BMA Few and Far the Hard Facts on Stolen Asset Recovery

8/11/2019 BMA Few and Far the Hard Facts on Stolen Asset Recovery

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Few and FarThe Hard Facts on Stolen Asset Recovery

Larissa GrayKjetil HansenPranvera Recica-KirkbrideLinnea Mills


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Stolen Asset Recovery (StAR) SeriesStARthe Stolen Asset Recovery Initiativeis a partnership between the World BankGroup and the United Nations Office on Drugs and Crime (UNODC) that supportsinternational efforts to end safe havens for corrupt funds. StAR works with developingcountries and nancial centers to prevent the laundering of the proceeds of corruptionand to facilitate more systematic and timely return of stolen assets.

Te Stolen Asset Recovery (StAR) Series supports the efforts of StAR and UNODC byproviding practitioners with knowledge and policy tools that consolidate internationalgood practice and wide-ranging practical experience on cutting edge issues related toanticorruption and asset recovery efforts. For more information, visit www.worldbank.org/star.

Titles in the Stolen Asset Recovery (StAR) Series

Stolen Asset Recovery: A Good Practices Guide or Non-Conviction Based Asset For eiture(2009) by Teodore S. Greenberg, Linda M. Samuel, Wingate Grant, and Larissa Gray

Politically Exposed Persons: Preventive Measures or the Banking Sector(2010) by Teo-dore S. Greenberg, Larissa Gray, Delphine Schantz, Carolin Gardner, and MichaelLatham

Asset Recovery Handbook: A Guide or Practitioners(2011) by Jean-Pierre Brun, LarissaGray, Clive Scott, and Kevin Stephenson

Barriers to Asset Recovery: An Analysis o the Key Barriers and Recommendations or Action (2011) by Kevin Stephenson, Larissa Gray, and Ric Power

Te Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets andWhat to Do About It (2011) by Emile van der Does de Willebois, J.C. Sharman, RobertHarrison, Ji Won Park, and Emily Halter

Public Office, Private Interests: Accountability through Income and Asset Disclosure(2012)

On the ake: Criminalizing Illicit Enrichment to Fight Corruption (2012) by LindyMuzila, Michelle Morales, Marianne Mathias, and ammar Berger

Lef out o the Bargain: Settlements in Foreign Bribery Cases and Implications or AssetRecovery(2014) by Jacinta Anyango Oduor, Francisca M. U. Fernando, Agustin Flah,Dorothee Gottwald, Jeanne M. Hauch, Marianne Mathias, Ji Won Park, and Oliver Stolpe.

All books in the Stolen Asset Recovery (StAR) Series are available for free at https://open-knowledge.worldbank.org/handle/10986/2172


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Few and FarThe Hard Facts on Stolen

Asset RecoveryLarissa Gray

Kjetil HansenPranvera Recica-Kirkbride

Linnea Mills


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2014 International Bank or Reconstruction and Development / he World Bank and the OECD1818 H Street NW, Washington DC 20433elephone: 202-473-1000; Internet: www.worldbank.org

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Attribution Please cite the work as ollows: Gray, Larissa, Kjetil Hansen, Pranvera Recica-Kirkbride, andLinnea Mills. 2014.Few and Far: he Hard Facts on Stolen Asset Recovery . DOI: 10.1596/978-1-4648-0274-4.Washington, DC: World Bank and OECD. License: Creative Commons Attribution CC BY 3.0 IGO

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Contents

StAR and OECD ix Acknowledgments xi Abbreviations xiii

Executive Summary 1Key Findings 1Main Recommendations 2

1. Introduction 5Scope o the Report 8Methodology 8erminology 9Organization o the Report 9Re erences 10

2. General Observations on the Data 11Re erences 15

3. Progress on Cases: Tracing, Freezing, and RecoveringProceeds of Corruption 17OECD Members Pursuing Cases 17Value o Assets Frozen and Returned by OECD Members 18Jurisdictions Where the Proceeds Originated 23How Are Cases Being Initiated? 26Legal Avenues or Asset Recovery 26Re erence 29Annex 3.1 30

4. Policy Developments 33Setting Asset Recovery as a Policy Priority 33Strengthening International Commitments on Asset Recovery 34Re erences 35

5. Legislative Developments 37Rebuttable Presumptions 37Administrative Freezing and Con iscation Measures 41


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Unexplained Wealth Provisions, Illicit or Unjust Enrichment Laws 43Non-conviction Based Con iscation 43Legislative Gaps Remain 43Including Asset Return in Settlement Agreements 44Re erences 45

6. Institutional Developments 47Specialized Units hat Focus on Asset Recovery 47Adequate Resources and a Mandate and Incentives to be

Proactive in Asset Recovery 47Forming and Using Practitioner Networks 48Capacity Building in Developing Countries 49Re erences 50

7. The Role of Developing Countries 51Re erence 54

8. The Role of Development Agencies 55Incorporating Asset Recovery E orts into Development Policies 55Supporting Domestic Law En orcement E orts in Pursuing Cases 56Advising on Ways to Secure Asset Return 56Adequate Financing or Capacity-Building E orts in Developing Countries 57Facilitating Data Collection 58Communicating Asset Recovery Policies, Actions, and Results 58

Advocating Policies, Laws, and Institutional Development 58Re erences 59

9. Conclusions 61

Appendix A. Recommendations 63Main Recommendations rom the Executive Summary 63Additional Recommendations 64

Data Collection ( rom chapter 2) 64Policy Recommendations ( rom chapter 4) 64

Legal Recommendations ( rom chapter 5) 64Operational Recommendations ( rom chapter 6) 65Recommendations or Developing Countries ( rom chapter 7) 65Recommendations or Development Agencies ( rom chapter 8) 65

Appendix B. Nine Key Principles of Effective Asset RecoveryAdopted by the G20 Anticorruption Working Group, Cannes, 2011 67Policy Development 67Legislative Framework 67Institutional Framework 68

Appendix C. StAR/OECD Questionnaire 71


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Contents I vii

Boxes1.1 he Busan Partnership or E ective Development

Co-operationCombating Corruption and Illicit Flows 73.1 International Commercial ArbitrationAn Innovative

Avenue or Asset Recovery 284.1 Good Practice Examples: Elements o Success ul AssetRecovery Policies 34

4.2 Guidance and ools on Asset Recovery and Related opics Producedby G8, G20, and the Financial Action ask Force (FAF) 35

5.1 Good Practice: Innovative Legislation to Overcome Barriers 405.2 Arab Spring Asset Freezing Measures 426.1 Specialized Units Focusing on Corruption O enses and Asset Recovery 486.2 Good Practices in Building Capacity o Requesting Jurisdictions 497.1 Good PracticesCooperation between Requested and Requesting

Jurisdictions; Actions by Developing Countries 527.2 StARs Practical Handbooks and Policy Notes on Asset Recovery(Available at http://www.worldbank.org/star) 53

8.1 Good Practice: Development Agencies Finance Law En orcementE orts to Combat Corruption and Recover Assets 56

8.2 Good Practice: A Development Agency Advises on a Return o AssetsPursuant to a Settlement Agreement 57

Figures1.1 Process or Recovery o Stolen Assets 102.1 Laws, Policies, and Data on Cases Available on the

Swiss Government Website 143.1 OECD Country Reports o Assets Frozen and Assets Returned to

Foreign Jurisdictions, Seperated by Reporting Periods 193.2 OECD Country Reports o Assets Frozen and Assets

Returned to Foreign Jurisdictions, Combined otals 2006June 2012Summary 20

3.3 otal Value o Assets Frozen and Returned 2006June 2012 213.4 Illustration o rends in Asset Recovery Cases (Anecdotal) 213.5 Assets Frozen and Returned, by OECD Country, 2006June 2012 223.6 Libyan Asset Freezes Reported by Four OECD Members,

2010June 2012 233.7 Assets Frozen by OECD Members 2010June 2012, Showing

Jurisdictions and Amounts 243.8 Assets Returned by OECD Members, 2010June 2012, Showing

Jurisdictions and Amounts 253.9 Increases in Asset Freezing or Recovery Cases with Developing

Countries between 2006 and June 2012 263.10 Legal Avenues Used or Asset Recovery, 2010June 2012 27

3.11 Assets Returned Pursuant to a Settlement Agreement,2010June 2012 28


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Tables3.1 OECD Members Pursuing Stolen Asset Recovery Cases Involving

Foreign Proceeds, 2010June 2012 183A.1 Comparative able o En orcement on Asset Recovery, 201012 30

5.1 Asset Recovery Legal Framework in OECD Member Countries 38


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StAR

Te Stolen Asset Recovery Initiative is a partnership between the World Bank Groupand the United Nations Office on Drugs and Crime that supports international effortsto end safe havens for corrupt funds. StAR works with developing countries and nan-cial centers to prevent the laundering of the proceeds of corruption and to facilitatemore systematic and timely return of stolen assets.

