derived from the crime include Australia, Greece, Hungary, and the Republic of Korea (OECD and World Bank 2012):  

In Australia, the maximum penalty for a corporation is the greater of $A 11 million or three times the value of any benefit that the corporation directly or indirectly obtained that is reasonably attributable to the conduct constituting the offense (including the conduct of any related corporation). If the court cannot determine the value of that benefit, it may be estimated at 10 percent of the corporation’s annual turnover during the 12 months preceding the offense.  

In Greece, the corporate liability legislation imposes an administrative fine of up to three times the value of the “benefit” against legal persons who are responsible for foreign bribery.  

In Hungary, fines for legal persons can be a maximum of three times the financial advantage gained or intended to be gained, and at least Ft 500,000.  

In Korea, the maximum fine for a legal person is ₩1 billion, but if the profit exceeds ₩500 million, the legal person can be subject to a fine up to twice the amount of the profit.  

Recovering Stolen Assets in the Context of Legal Actions Initiated by Foreign Jurisdictions

Authorities seeking to recover stolen assets may seek to support a criminal or NCB confiscation that has been initiated in another jurisdiction against corrupt foreign officials, their associates, or identified assets. At the conclusion of the proceedings, the state or government may be able to obtain a portion of the recovered assets through orders of the foreign courts, pursuant to national and international legislation or international agreements. This avenue requires that the foreign authority (a) have jurisdiction, (b) have the capacity to prosecute and confiscate, and (c) most important, be willing to share the proceeds.  

An action may be initiated in a foreign jurisdiction in one of the following two ways:  

  • Authorities in the jurisdiction affected by corruption may request the foreign authorities to open their own case. This can be accomplished by filing a complaint or even more simply through a spontaneous information exchange, such as by sharing incriminating evidence or the case file with the authorities of the foreign jurisdiction. In such situations, the foreign or international authorities ultimately have the discretion to pursue or ignore the case. If they decide to pursue it, the jurisdiction affected by corruption will still need to cooperate with the foreign and international authorities in the sharing of evidence and information.  

  • Foreign or international authorities may open a case independent of a request from the jurisdiction affected by corruption. Foreign authorities may receive information linking a corrupt public official or corrupt international public official to their jurisdiction—whether through a newspaper article, information from the international public organization, a suspicious transaction report (STR), or a request for informal assistance or formal mutual legal assistance—and decide to investigate money laundering or foreign bribery committed within their national territory.

The participation of the affected jurisdiction (the state or government harmed by corruption) in the proceedings is generally encouraged in most jurisdictions. In some civil law jurisdictions, however, the affected state may also be able to participate in foreign proceedings as a civil party to the proceedings. In both civil and common law jurisdictions, it may be possible to recover assets in these proceedings—through court-ordered compensation, restitution, or damages—as a party affected by a corrupt offense or as the legitimate owner in confiscation proceedings. 

This avenue is an interesting option if the jurisdiction seeking redress lacks an adequate legal basis, capacity, or evidence to pursue an international asset recovery action on its own. In particular, such jurisdictions may benefit from the confiscation of stolen assets in countries (including the United Kingdom and the United States) that apply NCB confiscation proceedings in foreign money-laundering cases and that may agree to return all or part of the confiscated assets pursuant to court orders or asset-sharing agreements. 

Moreover, if the limitation period rules out prosecution on the basis of the initial corruption or misappropriation offense, it may still be possible to investigate crimes such as money laundering or possession of stolen assets in other jurisdictions.  

However, in such cases, the jurisdiction affected by corruption does not have any control over the proceedings, and its success depends to a large extent on the foreign authorities’ capacity and willingness to advance the case. Furthermore, unless the foreign court orders the return of the assets, the affected jurisdiction will be dependent on asset-sharing agreements or the foreign government’s ability to return the assets on a discretionary basis.  

Use of Asset Recovery Avenues in Practice: Three Case Examples

The case studies below demonstrate how the various avenues discussed above have been used to recover assets in practice. Each case involved several jurisdictions and incorporated a number of different strategic approaches and considerations, depending on the circumstances of the case, the avenues available in the domestic and foreign jurisdictions, and various repatriation arrangements. Some strategic considerations, obstacles, and case management decisions are also highlighted.

