Global drive to recover stolen assets

FE Team | Published: September 19, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Eoin Callan
FT Syndication Service
WASHINGTON: The cross-border flow of illicit proceeds of corruption and corporate wrongdoing should be intercepted by rich countries and returned to the poor, the World Bank and United Nations said on Monday.
The development bank and the UN's office on drugs and crime announced a new stolen asset recovery initiative to help recover money secreted away in international bank accounts.
The scheme follows fresh research showing massive international flows of illicit funds, estimated to be worth more than $1,000b (euro724bn, Â£500bn) a year.
The World Bank estimates that 25 per cent of the gross domestic product of African states is lost to corruption every year, amounting to $148bn.
The history of tracking these funds and repatriating them to developing countries is patchy and fraught with legal complexities, and there are only a handful of cases where it has been achieved in recent years.
But Robert Zoellick, president of the World Bank, said: "Even a portion of recovered assets could provide much-needed funding for social programmes or badly needed infrastructure."
The World Bank cited its role in facilitating an agreement in May to transfer to Kazakhstan $84m in alleged bribes paid by US oil companies located in Swiss bank accounts.
The joint initiative is an attempt to provide a new multilateral framework for the recovery of stolen assets, but will depend on co-operation from national governments who often have legal jurisdiction.
A bank official said the "political will" to recover stolen assets was sometimes missing because it was "a time-consuming process which can impose a huge toll". But he added the initiative would help fund claims by developing countries. The development bank is expected to collect fees for this assistance.
The two bodies said advanced economies were generally deficient in tackling the problem.
Mr Zoellick said: "Developing countries need to improve governance and accountability, but developed countries should also stop providing a safe haven for stolen proceeds."
The UN said its Convention Against Corruption had been ratified by only half of the Group of Eight industrialised nations and half the members of the Organisation for Economic Co-operation and Development.
The UN also said that it would put pressure on tax havens, pointing out that 13 of the 54 internationally recognised offshore financial centres had ratified the corruption convention.
Other cases cited by the World Bank included Peru, which recovered about $180m associated with Vladimiro Montesinos, the country's spy chief, over five years from several jurisdictions such as Switzerland, the Cayman Islands and the US.
It took the Philippines 18 years of court battles to repatriate $624m in Swiss bank accounts attributed to Ferdinand Marcos, the former dictator, underlining how drawn out these efforts can be.