For more information, visit www.worldbank.org/star .

OECD DEVELOPMENT ASSISTANCE COMMITTEE

o achieve its aims, the OECD has set up a number of specialised committees. One ofthese is the Development Assistance Committee (DAC), whose mandate is to promotedevelopment co-operation and other policies so as to contribute to sustainable develop-mentincluding pro-poor economic growth, poverty reduction and the improvement ofliving standards in developing countriesand to a future in which no country will dependon aid. o this end, the DAC has grouped the worlds main donors, dening and monitor-ing global standards in key areas of development.

Te members of the DAC are Australia, Austria, Belgium, Canada, the Czech Republic,Denmark, the European Union, Finland, France, Germany, Greece, Iceland, Ireland, Italy,Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, theSlovak Republic, Slovenia, Spain, Sweden, Switzerland, the United Kingdom and theUnited States.

Te DAC issues guidelines and reference documents in the DAC Guidelines and Refer-ence Series to inform and assist members in the conduct of their development co-opera-tion programmes.

For more information, visit www.oecd.org/dac

StAR and OECD

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Tis publication was a joint effort o the World Bank/UNODC Stolen Asset Recovery(StAR) Initiative and the Organisation or Economic Co-operation and Development(OECD). It was written by Larissa Gray ( ask eam Leader, Senior Financial SectorSpecialist, StAR Initiative), Kjetil Hansen (Lead Governance Advisor, OECD), PranveraRecica-Kirkbride (Consultant, StAR Initiative), and Linnea Mills (Consultant, OECD).

Te team is especially grate ul to Jean Pesme (Coordinator, StAR Initiative), AlanWhaites ( eam Lead, Governance OECD/DAC), and Phil Mason (Chair o the OECD/DAC Anti-Corruption ask eam) or their ongoing support and guidance on thisproject.

Te team beneted rom many insight ul comments during the peer review process,which was chaired by Jean Pesme. Te peer reviewers were Rita Adam (Department o

Foreign Affairs, Switzerland); Joe Barker (Home Office, United Kingdom); Frank Fari-ello (Legal Vice Presidency, World Bank); Robert Leventhal (United States Departmento State); Astrid Manroth (Operations Policy and Country Services, World Bank); PhilMason (Department or International Development, United Kingdom); Ji Won Park(StAR Initiative); im Steele (United Nations Office on Drugs and Crime); Oliver Stolpe(StAR Initiative); and eresa urner-Jones (United States Department o Justice). Teteam also beneted rom the input o Jeanne Hauch (StAR Initiative) and Alice Ahn(United States Department o State).

We would also like to thank Patricia Katayama, Mayya Revzina, and Rick Ludwick ortheir support and guidance in the publications process.

A special thanks to Eli Bielasiak (StAR Initiative), Maria Orellano (World Bank), andLouis Scott (OECD) or their support in the administration o the project, and toAlessandra Fontana (OECD) or her contributions during the publication process.

Acknowledgments


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Corruption besieges countries around the world, with the most devastating impact ondeveloping and transition countries. It slows economic growth and development,diverting resources that could be used or development. It negatively affects the qualityand accessibility o public services and in rastructure, erodes public condence ingovernment, reduces private sector development, and weakens the rule o law.

Te seizure and recovery of the proceeds of corruptionasset recoveryis a pow-erful tool to combat corruption. Development agencies and other stakeholderscommitted to improving development effectiveness should be interested in usingasset recovery as a means to combat corruption.

In the rst place, the return o the proceeds o corrupt activities can have an importantdevelopment impact when returns are used or development purposes: Recent exam-ples have resulted in improvements in the health and education sectors and in the rein-tegration o displaced persons. Asset recovery also helps to deter corruption by showingthat corrupt officials will be deprived o their illicit gains. Finally, additional benetsaccrue in terms o improved international cooperation and enhanced capacity o lawen orcement and nancial management officials.

Development agencies have made international commitments to ght corruption andrecover the proceeds o corruption at the Tird High-Level Forum on Aid Effectiveness: Accra Agenda or Actions, held in Accra (2008); and Fourth High-Level Forum on AidEffectiveness: Partnership or Effective Development Co-operation, in Busan (2011).

Te implementation o those Accra and Busan commitments is the ocus o this reportby the Stolen Asset Recovery Initiative (StAR) and the Organisation or EconomicCo-operation and Development (OECD) Development Assistance Committee. How

have those commitments been translated into domestic policies, law, or institutionalchanges? What results have been achieved? How has asset recovery been incorporatedinto development policies and programs? Te report ocuses on the progress o 34OECD members toward meeting those commitments between 2010 and June 2012. Itis the second o its kind, ollowing the StAR and OECD report o 2011, which mea-sured progress rom 2006 to 2009. Outlined below are the key ndings and recom-mendations.

Key Findings

Since the rst StAR/OECD report, the total assets frozen have increased . A totalo US$1.398 billion was rozen between 2010 and 2012. Tis activity over a

Executive Summary

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2.5 year period is already greater than that during the 4-year period covered bythe rst StAR/OECD report.

Te legal avenues and powers used most successfully to freeze and return assetswere not the traditional ones. Administrative actions were introduced to reezeassets rapidly, and more jurisdictions proactively initiated their own investiga-tions, rather than waiting or a request rom the jurisdiction o the corrupt official.Non-conviction based conscation, court-ordered reparations and restitution,and settlement agreements were used to return more assets than was criminalconscationcommonly thought to be the main legal avenue or asset recovery.

OECD members are returning more assets to developing countries. Te rstStAR/OECD report ound that most returns were to other developed countries,whereas recent data show signicant returns to developing countries.

Building the capacity of practitioners in developing countries can support assetrecovery efforts. Such initiatives have helped to prioritize and initiate cases, build

trust with oreign counterparts, and eventually generate evidence (or a courtorder) to support asset recovery. Countries with established asset recovery policies and solid legal and institu-

tional frameworks continue to achieve success in returning the proceeds of cor-ruption. Only three OECD membersSwitzerland, the United States, and theUnited Kingdomhave repatriated corruption proceeds in both reporting peri-ods. All three countries have high-level policies, a wide range o asset recoverytools available, and dedicated teams working on asset recovery cases. Where bar-riers are encountered, new laws or creative solutions are sought to overcome them.

For the majority of OECD members, there is a disconnect between high-level inter-national commitments and practice at the country level. Fourteen o the 34 OECDmembers did not respond to the StAR survey at all, 1 and o those that responded,most reported very little progress. Experience has demonstrated that where suchlack o interest and low-priority treatment extend to ineffective laws or institutions,criminals will exploit those vulnerabilities to launder corruption proceeds.

Te data on asset recovery cases continue to be scarce . Little progress was madein overcoming the obstacles identied in the rst StAR/OECD report.

Few and Far: Ultimately, a huge gap remains between the results achievedand the billions of dollars that are estimated stolen from developing countries.Only US$147.2 million was returned by OECD members between 2010 andJune 2012, and US$276.3 million between 2006 and 2009, a raction o the$2040 billion estimated to have been stolen each year.