Case 1: Peru: Vladimiro Montesinos and His Associates

Background: Vladimiro Montesinos, personal adviser of Peru’s President Alberto Fujimori (1990–2000) and the de facto head of Peru’s intelligence service, was caught in September 2000 in a corruption scandal that involved the bribery of an elected opposition congressman. In fact, a Peruvian television station broadcast a leaked video (one of the so-called Vladi-videos) showing Montesinos paying the congressman US$15,000 and asking him to leave his party and join Fujimori’s coalition. A few months later, in November 2000, President Fujimori resigned, and in June 2001 Montesinos was arrested in Venezuela after eight months on the run. Subsequent investigations revealed that Montesinos was involved in numerous illegal activities including bribery, embezzlement of public funds, arms and drug trafficking, and human rights violations. Montesinos was charged, tried, and convicted on multiple charges.

Illegal assets: Since 1990, Montesinos had received, among other things, kickbacks related to arms trafficking in at least 32 transactions (each worth 18 percent of the purchase price) as well as commissions on the purchase of three planes for the Peruvian air force (Levi, Dakolias, and Greenberg 2007). Montesinos had deposited his illegal assets in several jurisdictions, including Switzerland, the Cayman Islands, Luxembourg, Peru, and the United States.

Illegal assets in Switzerland and strategic considerations: Regarding the US$49.5 million frozen in Switzerland two options were discussed with the Swiss investigating magistrate: (a) to prosecute the offenders in Peru for corruption and then use formal mutual legal assistance (MLA) channels to repatriate the assets, or (b) to have Switzerland initiate proceedings for drug trafficking and related money-laundering offenses that were also part of the case. However, under the latter option, Peru would have to share with Switzerland a percentage of the recovered assets.

Peru selected the first option and strategically introduced legislation permitting guilty pleas (plea bargaining). In return for a reduced criminal sentence or dismissal of the proceedings, defendants would provide useful information regarding known or unidentified crimes, unknown evidence, access to the proceeds of crime, or testimony against key figures. In addition, defendants would sign waivers authorizing foreign banks that held their assets to transfer them to Peruvian government accounts. Several million dollars were recovered using these waivers. As a result of the efficient cooperation between the Swiss and Peruvian authorities, US$77 million was ultimately transferred to Peru.

Illegal assets in the Cayman Islands: For the assets allegedly deposited in the Cayman Islands, Peru hired local lawyers to assist with the pursuit of US$33 million transferred through a Peruvian bank. Peruvian authorities also met with the financial intelligence unit (FIU) in the Cayman Islands to seek assistance. After several months of financial analysis, Peru discovered that the assets had never been sent to the Cayman Islands but instead had remained in a Peruvian bank. A back-to-back loan scheme had been used to simulate the “transfer” to a Cayman Islands bank and the “return” to a Peruvian bank. Once discovered, the funds in the Peruvian bank were seized and confiscated.

Illegal assets in the United States: Following an FBI investigation (in collaboration with Peruvian authorities) into fraud, corruption, and money laundering involving Montesinos and his associate Victor Venero Garrido, US$20.2 million was frozen while Garrido was arrested and his apartment seized (INL 2005). Another US$30 million of Montesinos’s funds held in the name of a front man were also frozen. Non-conviction based (NCB) confiscation proceedings in Florida and California were used to recover the funds, and the entire amount was repatriated to Peru. The repatriation agreement between the United States and Peru provided for transparency as well as for the compensation of victims and the support of anticorruption efforts (INL 2005).

Illegal assets in Peru: In Peru, more than US$60 million was recovered by Peruvian authorities through the seizure and confiscation of properties, vehicles, boats, and other assets in approximately 180 criminal proceedings involving over 1,200 defendants.

Overall asset recovery outcome: Ultimately, over US$250 million has been recovered from Switzerland, the United States, and local banks in Peru.

Case 2: Zambia: Civil Actions in Tort against Frederick Chiluba and His Associates

Background: Frederick Chiluba was the president of Zambia from 1991 to 2002. In 2002, a task force was established in Zambia to investigate alleged corruption by the former president and his associates from 1991 to 2001, to assess whether criminal proceedings could be brought, and to determine the best options for recovering assets.

In February 2003, stripped of his immunity from prosecution, Chiluba was charged before a Zambian court—along with his former intelligence chief, Xavier Chungu, and several former ministers and senior officials—with 168 counts of theft. The allegations involved assets that were diverted from the Ministry of Finance to an account held at the London branch of the Zambia National Commercial Bank (Zanaco). The Zambian government claimed that the account was used to meet Chiluba’s and Chungu’s personal expenses, while the latter argued that the account was used by Zambia’s intelligence services to fund operations abroad (Ryder 2011, 1).