Main Recommendations

Success in stolen asset recovery requires coordinated action by all stakeholders in bothrequested and requesting jurisdictions, including those responsible or setting policies,law en orcement and justice officials, banks, private companies and their intermediaries

1. Responses were not received rom Austria, Chile, Czech Republic, Estonia, Finland, Greece, Hungary,Iceland, Ireland, Korea, Mexico, Poland, Slovenia, and urkey.

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(e.g., lawyers), development cooperation actors, civil society, and the media. Te ollow-ing are the main recommendations or OECD DAC members and other developmentpartners, based on survey results and independent research. Additional recommenda-tions appear throughout the report and are intended to complement and expand on thepriority ones. Although they may not be specic action areas or development agencies,all are activities that development agencies can oster and encourage to implement theirAccra and Busan commitments.

1. Obtain a high-level commitment to asset recovery . Both developed and develop-ing countries need to adopt and implement comprehensive strategic policies tocombat corruption and recover assets. For their part, development agencies needto establish asset recovery as a priority in their strategic planning.

2. Provide the necessary resources . Adequate unding is needed to support assetrecovery, including unding or investigations, prosecutions, international coop-

eration, training o domestic and oreign practitioners, policy development work,and institutions. Development agencies can allocate development unds to sup-port these programs, both domestically and in oreign jurisdictions.

3. Ensure that a wide range of asset recovery tools are available and used. Bothdeveloped and developing countries need to ensure that they have a broad rangeo mechanisms in place, such as the abilities to rapidly reeze assets, to conscatein the absence o a conviction, to return assets as part o a settlement agreement,and to reverse or shif the burden o proo .

4. Be proactive, not reactive. OECD members need to ensure that they are able toproactively identi y and reeze the assets o allegedly corrupt officials and estab-lish incentives or domestic practitioners to initiate cases. Such domestic actionsshould be ollowed by international cooperation with the relevant oreign juris-diction, including spontaneous disclosures and actions to build capacity andtrust. Developing countries need to be initiating their own investigations andcommunicating and cooperating with oreign counterparts.

5. Build capacity in developing countries. Asset recovery requires effective investi-gations in both the requested and requesting countries, and many developingcountries may need technical assistance to take such action. Development agen-cies can support the training and mentoring o developing country practitioners,especially given that capacity development is a priority o the Accra Agenda andis key to achieving development results.

6. Collect statistics to measure results, and make them publicly available. Statisticson law en orcement activities are essential or showing that countries are ulll-ing their high-level commitments; they also help to guide domestic policy devel-opment, resource allocation, and strategic planning. Making progress publiclyavailable highlights results and also supports transparency and accountability,principles which the Busan Partnership and Paris Declaration have highlighted asbeing key to development effectiveness and cooperation.

Executive Summary I 3


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5

1. Introduction

Angola and Switzerland work together to channel recovered assets worth$64 million to priority development needs. In 2004 and 2012, Switzerland con-ducted separate criminal investigations into allegations o corruption and moneylaundering involving corrupt officials rom Angola. In both, the proceeds wereinitially rozen ($21 million in 2004 and $43 million in 2012) as part o the crimi-nal case. Although the criminal investigations were subsequently closed, the undsremained rozen, and it was not contested that the money belonged to the Angolan

state. Switzerland and Angola explored options to return the unds and agreed todesignate them or projects in key development areas. In 2004 the recovered assetsnanced projects that cleared land mines and supported agricultural develop-ment. In 2012 the unds were allocated or development needs that includedestablishment o a hospital in rastructure, water supply, and local capacity build-ing or reintegration o displaced persons. Switzerland and Angola shared theplanning and implementation responsibilities, and that helped Angola buildcapacity. Te return has strengthened international cooperation and the capacityo law en orcement officials.

Following a settlement agreement, a 29.5 million ex-gratia payment is madefor education needs in anzania. Te U.K. Department for InternationalDevelopment plays a central role in project design. In 2010 the company BAESystems reached a settlement agreement with the U.K. Serious Fraud Office(SFO) regarding bribery allegations involving a $40 million contract to supplyradar control systems to anzania. Te company agreed to make voluntary repa-rations o 30 million (less nes imposed by the court) or the benet o thepeople o anzania. 1 Following advice and assistance rom the U.K. Departmentor International Development (DFID), the government o anzania submitted adetailed proposal to dedicate the money to primary schools in the country, inparticular or teaching materials and school desks, to rehabilitate classrooms, andto build teacher accommodations in rural, remote, and hard-to-reach areas.DFID acilitated exchanges between the government o anzania and the SFOand advised the government o anzania on the specics o the proposal(e.g., advice on ring- encing the payment or specic development objectives,setting up measurable development objectives, monitoring and evaluation, anddrafing a good quality proposal). SFO and BAE accepted the proposal, andDFID continues to provide support to anzania in the expenditure o the unds.

1. Settlement Agreement between the Serious Fraud Office and BAE Systems PLC, dated February 2010(accessed May 9, 2014), http://www.caat.org.uk/resources/companies/bae-systems/bae-settlement-basis-o-plea.pd . See also R v. BAE Systems PLC , Case No.: S2010565, Crown Court at Southwark, December 21,2010, http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/r-v-bae-sentencing-remarks.pd .


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6 I Few and Far

Corruption has a devastating impact on developing and transition countries. Te casesdescribed above demonstrate the impact that may come rom a single corruption orbribery case. Tese are considerable amounts o money by any standard, but they areparticularly devastating or poor countries.

Although estimates and methodologies or reaching them vary signicantly, and havebeen criticized or aws in technique, they provide an idea o the size o the problem.Even the more conservative o the approximations gathered by the Stolen Asset Recov-ery Initiative (StAR) in 2007 were staggering: $20 billion to $40 billion per year stolenby public officials rom developing and transition jurisdictions. Tat is equivalent to20 percent to 40 percent o ows o official development assistance (UN Office on Drugsand Crime and World Bank 2007, 9).

Te return o the proceeds o corruptionasset recoverycan have a signicant devel-

opment impact. In the cases described at the beginning o the chapter, the proceedsrecovered were used directly or development purposesimprovements in the healthand education sectors and reintegration o displaced persons. In these and other cases,the benets exceed the amounts returned, with additional benets accruing in improvedinternational cooperation and enhanced capacity o law en orcement and nancialmanagement officials.

Development agencies have a role in the asset recovery process. Te BAE case provides anexample o how development agencies can acilitate the return o stolen assets throughcompensation to victims. Tis report nds a number o other areas in which developmentagencies have played (or can play) a role, through policy inuence, preventive measures,support o domestic law en orcement, or capacity building o oreign practitioners.

Development agencies and other bodies committed to improving developmenteffectiveness should be interested in the asset recovery agenda, in view o their rec-ognition that corruption undermines development efforts and international com-mitments to ght it and recover the proceeds. At the Fourth High Level Forum onAid Effectiveness, held in Busan, Republic o Korea, in November 2011, more than3,000 delegates met to review progress on implementing the principles o the ParisDeclaration on Aid Effectiveness. Te orum culminated in the signing o the BusanPartnership or Effective Development Co-operation (Busan partnership) by min-isters o developed and developing nations, emerging economies, providers oSouth-South and triangular cooperation, and civil society representatives. It was therst agreed ramework or development cooperation involving such a variety ostakeholders.

Within this new ramework, delegates committed themselves to ght corruption andto undertake efforts to identi y, trace, reeze, and return the proceeds o corruption.Tose commitments were not new to the development effectiveness agenda: the

Tird High Level Forum on Aid Effectiveness, held in Accra, Ghana, included similarcommitments in the Accra Agenda or Action. Box 1.1 outlines those commitments.Although they are not new, the inclusion o these commitments in the Busan


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Introduction I 7

partnership is an important signal. Corruption is one o the ew substantive issuesaddressed in the partnership agreement, which otherwise ocuses almost exclusively

on improving cooperation on international development. Teir inclusion underlinesthe critical importance o combating corruption and recovering the proceeds oreffective development.

BOX 1.1 The Busan Partnership for Effective DevelopmentCo-operationCombating Corruption and Illicit Flows

33. Corruption is a plague that seriously undermines development globally,

diverting resources that could be harnessed to nance development, damagingthe quality of governance institutions, and threatening human security. It oftenfuels crime and contributes to conict and fragility. We will intensify our jointefforts to ght corruption and illicit ows, consistent with the UN Conventionagainst Corruption and other agreements to which we are party, such as theOECD Anti-Bribery Convention. To this end, we will:

a) Implement fully our respective commitments to eradicate corruption,enforcing our law and promoting a culture of zero tolerance for all corruptpractices. This includes efforts to improve scal transparency, strengthenindependent enforcement mechanisms, and extend protection for whistle-blowers.

b) Accelerate our individual efforts to combat illicit nancial ows bystrengthening anti-money laundering measures, addressing tax evasion,and strengthening national and international policies, legal frameworksand institutional arrangements for the tracing, freezing, and recoveryof illegal assets. This includes ensuring enactment and implementa-tion of laws and practices that facilitate effective internationalco-operation.

The Accra Agenda for Action: Commitments to Fight Corruption

24. Transparency and accountability are essential elements for developmentresults. They lie at the heart of the Paris Declaration, in which we agreed thatcountries and donors would become more accountable to each other and to theircitizens. We will pursue these efforts by taking the following actions: []

d) Effective and efcient use of development nancing requires both donorsand partner countries to do their utmost to ght corruption. Donors anddeveloping countries will respect the principles to which they have agreed,including those under the UN Convention against Corruption. Developingcountries will address corruption by improving systems of investigation,legal redress, accountability and transparency in the use of public funds.Donors will take steps in their own countries to combat corruption by indi- viduals or corporations and to track, freeze, and recover illegally acquiredassets.


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8 I Few and Far

Scope of the Report

Tis report measures the progress o Organisation or Economic Co-operation andDevelopment (OECD) member countries in meeting their commitments to trace,

reeze, seize, and recover the proceeds o corruption. It covers the period rom January2010 to June 2012 and ollows an initial report measuring progress between 2006 and2009, racking Anti-Corruption and Asset Recovery Commitments: A Progress Reportand Recommendations or Action (rst StAR/OECD report; StAR and OECD 2011).Progress was determined based on the level o law en orcement activity and reports opolicy, institutional, and legislative measures taken by OECD members. Some o theirchallenges in meeting these commitments are described, along with good practices andrecommendations to guide uture efforts.

Te report is primarily intended to support the anticorruption and asset recovery

efforts o developed and developing jurisdictions, with a particular ocus on actions ordevelopment agencies. Civil society organizations engaged in governance and develop-ment issues may wish to use the ndings and recommendations in their reports andadvocacy efforts as well.

Methodology

In reviewing OECD member progress on asset recovery between January 2010 andJune 2012, the StAR/OECD team looked at data on corruption cases involving the trac-ing, reezing, or return o assets to a oreign jurisdiction (e.g., number o cases, value oassets rozen or returned, jurisdictions involved, etc.), as well as data on the policies,legal rameworks, and institutional arrangements that OECD countries have adopted tostrengthen their asset recovery efforts.

Te data were drawn primarily rom a StAR/OECD Asset Recovery Questionnairedistributed to the 34 OECD members (see appendix C or the questionnaire). Teteam complemented those data with in ormation rom the StAR Asset RecoveryWatch Database, the StAR settlement database, the rst StAR/OECD report covering

200609, and independent research. A summary o this surveys results appeared inthe OECD report Illicit Financial Flows rom Developing Countries: MeasuringOECD Responses (2014).

Te questionnaires requested data on law en orcement efforts in reezing and returningassets, the sources o the cases, and the oreign jurisdictions where the assets origi-nated. Given the scope o the report and previous difficulties collecting data on assetrecovery, the questionnaires ocused on high-level data and did not request specicin ormation on the names o cases or progress in individual cases. A uture survey mayexplore progress in that area. In ormation on policies, legal rameworks, and institu-

tional arrangements adopted to strengthen asset recovery efforts was also requested.Responsibility or the accuracy o the in ormation provided rests solely with the individual countries.


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Introduction I 9

Te StAR/OECD questionnaire was prepared in consultation with asset recovery prac-titioners rom three OECD member countries. o acilitate the reporting effort, thequestionnaires were pre-populated with data rom the StAR Asset Recovery Database,and the countries were asked to review the pre-populated data and include any missingin ormation.

Only 20 o the 34 countries responded. Responses were not received rom Austria,Chile, Czech Republic, Estonia, Finland, Greece, Hungary, Iceland, Ireland, Korea,Mexico, Poland, Slovenia, and urkey. Although previous responses rom thesecountries and independent research suggest that it is unlikely that the overall picture oasset recovery cases would be much different than the one presented in this report hadthey responded, some data on policy, legislative, or institutional developments mighthave been missed. Te low level o response may also be indicative o the priority givento the issue.

Terminology

In the questionnaire and in this report, corruption offenses are those outlined inarticles 1523 o the United Nations Convention against Corruption, or UNCAC, spe-cically, bribery o national public officials (art. 15); bribery o oreign public officialsand officials o public international organizations (art. 16); embezzlement, misappro-priation or other diversion o property by a public official (art. 17); trading in inuence(art. 18); abuse o unctions (art. 19); illicit enrichment (art. 20); bribery in the privatesector (art. 21); embezzlement o property in the private sector (art. 22); and launderingproceeds o crime (art. 23).

Asset recovery is dened to include the powers envisaged in article 5355 o UNCACand is effectively the process by which proceeds o corruption are recovered andreturned to a oreign jurisdiction. Cases are investigations, sanctions, acquittals, andsettlement agreements.

Asset recovery is conducted through a variety o legal avenues, including criminal con-scation, non-conviction based conscation, civil actions, and actions involving theuse o mutual legal assistance. Regardless o the avenue selected, the objectives andundamental process or asset recovery are generally as illustrated in gure 1.1.

Organization of the Report

Tis report is organized as ollows: Chapter 2 provides some general observations onthe data available; chapter 3 summarizes the main ndings on asset recovery cases;chapters 4, 5, and 6 discuss the progress that countries have made in developing the

necessary policy, legal, and institutional rameworks. Chapter 7 summarizes the role odeveloping countries in recovering the proceeds o corruption; chapter 8 reports on pos-sible areas or the involvement o development agencies; and chapter 9 sets out the main


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11

2. General Observations on the Data

ransparency and accountability are essential elements or developmental results.Accra Agenda or Action

StAR/OECD used two main sources o data in examining OECD member progress ontracing, reezing, and recovering assets. Te rst source was data on the policies, legalrameworks, and institutional arrangements that countries have adopted to strengthen

their asset recovery efforts. Te second was data rom law en orcement on the numbero cases conducted; the value o assets traced, rozen, conscated, and recovered; the jurisdictions involved; mechanisms used (e.g., criminal conscation, non-convictionbased conscation); and what prompted the action. For example, was a reeze initiatedpursuant to a mutual legal assistance (MLA) request, a domestic investigation, or anadministrative order?

Overall, little in ormation was available on law en orcement cases. Most respondingcountries indicated that they were unable to provide a complete set o such data. Teycited a number o reasons, which can be categorized into two main challenges.

In the rst category, a broader data set was being collected within which it was not pos-sible to differentiate corruption and asset recovery cases. Te broader data set may becollected or domestic or international evaluations (such as domestic asset recoveryoffices, the OECD Working Group on Bribery, the Financial Action ask Force, or theUNCAC Con erence o States Parties) but may lack the specics to identi y asset recov-ery cases. In some cases, data may be collected on all assets rozen and conscated butwithout identication o the underlying offense or wrongdoing, or example, whetherthe unds were the proceeds o corruption, drug-related offenses, tax crimes, or othercrime. Or the data may not show whether the reeze or conscation was due to a domes-tic or a oreign case. Data may be collected on money-laundering cases and relatedconscations but without specics on the predicate crime. In other words, the data col-lected do not distinguish recovery o the proceeds o corruption rom the proceeds oother types o offenses.