There were several delays in the legal process: a co-defendant fled the country, two out of three trials collapsed, and political interference was also an issue in the proceedings. Zambia’s new president, Levy Mwanawasa, even considered offering Chiluba a pardon if he returned 75 percent of the laundered money. Authorities therefore decided to also bring a civil action in the United Kingdom in the hope of recovering some of the laundered money. Hence, in 2004, the attorney general of Zambia, for and on behalf of the Republic of Zambia, initiated a civil suit in the United Kingdom against Chiluba and 19 of his associates to recover funds transferred to London and across Europe between 1995 and 2001 to fund the former president’s expensive lifestyle, including a residence valued at over 40 times his annual salary. These proceedings were launched in addition to the ongoing criminal proceedings in Zambia.

Choice of legal avenue: Three factors drove the strategic decision to launch the civil action in London in addition to the criminal proceedings in Zambia:

Most of the defendants were located in Europe, and especially in London, making domestic criminal prosecution and confiscation impossible in some cases.

Most of the evidence and assets were located in Europe, which made a European venue a more favorable option. In fact, most of the funds diverted from Zambia had passed through two law firms and bank accounts in the United Kingdom. Hence, the Zambian attorney general was able to establish jurisdiction over defendants through application of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.

Successful mutual legal assistance (MLA) was unlikely, especially regarding the cases where domestic criminal prosecution and confiscation were possible, because Zambia lacked the bilateral or multilateral agreements, procedural safeguards, capacity, and experience necessary to collect evidence and enforce confiscation orders across Europe.

Hence, the choice of forum was made on the basis of the ability to enforce a court order obtained in a European jurisdiction, in a country that is a party to legal instruments (such as the Brussels Convention). By virtue of the legal instruments, such a decision would be recognized and enforced throughout Europe. It was anticipated that out-of-court settlements in the United Kingdom would also be enforceable in Zambia once registered before the UK court.

Civil proceedings before UK courts: The first case arose out of the transfer of about US$52 million from Zambia to a bank account allegedly operated outside ordinary governmental processes, the “Zamtrop account,” held at Zanaco’s London branch (the “Zamtrop Conspiracy”). Another claim related to payments of about US$20 million made by Zambia pursuant to an alleged arms deal with Bulgaria and paid into accounts in Belgium and Switzerland with funds traced in London (the “BK Conspiracy”).

The ruling: The court, after considering all the evidence, found Chiluba and other defendants who helped him divert the funds liable in tort. Particularly, it found that the defendants had conspired to misappropriate US$25,754,316 under the Zamtrop Conspiracy and US$21,200,719 under the BK Conspiracy. The defendants were held liable for the value of misappropriated assets plus damages. The ruling decried the “cynical and unjustified misappropriation of funds for the private purposes of Government officials.”

Overall asset recovery outcome: The significance of the London court judgment lies in the fact that it permitted the seizure of assets found in the United Kingdom and also in the enforceability of this judgment in other jurisdictions that recognized and enforced UK court decisions (Ryder 2011, 7). However, obstacles remained to the enforcement of the London judgment in Zambia. Chiluba argued that the Zambian law on the enforcement of foreign judgments had not been fully satisfied. In light of the nonenforcement of the London court decision in Zambia, it has been argued that the lessons derived from this case lie mostly in the legal process chosen to pursue the assets rather than in actual recovery of assets, which clearly failed (Ryder 2011, 8).

Case 3: Nigeria: Diepreye Alamieyeseigha

Background: In 1999, Diepreye Alamieyeseigha was elected governor of the state of Bayelsa in Nigeria, and he was reelected in 2003. In 2005, he was impeached for corruption. From 1999 to 2005, Alamieyeseigha accumulated foreign properties, bank accounts, investments, and cash exceeding £10 million in value. The foreign assets were held in either his or his wife’s name, while some other assets were held by companies and trusts incorporated in The Bahamas, the Seychelles, South Africa, and the British Virgin Islands.