Te second category includes cases in which law en orcement data are not collected inthe rst place. Tis happens in countries where cases are conducted at cantonal, state,or provincial level; in private civil actions in which the government is not a party; orwhen a number o different agencies have the authority to investigate and prosecute

such cases. Cases may be conducted and private civil actions may be pursued, but thedata are not being collected at a central level. In these situations, the only cases thatmight be reported are those that come to the attention o national-level authorities,


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12 I Few and Far

whether through ederal prosecutions or mutual legal assistance (MLA) requests.Tat leaves out asset reezes that may take place at an administrative or in ormalcooperation level, as well as direct recoveries ordered by courts. Other reasons cited ornot collecting the data were their sensitive nature, a lack o enabling legislation, and alack o resources.

A major challenge in data collection was the low level o response on the part o manyOECD members. O the 34 OECD members, the a orementioned 14 did not respond tothe survey at all, despite repeated requests (see chapter 1). Many o the countries thatresponded provided incomplete in ormation and were unwilling to respond to ollow-up questions, even where the additional in ormation would increase their results ( orexample, the seizure o Equatorial Guinea assets by France could not be conrmed andso could not be included). 1

Tese issues are not new. Te rst StAR/OECD report noted similar problems with datacollection (StAR and OECD, 2011, 1921). Nor are the problems o data collectionconned to asset recovery cases. Similar issues have been reported by countries gather-ing en orcement data or the OECD Working Group on Bribery, countries reporting onmoney laundering cases, and so on.

Gathering data is important. Statistics play a major unction in domestic decision makingand in how resources are used in all areas o government, including taxation, health care,education, ghting crime, or development assistance. Data and statistics are also impor-tant measuring the effectiveness o strategies, laws, and institutional rameworks. Doesthe system work? Are there results in terms o assets rozen or returned? Evidence that thesystem is working (or not working) is essential in ormation that can guide decision mak-ers in thinking strategically on priorities, closing gaps, and efficient resource allocation.

In addition, experience has demonstrated that where asset recovery is given a low pri-ority and ineffective laws or institutions result, criminals will exploit those vulnerabili-ties to launder their corruption proceeds.

At the international level, standard setting-bodies ocused on results and effectivenessare increasingly emphasizing gathering statistics. Te Financial Action ask Force(FA F), or example, has adopted an assessment methodology that looks equally at theeffectiveness o AML/CF systems (anti-money laundering and combating the nanc-ing o terrorism) and technical compliance (whether laws and institutions are in place)(FA F 2013). As countries are assessed against this standard, assembling comprehen-sive statistics will become more and more important or countries to demonstrate theireffectiveness. Similarly, the OECD Working Group on Bribery collects law en orcement

1. See StAR Asset Recovery Watch, eodoro Nguema Obiang Mbasogo/ eodoro Nguema ObiangMangue (France), available at http://star.worldbank.org/corruption-cases/node/18584. See also Des, CarNews, 11 Supercars o eodoro Obiang Nguema Mbasogo Seized by French Police, September 29, 2011,available at http://www.gtspirit.com/2011/09/29/11-supercars-o -teodoro-obiang-nguema-mbasogo-seized-by- rench-police/.


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General Observations on the Data I 13

data on bribery cases, and the UNCAC (United Nations Convention against Corruption)review mechanism collects data on UNCAC implementation.

International organizations and other entities requesting data can do their part to makethe number o data requests less burdensome by collaborating on requests or data, asStAR and OECD have done in producing this report, or by producing indicators thatcountries can use in measuring results. For example, the European Commission indi-cated in an internal strategy document that it will develop common indicators againstwhich member states can evaluate the per ormance o asset recovery offices (EuropeanCommission 2010, 6). Where countries have made international commitments on ght-ing corruption and recovering its proceeds, there should be a corresponding interest indetermining whether they are effective in ullling them.

Several ideas or improving data collection emerged rom the in ormation provided by

OECD members or this report:

Start with some data gathering, then expand. All countries experience difficultieswith gathering data. Some o the 20 countries that responded to the StAR ques-tionnaire were able to produce a selection o data, even though it was incomplete.Te others did not provide any law en orcement data at all, citing various datacollection problems, despite indications rom public sources that cases occurred.Even incomplete data can be help ul in showing some level o progress, indicatinggood practices, and so orth. Tere ore all countries should aim to gather thelow-hanging ruitdata that are easy to obtain or rom agencies where resultsmight be expected. Once the process is initiated and under way, countries canproceed to other data sets and identi y and ll gaps.

Develop a system to ag asset recovery cases among broader sets o data already beingcollected. For example, previously in the United Kingdom, cases involving therecovery o proceeds o corruption could not be extracted as a separate class. A newsystem introduced in 2011 now allows or the tagging o cases involving oreignassets, so that corruption cases involving oreign assets can be counted separately.

Incorporate a data collection objective into asset recovery policies, and ensure thatadequate resources are made available. A number o countries indicated that theylacked resources and enabling legislation. But i countries are serious aboutensuring the policies they set are effective, they should include data gathering toreveal those policies impact. For example, the Netherlands Criminal AssetDeprivation Bureau (BOOM) has set data collection as an objective o the bureau,committing itsel to collecting data on all asset recovery cases.

Critically evaluate generalizations that data are too sensitive to collect. I a sensitivecase is identied, consider releasing sanitized data.Although the content o ongo-ing investigations and prosecutions is sensitive in nature, countries can providegeneral statistical data without compromising a case, such as the number o casesand the value o assets that have been rozen, conscated, or returned. All coun-

tries that responded were able to provide those general statistics. Tey also provided the names o the oreign jurisdictions involved in all but our cases. In thoseour, Belgium, the Netherlands, and the United Kingdom identied progress in


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14 I Few and Far

terms o the value o assets being rozen, but because o concerns that releasing thedata could compromise a case, they deleted the name o the jurisdiction involved.Tus they could report progress, yet also protect sensitive case in ormation. Tedata on the specic jurisdiction can be entered once the case is nalized.

Make laws, policies, institutional changes, and data on case achievements publiclyavailable and accessible through a central source. Publishing in ormation ondomestic asset recovery efforts in one location or publication will help to high-light a countrys commitments to asset recovery and can be a good resource orrequesting countries. For example, Switzerland has published its laws, caseexamples, and policies on a website (see gure 2.1). Such efforts will also contributeto the transparency and accountability commitments o countries in the ParisDeclaration, Accra Agenda or Action and the Busan Partnership.

Source: http://www.eda.admin.ch/eda/en/home/topics/nec/poexp.html; accessed December 12, 2013.

FIGURE 2.1 Laws, Policies, and Data on Cases Available on the SwissGovernment Website

Recommendation:Developed and developing countries should maintain comprehensive statisticson asset recovery cases, including assets frozen or conscated, reparations orrestitution ordered, and assets returned. Gaps in the data should be identiedand their collection addressed. Where possible, countries should gather data onthe various means to return assets, including criminal and non-conviction basedconscation, administrative conscation, private civil actions, or other forms ofdirect recovery. Statistics on cases and information on laws and results shouldbe publicly available and accessible at a central location such as a website.


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General Observations on the Data I 15

References

European Commission. 2010. Communication rom the Commission to the EuropeanParliament and the Council: Te EU Internal Strategy in Action: Five Steps towards

a More Secure Europe. COM (2010) 673 o 22.11.2010, Brussels.FA F (Financial Action ask Force). 2013. Methodology or Assessing echnicalCompliance with the FA F Recommendations and Effectiveness o AML/CF Systems.Paris: FA F.

StAR/OECD. 2011. racking Anti-Corruption and Asset Recovery Commitments: AProgress Report and Recommendations or Action. Paris: OECD. http://www.oecd.org.dac/governance-development/49263968.pd and www.worldbank.org/star.


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17

3. Progress on Cases: Tracing, Freezing,and Recovering Proceeds of Corruption

Te StAR/OECD questionnaire requested data in the ollowing areas:

Te number o cases o assets traced, rozen, or returned and value o assets; Te oreign jurisdiction (or country harmed by corruption); Te source o the case, such as mutual legal assistance (MLA), domestic investi-

gation, or governmental order, decree, or law; and Te method used to reeze or return the assets, such as criminal or non-conviction

based (NCB) conscation, private civil action, domestic investigation, or repara-tions ollowing a settlement.

A total o 41 cases were reported by eight countriesBelgium, Canada, Luxembourg,the Netherlands, Portugal, Switzerland, United Kingdom, and the United States. Othese, 29 cases involved the reezing or seizing o assets and 12 were returns.

Similar to experience with the rst StAR/OECD report, the data on asset tracing inves-

tigations remain extremely limited. Only Luxemburg, the Netherlands, Portugal, andthe United States provided in ormation on tracing efforts, with a value o $166 million.Te remaining countries cited problems with data collection or sensitive in ormation.In addition, the values reported were equivalent to the assets rozen by thosecountries. Inasmuch as the value o assets traced should, at least in theory, be equal toor greater than the value o assets rozen or seized (a country has to trace the assets itreezes or seizes and may pursue some tracing investigations that do not result in anasset reeze or seizure), these numbers offer little in terms o value added and riskdouble-counting o data.

Overall the data provided were sufficient to support a number o ndings or trends,in particular compared to the rst StAR/OECD report. Tis chapter describes thosendings. Chapters 4, 5 and 6 discuss the ndings related to the policy, legislative, andinstitutional changes.

OECD Members Pursuing Cases

More countries are pursuing asset recovery cases involving assets in oreign jurisdic-tions, but the overall number o OECD members doing so remains small. Since therst StAR/OECD report, our new countriesBelgium, Canada, the Netherlands, andPortugalhave joined the list o OECD members that have rozen corruption proceeds,


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18 I Few and Far

bringing the number up to 10. Te remaining countries did not report cases that met thecriteria or this report (table 3.1; see table 3A.1, at the end o this chapter, or additionaldetails).

Value of Assets Frozen and Returned by OECD Members

Although there has been an increase in the value o assets rozen, the value o assetsreturned remains at a level similar to that ound by the rst StAR/OECD report. Belgium,Canada, Luxembourg, the Netherlands, Portugal, Switzerland, the United Kingdom,and the United States reported 29 reezing cases, totaling $1.398 billion, between 2010and 2012. Tis activity over a 2.5-year period is already slightly greater than over the4-year period covered by the rst StAR/OECD report (20 cases o $1.225 billion),demonstrating increased activity in the reezing o assets.

Only Switzerland, the United Kingdom, and the United States reported returns in thesame period, a total o 12 cases valued at $147.2 million (see gure 3.3). Te value oassets returned over the 2.5-year period is a little over hal o the value o assets returnedover the our years rom 2006 to 2009 ($276.3 million), showing a rate o asset returnsslightly lower than that ound by the rst StAR/OECD report.

Figure 3.1 shows OECD country reports o total assets rozen and returned to oreign

jurisdictions during the period 2010 to June 2012 and the comparable reports rom therst StAR/OECD report, covering 200609; and gures 3.2 and 3.3 shows reports orthe entire period o 2006 to June 2012.

TABLE 3.1 OECD Members Pursuing Stolen Asset Recovery CasesInvolving Foreign Proceeds, 2010June 2012

Countries pursuing cases No reported cases Did not respond to the surveyBelgium

Canada

Luxembourg

Netherlands

Portugal

Switzerland

United Kingdom

United States

Australia a

Denmark

France a

Germany

Israel

Italy

Japan

New Zealand

Norway

Slovak Republic

SpainSweden

Austria

Chile

Czech Republic

Estonia

Finland

Greece

Hungary

Iceland

Ireland

Korea, Rep.

MexicoPoland

Slovenia

Turkey

Source: Authors compilation based on responses to StAR/OECD survey.a. Australia and France reported cases in the rst StAR/OECD report.


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Progress on Cases: Tracing, Freezing, and Recovering Proceeds of Corruption I 19

FIGURE 3.1OECD Country Reports of Assets Frozen and Assets Returned toForeign Jurisdictions, Seperated by Reporting PeriodsMillions of dollars

Sources: (A) StAR and OECD 2011; and (B) Authors compilation based on responses to StAR/OECD survey.

a. Assets frozen

B. 2010June 2012

Switzerland 786.1(56.2%)

United Kingdom 451.2(32.3%)

United States 112 (8%)

Luxembourg 26.5(1.9%)

Portugal 18.4(1.3%)

Canada 2.6(0.2%)

Netherlands 1.2(0.1%)

Belgium 0.3

Total $1,398 million

b. Assets returned

United States 59.5(40.4%)



Total $147.2 million

Luxembourg 508.4(41.5%)




Australia 6.9(0.6%)

France 1.4(0.1%)

a. Assets frozen

A. 200609

Total $1,225 million

b. Assets returned

Switzerland 146.3(53%)


Australia 7.6(2.8%)

United Kingdom 2.2

(0.8%)


0

200

400

600

800

1000

1200

1400

1600

Assets f rozen Assets returned

20062009 2010June 2012


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Figure 3.3 shows that assets returned were signicantly less than assets rozen. Te total value o assets returned between 2006 and June 2012 was $423.5 million, which is signi-cantly less than the $2.623 billion in assets rozen. Tese totals are a raction o the estimated$20 billion to $40 billion stolen each year rom developing and transition jurisdictions.

Since the StAR/OECD survey collected general data on assets rozen or returned, it isnot possible to ollow the activity in specic cases. However, the general data gatheredmirrors the experiences that jurisdictions have reported anecdotally on individualcases. News media reports o assets stolen and hidden in particular jurisdictions havecited much higher values than the values traced. In turn, those values are much greaterthan the amounts that can eventually be rozen, conscated (or ordered to be paid asdamages or a ne by a court), and returned. Figure 3.4 illustrates this trajectory.

FIGURE 3.3 Total Value of Assets Frozen and Returned 2006June 2012Millions of dollars

Source: Authors compilation based on responses to StAR/OECD survey and StAR and OECD 2011.

2,623.3

423.5

0

500

1,000

1,500

2,000

2,500

3,000

Assets frozen Assets returned

FIGURE 3.4 Illustration of Trends in Asset Recovery Cases (Anecdotal)

Source: Authors compilation.

Media reports of assets stolenby a corrupt ofcial in country A

and held in country B

Assets frozen

Assets conscated,reparations

or restitutionordered, etc.

Assetsreturned

Value

($, ,, etc.)


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imposed a reeze on a broad range o assets belonging to the Libyan government (such asthe Central Bank, Libyan Investment Authority, and Libyan National Oil Corporation),not exclusively on the proceeds o corruption. Assets were rozen worldwide, including$25.6 billion reported to StAR/OECD by the Netherlands, Sweden, Switzerland, and theUnited Kingdom. Te list is likely to grow, given that some countries did not considerLibyan asset reezes to be covered by this report or were not able to provide estimates.

Although some o those Libyan assets may have involved the proceeds o corruption, itis impossible to distinguish them, and there ore the data could not be included in theStAR/OECD data set. In addition, where the UN Security Council has lifed a reeze,the unds are released to the owner which may be a state-owned entity or an individual.I an individual, the unds were returned to the individual and not to Libya. As illus-trated in gure 3.6, the expansive scope o the reezes would dwar the value o all otherasset reezes reported to StAR/OECD.

Jurisdictions Where the Proceeds Originated

In almost all o the 41 cases reported, OECD members named the jurisdiction where theproceeds originated. Tere were only three cases in which the name o the jurisdictionwas redacted because o the sensitive nature o the case. Tus the data in the maps ingures 3.7 and 3.8 provide a good picture o the jurisdictions and proceeds involved.

OECD members have made signicant progress in expanding the reezing and returno stolen assets beyond developed countries.

Between 2006 and 2009, the majority o asset reezing or recovery cases involved otherdeveloped countries. Only 11 developing countries ell outside this group, accounting

or less than 40 percent o assets rozen and returned. Tose countries were Belarus,Brazil, China, Indonesia, Kazakhstan, Mexico, Nigeria, Peru, South A rica, Uganda, andUkraine (StAR and OECD 2011, 3132).