The criminal proceedings in Nigeria and the United Kingdom included criminal restraining orders over assets and formal mutual legal assistance (MLA) requests from Nigeria to the United Kingdom. Criminal confiscation of assets took place in Nigeria based on the findings of guilt by the Nigerian court. Private civil proceedings, launched in the United Kingdom, included a worldwide freezing injunction that was enforced in Cyprus and Denmark. Civil forfeiture proceedings also took place in South Africa and the United States. More specifically, the actions proceeded as follows:

  • Suspicion of money laundering and arrest. In September 2005, the London Metropolitan Police first arrested Alamieyeseigha at Heathrow Airport on suspicion of money laundering. Investigations had revealed that Alamieyeseigha had hidden US$2.7 million in bank accounts and in his London home, while he also possessed real estate in London worth an estimated US$15 million. Alamieyeseigha was released on bail, subsequently fled the United Kingdom in November 2005, and returned to Nigeria.

  • Charging and freezing of assets in Nigeria. In Nigeria, Alamieyeseigha initially claimed immunity from prosecution. However, he was subsequently removed from office by Bayelsa State’s lawmakers, thereby losing immunity. Nigeria’s Economic and Financial Crimes Commission (EFCC) charged him with 40 counts of money laundering and corruption and secured a court order freezing assets held in Nigeria.

  • Confiscation of cash in the United Kingdom. Regarding assets in the United Kingdom, close cooperation between the EFCC and the London Metropolitan Police’s Proceeds of Corruption Unit was pivotal. In fact, US$1.5 million in cash was seized from Alamieyeseigha’s London home under the Proceeds of Crime Act 2002 on the basis of a court order finding that the assets represented proceeds of crime. In May 2006, a court ordered the funds to be repatriated to Nigeria, and the transfer was made a few weeks later.

  • Civil proceedings in the United Kingdom and criminal proceedings in Nigeria. For the proceeds deposited in bank accounts, the process was more challenging because both the assets and the relevant evidence were located across several jurisdictions: The Bahamas, the Seychelles, South Africa, the United Kingdom, and the British Virgin Islands. Nigerian authorities recognized that initiating proceedings with formal MLA in all these jurisdictions could take considerable time, while orders from Nigerian courts would not necessarily be executed. In addition, the pursuit of legal proceedings in each of these jurisdictions was a daunting prospect because the Nigerian authorities had little evidence linking Alamieyeseigha to these assets and the assets to acts of corruption.

Therefore, Nigerian authorities decided to bring civil proceedings in the United Kingdom and simultaneously pursue criminal proceedings in Nigeria. Nigeria claimed ownership of the stolen assets and proceeds of the defendant’s corrupt activities. To secure evidence, the Nigerian authorities obtained a disclosure order for the evidence compiled by the London Metropolitan Police during its investigation. Nigeria was able to use this evidence—obtained using both criminal procedures and Alamieyeseigha’s income and asset declaration in its civil case—to obtain a worldwide freezing order covering all assets owned directly or indirectly by him and a disclosure order for documents held by banks and his associates.

  • Non-conviction-based confiscation proceedings in South Africa. Parallel to these proceedings, the South African Asset Forfeiture Unit initiated non-conviction based (NCB) confiscation proceedings against Alamieyeseigha’s luxury waterfront penthouse in Cape Town. Funds were returned to Nigeria following the sale of the property in January 2007.

  • Guilty pleas. In July 2007, Alamieyeseigha pleaded guilty before a Nigerian High Court to six charges for making false declarations of assets. He also had his companies plead guilty to 23 charges of money laundering. He was sentenced to two years in prison, and the court ordered the confiscation of assets in Nigeria. Alamieyeseigha’s guilty pleas effectively voided his defence in the civil proceedings before the London High Court. In December 2007, the court issued a summary judgment confiscating property and funds deposited in the UK bank account. A subsequent judgment in July 2008 led to the confiscation of the remaining assets in the United Kingdom, Cyprus, and Denmark.

  • Forfeiture orders in the United States. In June 2012, a US District Court issued a forfeiture order allowing the United States to dispose of US$401,931 in assets traceable to Alamieyeseigha. In addition, a forfeiture order was granted in May 2013 against a private residence Alamieyeseigha had purchased in Rockville, Maryland, worth more than US$700,000.

Overall asset recovery outcome: As a result of the efficient collaboration with the authorities in South Africa, the United Kingdom, and the United States, as well as the choice and combination of various asset recovery mechanisms Nigeria recovered US$17.7 million through domestic and foreign proceedings.