FIGURE 3.6 Libyan Asset Freezes Reported by Four OECD Members,2010June 2012

Source: Authors compilation based on responses to StAR/OECD survey.

Assets frozen allother countries

$1.398 billion (5%)

United Kingdom $19.6 billion

Netherlands$4 billion

Sweden$1.6 billion

Switzerland$0.4 billionAssets frozen Libya

$25.6 billion (95%)


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26 I Few and Far

FIGURE 3.9Increases in Asset Freezing or Recovery Cases with DevelopingCountries between 2006 and June 2012In millions of dollars

Source: Authors compilation based on responses to StAR/OECD survey.

Developed countriesDeveloping countries

452.1

779.1

724.76

212.8

0

200

400

600

800

1,000

200609 201012

108.1

127.7

168.11

19.50

50

100

150

200

200609 201012

C a s e s

C a s e s

a. Assets frozen b. Assets returned

Between 2010 and June 2012, however, those numbers have increased signicantly.Assets were rozen or returned to 15 developing countries and comprised 80 percent othe total value o assets rozen and returned. Te countries were Algeria, Bangladesh,Brazil, Costa Rica, Cte dIvoire, Arab Republic o Egypt, Equatorial Guinea, Iraq,Kazakhstan, Libya, Malaysia, Nigeria, anzania, unisia, and Zimbabwe. Figure 3.9shows the progress made between the two reporting periods.

How Are Cases Being Initiated?

Proactive initiatives by OECD member governments or law en orcement agenciesremain important sources or success ul asset reezes and returns. Only our countriesprovided data on the sources o reezes or returns, but the results were noteworthy. Onecountry relied exclusively on ormal mutual legal assistance requests to reeze assets,but the others applied proactive measures to reeze or return assets. Law en orcementagencies initiated their own investigations and prosecutions o oreign bribery or moneylaundering (or both) in a manner similar to that reported in the rst StAR/OECDreport (StAR and OECD 2011, 2526). In the context o the Arab Spring, some OECDmember governments also passed laws and issued decrees to proactively reeze assets ocorrupt leaders rather than waiting or a ormal request or mutual legal assistance.Chapter 5 provides urther detail on the legal mechanisms used to proactively takeaction in conducting cases, initiating international cooperation, and reezing assets.

Legal Avenues for Asset Recovery

Te results o the StAR/OECD survey show that OECD members are using multiple ave-

nues to reeze and recover the proceeds o corruption. Te methods go beyond what iscommonly thought o as the traditional method or asset recovery, a criminalconscation case.


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Administrative asset reezes in connection with the Arab Spring brought impressive results.O the total assets reported rozen by OECD members, 39 percent originated in eitherunisia or Arab Republic o Egypt ($542.8 million o the total $1.398 billion). Te assetswere rozen pursuant to decrees or laws passed by Canada, the European Union, andSwitzerland and not based on MLA requests (see box 4.4, in the next chapter, or a descrip-tion o these laws). Teir value is likely to be higher, given that Libyan corruption proceedscould not be included because they could not be distinguished rom the broader Libyanasset reezes described above.

For asset returns, countries used multiple legal avenues, including criminal and non-conviction based conscation, criminal reparations and restitution, and private civilactions. Reports by OECD members show that criminal conscation accounted oronly 13 percent o the total assets returned (see gure 3.10). Other avenues were armore productive, in particular non-conviction based (NCB) conscation (40 percent o

returns) and criminal restitution and reparations (34 percent). Assets were also returnedollowing private civil actions in the United Kingdom by Libya (11 percent o returns)and Ukraine (value unknown).

O the 12 asset return cases, 8 were resolved by settlement agreements, accounting or74 percent o the total value o assets returned (gure 3.11). Although that resultdemonstrates that the method is gaining traction as a means or resolving oreignbribery cases in civil and common law jurisdictions, the need exists to discuss urther

FIGURE 3.10Legal Avenues Used for Asset Recovery, 2010June 2012Millions of dollars

Source: Authors compilation based on responses to StAR/OECD survey.Note: NCB = non-conviction based.

Criminalconfiscation

2 cases$19.1

NCB confiscation2 cases$59.5

Criminalrestitution,

reparations6 cases$49.4

Private civil action1 case

$16

Other1 case

$3.1



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Reference

StAR and OECD (Stolen Assets Recovery Initiative and Organisation or EconomicCo-operation and Development). 2011. racking Anti-Corruption and Asset Recovery

Commitments: A Progress Report and Recommendations or Action. Paris:OECD. http://www.oecd.org.dac/governance-development/49263968.pd and www.worldbank .org/star.


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30 I Few and Far

T A B L E 3 A

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33

4. Policy Developments

Success ul asset recovery requires a solid oundation o comprehensive policies andstrategies, a legal ramework that offers a variety o tools or practitioners, and well-resourced institutions. Tis chapter discusses country progress in those areas.

Setting Asset Recovery as a Policy Priority

One o the recommendations in the rst StAR/OECD report was that countries shouldimplement comprehensive strategic policies to combat corruption and recover assets(StAR and OECD 2011, 13, 3536). Te report ound that experiences in Switzerland,the United Kingdom, and the United States had shown that political willthe credibleintent o political actors, civil servants, and state actors, most ofen demonstrated througha well-resourced, high-level country policy or strategycould generate progress in termso legislative, institutional, or operational changes, as well as in case results. Tose samecountries have urther developed and improved their policy initiatives over the past two-and-a-hal years. In addition, a hand ul o countries, including Australia, Canada, France,and the Netherlands, have taken steps toward adopting an asset recovery strategy.

Asset recovery policies should have clear objectives, high-level commitment, and su -cient resources (Stephenson et al. 2011, 2431). Te policies should include commit-ments to improve legislation, institutional capacity, domestic coordination, andinternational cooperation and to increase the number o cases undertaken and the value o assets rozen or conscated. Tey should encourage practitioners to thinkcreatively in overcoming barriers to asset recovery. Reporting measures are importantor tracking progress and monitoring results, and so is setting clear benchmarks toencourage proactive initiatives by law en orcement agencies. Box 4.1 describes someexamples o good practices that countries have adopted.

Recommendation:

Developed and developing countries should adopt, implement, and fund compre-hensive strategic policies to combat corruption and recover assets. Countriesshould identify gaps and be swift and responsive in addressing obstacles encoun-tered during the asset recovery process. They should evaluate the implementa-tion of their policies and consider changes where needed.


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Strengthening International Commitments on Asset Recovery

Several countries have undertaken multilateral efforts to strengthen asset recoverypolicies, standards, and actions, in particular through the UN Convention againstCorruption (UNCAC) Asset Recovery Working Group, the Financial Action askForce, the G20 Anticorruption Working Group, and the G8 Deauville Partnership (aninitiative o the G8 to support countries in the Arab world in democratic transition).In addition to its commitments to improve asset recovery, the G8 Deauville Partner-ship established the Arab Forum on Asset Recovery (AFAR) to bring together the G8,the countries in transition, and other countries rom the Arab region. Trough twohigh-level meetings and three regional trainings, AFAR has provided a orum orregional training and discussion o best practices on cases and effective measures orasset recovery; it has acilitated direct dialogue on cases between countries.

Te Financial Action ask Force (FA F) issued new global standards, the revised FA F40 Recommendations (2012), which strengthened the requirements on customer duediligence, benecial ownership, politically exposed persons, international cooperation,and responsibility and powers to investigate and prosecute money launderingallimportant tools or combating corruption and recovering the proceeds.

As part o these commitments and actions, the G8, the G20, and FAF have also adoptedpolicy, trends analysis, and guidance documents on asset recovery and related topics.

BOX 4.1 Good Practice Examples: Elements of Successful AssetRecovery Policies

Clearly articulated policy. Switzerland, the United Kingdom, and the

United States have all adopted asset recovery as a policy priority and havepublicized their commitments through statements and on governmentwebsites.

High-level buy-in. Statements supporting asset recovery have been madeby the president and attorney general of the United States (U.S. Departmentof Justice 2012, 2013; U.S. White House 2012), the prime minister and for-eign minister of the United Kingdom (U.K. Cabinet Ofce 2012; 2013; U.K.Foreign and Commonwealth Ofce 2013; U.K. Home Ofce 2012), and thepresident and foreign minister of Switzerland (Switzerland FederalDepartment of Foreign Affairs 2010; 2011).

Resources. The Netherlands (Afpakken) program for recovery of criminalassets provided additional funding for law enforcement authorities.

Commitment to international engagement. Switzerland launched the Laus-anne Process, a global forum that brings practitioners together to discusspragmatic solutions to asset recovery.


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Policy Developments I 35

BOX 4.2 Guidance and Tools on Asset Recovery and Related TopicsProduced by G8, G20, and the Financial Action Task Force (FATF)

G20, Nine Key Principles of Effective Asset Recovery , Cannes Summit, France,

2011 (see appendix B). Country proles have also been drafted and areavailable on the StAR website. Asset recovery guides , 2012. Canada, France, Germany, Jersey, Italy, Japan,

Switzerland, the United Kingdom, and the United States have publishedguides on the asset recovery tools and procedures available in each country. They are available at http://star.worldbank.org/star/ArabForum/country -guides-asset-recovery-0.

G20, Asset Tracing Country Proles , Los Cabos Summit, Mexico 2012. A pro-le of each G20 country lists the resources available for tracing assets frombank accounts and in the forms of real estate, business and nancial inter-ests, and luxury goods. Available at http://g20mexico.org/en/anticorruptionand worldbank.org/star.

G8 Principles to Prevent the Misuse of Companies and Legal Arrangements , June2013. All of the G8 countries have published their national action plans toimplement these principles. Available at http://star.worldbank.org/star

/about-us/transparency-benecial-ownership-resource-center. G20 Mutual Legal Assistance Guides of G20 Countries , Los Cabos Summit,

Mexico, 2012. A step-by-step guide to legal requirements for mutual legalassistance in each of the G20 countries. Available at http://g20mexico.org

/en/anticorruption. FATF analysis of methods and trends of corruption. FATF adopted two papers,

Laundering the Proceeds of Corruption (July 2011), and Specic Risk Factorsin Laundering the Proceeds of Corruption (FATF 2012). Both are available athttp://www.fatf-ga.org.

FATF Best Practice Paper on the Use of the FATF Recommendations to CombatCorruption (FATF 2013a).

For example, the G20 Anticorruption Working Group adopted Nine Key Principles oEffective Asset Recoveryand is currently conducting a benchmarking survey against theprinciples (see appendix B). Some o the country review exercises have been made pub-lic and are available on the G20 and StAR websites. Box 4.2 enumerates similar initia-tives taken at the international level.

References

FA F (Financial Action ask Force). 2012. Specic Risk Factors in Laundering the

Proceeds o Corruption. Paris: FA F.. 2013.Best Practice Paper on the Use o the FA F Recommendations to CombatCorruption. Paris: FA F.


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StAR and OECD (Stolen Asset Recovery Initiative and Organisation or EconomicCo-operation and Development). 2011. racking Anti-Corruption and Asset RecoveryCommitments: A Progress Report and Recommendations or Action. Paris: OECD.

Stephenson, K. M., L. Gray, R. Power, J. P. Brun, G. Dunker, and M. Panjer. 2011.Barriers to Asset Recovery: An Analysis o the Key Barriers and Recommendations or Action. Washington, DC: World Bank.

Switzerland Federal Department o Foreign Affairs. 2010. Foreign Minister Calmy-Rey Speaks at No Sa e Havens: A Global Forum on Stolen Asset Recovery andDevelopment , June 8, 2010, Paris.

. 2011. Federal President Calmy-Rey at EU- unisia ask Force Meeting inunis, September 28, 2011, unis (accessed November 8, 2013) http://www.swissembassy.org.uk/eda/en/home/recent/media/single.html?id=41409.

United Kingdom Cabinet Office and Prime Ministers Office. 2012. David CameronsAddress to the United Nations General Assembly, September 26, 2012 (accessed

October 26, 2013) https://www.gov.uk/government/speeches/david-camerons-address-to-the-united-nations-general-assembly.. 2013. David Cameron Speaks to the Second Arab Forum on Asset Recovery,

October 25, 2013 (accessed November 8, 2013) https://www.gov.uk/government/news/second-arab- orum-on-asset-recovery-marrakesh-26-28-october.

United Kingdom Home Office. 2012. Written Statement to Parliament: Arab SpringAsset Recovery ask Force, December 17, 2012, London (accessed October 26,2013) https://www.gov.uk/government/speeches/arab-spring-asset-recovery-task- orce.

United States Department o Justice. 2012. Attorney General Eric Holder Speaks at theArab Forum on Asset Recovery, Doha, Qatar, September 13, 2012 (accessed October26, 2013) http://www.justice.gov/iso/opa/ag/speeches/2012/ag-speech-120913.html.

. 2013. Attorney General Eric Holder Delivers Remarks at the Arab Forum onAsset Recovery, Marrakesh, Morocco, October 28, 2013 (accessed November 8,2013) http://www.justice.gov/iso/opa/ag/speeches/2013/ag-speech-131028.html.

United States White House. 2012. President Obamas Message to the Arab Forum onAsset Recovery, September 12, 2012 (accessed November 8, 2013) http://www.whitehouse.gov/photos-and-video/video/2012/09/10/president-obama-s- message-arab- orum-asset-recovery.


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T A B L E 5 . 1

A s s e t

R e c o v e r y L e g a

l F r a m e w o r k

i n O E C D M e m

b e r

C o u n

t r i e s

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R e c o g n

i z e

f o r e

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c o n v

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d

c o n

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t i o n

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F o r e

i g n

c o u n

t r i e s

c a n

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c i v

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i o n

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c o u r t s

C o u r t s c a n o r d e r

c o m

p e n s a

t i o n ,

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d a m a g e s

t o

a f o r e

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j u r i s d

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A u s t r a

l i a

Y e s

Y e s a

Y e s

Y e s

Y e s

Y e s

N o

N o

B e l g i u m

Y e s

E U o n

l y b

Y e s c

E U o n

l y

N o

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l y

Y e s

C a n a d a

Y e s

Y e s d

Y e s e

Y e s

Y e s f

Y e s g

Y e s

Y e s

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Y e s

N o

Y e s

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l y

N o

N o

Y e s h

Y e s

F r a n c e

Y e s

Y e s i

N o

N o

N o

Y e s

Y e s

Y e s

G e r m a n y

N o

E U o n l y

j

Y e s k

N o

N o

N o

Y e s l

Y e s

I s r a e l

Y e s

Y e s m

N o n

Y e s

Y e s

Y e s

Y e s

Y e s

I t a l y

Y e s

Y e s o

N o

Y e s

Y e s

Y e s

Y e s

Y e s

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N o

N o

N o

Y e s

N o

N o

Y e s

N o

L u x e m

b o u r g

Y e s

N o

Y e s

N o

N o

N o

N o

Y e s

N e t

h e r l a n d s

Y e s

Y e s p

Y e s q

E U o n

l y

N o

N o

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l a n d

N o

N o

N o

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N o

Y e s

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Y e s

N o

Y e s

Y e s

N o

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P o r t u g a l

Y e s

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Y e s s

Y e s

Y e s

Y e s

Y e s

Y e s t


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40 I Few and Far

presumption, and the party against whom the presumption exists has the burden toovercome it by presenting proo (that is, the burden o proo is reversed). I the partyails, the presumption is converted into a act. Switzerlands Restitution o Illicit AssetsAct, adopted in 2011, provides or a presumption o the illicit nature o the assets incases in which the enrichment o the politically exposed person (PEP) is clearly exorbi-tant and the degree o corruption o the state or o the person in question is notoriouslygreat (

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